Big Money Heading for Consumer Genomics

Posted by Pete Shanks October 15, 2015
Biopolitical Times
A shared desk among workers. Two workers have their back turned facing forward to a wall filled with real-time stock market exchanges. An empty share is between the two workers. On the computer screen with the empty chair is the 23 and Me logo.

The direct-to-consumer (DTC) genetic testing business hit a major speed bump when the Food and Drug Administration (FDA) stopped 23andMe in its tracks two years ago. The FDA asserted control over the sale of DTC tests, saying that it required proof of their analytical or clinical validity.

At the time, this was controversial, with libertarians particularly up in arms about "bureaucrats" and "ridiculous bans." Others pointed out that the FDA was doing its job. Matthew Herper in Forbes (or his editor) came up with the headline:

23andStupid: Is 23andMe Self-Destructing?

We now have a definitive answer: No. From the same author, same publication, already online, and in print on November 2:

23andMe Wins A Second Life: New Business Plan Scores $115 Million From Investors

The latest investment, from several venture capital outfits, values the company at $1.1 billion.

A company spokesperson told The Verge that they "will return health reports to consumers by the end of this year." Back in February, the FDA did give the company clearance to sell a test for one specific gene correlated to a rare genetic disease, and CEO Anne Wojcicki is spinning that hard:

Now Wojcicki says she hopes the FDA will allow 23andMe to market some health-related tests again soon. "There's a huge value in actually being the only one who's gone through the FDA process and can sell directly to consumers," she says. Some of them, she hints, may have higher margins than the $99 test.

23andMe has for a long time had the concept of leasing the content of their database for research as an important part of their business plan, and announced a deal with Genentech back in January. A week later, the company announced a similar deal with Pfizer. They have also poached a couple of Genentech executives, and launched their own research unit.

But there are other players diving into the business.

Ancestry.com is in the "very early stages of a conversation with the FDA" about DTC tests for risk of disease. They claim to have a larger DNA database than 23andMe (both have over a million samples), and clearly want to leverage that into sales for research purposes: They announced a deal with Calico Life Sciences in July to "work together to unravel the role that genetics play in how long a person lives." (Calico is a Google company; 23andMe was founded with Google money but Wojcicki's divorce from Sergei Brin may have distanced the companies.)

Also in July, the company announced AncestryHealth (beta here), which seems to be heading in the same direction but via family history rather than genetic analysis. In 2010, family history was called "the gold standard in personal disease risk assessment," and it is by no means clear that genomics has yet caught up.

Invitae (formerly Locus, a spin-off from Genomic Health), is a genetic testing company aimed mostly at physicians. It also has genetic counselors on staff and appears to include DTC and family history components. It went public in February and has raised nearly $200 million.

There may be much more competition in the works, as well as a proliferation of third-party tools. Both Apple and Google have indicated interest in offering data-storage, and possibly analysis, services for genetic information. And a major force in genome sequencing is jumping in.

Illumina, which sees the sequencing market heading a long way upwards of $20 billion, is expanding. In 2013, it committed $450 million to acquire Verinata, which specializes in prenatal tests, and now it wants a piece of the DTC action. They have a cute name for a company with a cute idea: Helix (to launch in 2016) will be "an enormous app store for genetic information." (Hat-tip to Antonio Regalado, who has broken several important stories in MIT Technology Review.)

The idea is that Helix will partner with other companies, which will generate apps on their platform, and then save the data and sell it again for a different app. That is, to paraphrase Regalado, you buy the "speed gene" app (ACTN3, but don't count on it), send in spit, and they lose money on the first one by doing more analysis than they let on. Helix gets some cut of the app sales, and holds on to the data:

"We are betting on the consumer coming back and asking for more, and then you don't have to sequence a second time," says [Illumina CEO] Flatley.

Indeed, along with two venture capital firms, they are betting some $100 million.

Worth noting in this context are a couple of non-profits. DNA.LAND, which launched last week, has neatly grabbed a very slick URL. The founders are academics from the New York Genome Center and Columbia University, who hope to pool data from (at first) customers of 23andMe, Ancestry.com and FamilyTreeDNA. It's free to the customers, who are expected to download their data from the site of origin and then upload it.

The site launched on October 10, and six days later, they have 5758 genomes. That may be a better start than Genes for Good, which is based at the University of Michigan. That launched in April, as a Facebook app, and by one report now has 7200 "research participants."

Linking the silos is scientifically interesting, but it's a little hard to see the appeal to clients unless, of course, they get massive buy-in.

The potential for misleading customers, for breaches of privacy (yeah, sure, everything will be as secure as possible), and generally for promoting genism and the market for high-tech medicine aimed at the affluent, is enormous. The FDA did us a major service in 2013 in slowing this juggernaut. Let's hope they hold firm.

Previously on Biopolitical Times:

Image via Wikimedia