A blank-cheque company backed by Richard Branson’s Virgin Group is in talks to merge with 23andMe, in a deal that would vault the genetics testing start-up on to public markets.

The merger with Sir Richard’s special purpose acquisition company, VG Acquisition, could value 23andMe at about $4bn, according to two people briefed on the discussions. A deal could be reached within weeks, the people said, although the talks could still fall apart.

23andMe would be the latest high-profile company to go public through a Spac, as the euphoria in US markets has encouraged celebrities, politicians and dealmakers to sponsor blank-cheque vehicles.

Sir Richard has experience with the Spac dealmaking process after one of his companies, Virgin Galactic, went public in a deal with Social Capital Hedosophia, the vehicle set up by former Facebook executive Chamath Palihapitiya. The space tourism company is among the most successful Spac deals to date, with its shares trading at about $50.

VG Acquisition raised $480m in October to acquire and publicly list a consumer-facing business that would expand Virgin’s brand in the US. Shares in the Spac are trading at close to $14.

23andMe pioneered direct-to-consumer genetic testing but has recently turned its attention to the potential to use its genetic research database — the largest in the world — for drug discovery. People who have taken the tests often opt to share their data for research and take assessments so their genes can be compared with the state of their health.

Last year, the company began clinical trials of a cancer drug as part of its partnership with UK drugmaker GSK. It also licensed its first drug candidate to Spanish dermatology drugmaker Almirall in early 2020.

23andMe has a history of battling with US regulators, who were initially concerned about allowing patients to access information they might not understand. It then pivoted to focus on genealogy, before returning to genotyping for certain diseases, such as assessing whether people have genes that heighten the risk for breast cancer.

Recent concerns about privacy — particularly after online DNA databases were used to long-unsolved crimes — appear to have damped sales of consumer genetic test kits. Last year, 23andMe laid off 100 employees, or about 14 per cent of its staff.

Sequoia Capital, the venture capital group, is one of the largest investors in 23andMe, which has reportedly been valued at more than $2.5bn by private backers.

23andMe and a representative for Sir Richard declined to comment. Bloomberg first reported on the discussions.