July 7 (Reuters) - Genetic testing company 23andMe can

proceed with a $305 million sale to the company's co-founder

Anne Wojcicki after a U.S. bankruptcy judge rejected

California's bid to delay the sale while the state appeals over

privacy concerns related to the deal.

U.S. Bankruptcy Judge Brian Walsh, who previously approved

Wojcicki's buyout of the company, said in a court hearing in St.

Louis that California's appeal was "likely to fail" and that

California customers would not be "irreparably harmed" if the

sale went forward while the state appealed.

"They remain free to delete their accounts and data at any

time," Walsh said of 23andMe's California customers.

23andMe filed for bankruptcy in March, seeking to sell its

business after a drop-off in consumer demand and a 2023 data

breach that exposed millions of customers' genetic data.

California had argued the sale violates the state's Genetic

Information Privacy Act, which prohibits the transfer and

disclosure of genetic data or biological samples to third

parties, including Wojcicki's new non-profit TTAM Research.

The state had sought to prevent California customers' data

from being transferred, a step that 23andMe said would

effectively kill the sale. California consumers represent about

1.8 million of the approximately 10 million genetic profiles in

23andMe's inventory, according to California's court filings.

"Everyone knows that this is a sale of DNA to a third

party," California's attorney Bernard Eskandari said in court.

"It has always been a sale of DNA to a third party."

TTAM Research won a bankruptcy auction for 23andMe's assets

in June, overbidding a $265 million offer from Regeneron

Pharmaceuticals ( REGN ).

TTAM said it would continue to protect customers' genetic

data and maintain 23andMe's privacy policies, including

customers' right to delete their data. Wojcicki was 23andMe's

CEO before its bankruptcy filing, and her new nonprofit's name

is an acronym formed from the first letters of the words

"twenty-three and me."

Several other U.S. states, including New York and Texas,

also opposed the sale and said that their state laws also

prevent the sale of customers' genetic data without their

consent. Walsh overruled those objections on June 27.