It’s been six years since DNA testing service 23andMe launched. In that time, about 180,000 people around the world have sent their saliva to the Mountain View-based company to test for more than 200 genetic traits and markers.
That’s not an inconsequential number, but it shows that personal DNA testing just isn’t a very large market yet. As a result, 23andMe has decisively shifted its focus to building and monetizing a giant database of genetic information, rather than satisfying personal curiosity. We’re entering the era of personal genetics as big business.
The company announced yesterday that it has raised $50 million from name-brand investors including Google Ventures and Russian billionaire Yuri Milner to do just that. 23andMe is run by Anne Wojcicki, who is a 10-year veteran of healthcare investing and the wife of Google cofounder Sergey Brin; she and her husband both plunked down cash as well.
We’re entering the era of personal genetics as big business
It’s been a big year for the personal genetics industry. Last week, personal genetics testing provider deCODE Genetics was bought by biotech company Amgen for $415 million. Genetics diagnostics startup Navigenics was acquired by Life Technologies in July. But there’s also new competition: Houston-based Gene By Gene just announced direct-to-consumer genetics testing at the end of November.
One million exomes
With the new funding, 23andMe has one goal: reach a million customers by the end of 2013. To help speed things up, the company slashed the price of a test from $299 to $99. The price of genetics testing is falling, but not that fast. The company hasn't disclosed its costs, but people working in the field say that it’s safe to say that 23andMe is heavily subsidizing the test. Competitor deCODEme charges $1,100 for a similar service. That means 23andMe is losing money, potentially a ton of money, in order to reach a critical mass of data.
Genetics testing has started to catch on among members of the "quantified self" movement as well as the more brave and curious among us. 23andMe customers receive an online report that identifies genetic disorders like Parkinson’s, genetic propensities like obesity, and information about ancestry. 23andMe will also tell you if you’re related to another 23andMe user. One customer met his half-sister through the service; he learned his father was not his biological father and his parents had actually used a sperm donor. "That was a weird week," he wrote on the Hacker News forum.
About 90 percent of customers opt into 23andMe's research program
Customers can also opt in to 23andMe’s research program, which means they’ll be asked to participate in research studies and fill out online surveys about their health. About 90 percent of customers opt in, 23andMe says. The company has already published at least eight papers in peer-reviewed journals and discovered about 180 new traits, including a variant that makes people more likely to sneeze in bright sunlight.
"Their new pricing structure reinforces that [direct-to-consumer] genetic scans is not how they plan to make money," Laura Hercher, a faculty member at the Joan H. Marks Human Genetics Program at Sarah Lawrence College, said in an email. "Frankly, direct-to-consumer is a lousy business, which is why the (heavily bankrolled) 23andMe is the only real player left standing."
Adding a million users opens up new business opportunities. In addition to discovering new genes with big implications for healthcare, 23andMe is hoping to partner with researchers in Big Pharma and other industries as well as help the Federal Drug Administration approve drugs.
As the focus shifts from serving consumers with copies of their data to serving the multi-trillion dollar healthcare industry, privacy and open data advocates are getting concerned.
"I'm one of the cranks that wants things to be more open," said John Wilbanks, an executive at Sage Bionetworks who is steeped in the world of genomics, ethics, and open data. "23andMe has really ramped up on rhetoric. Their messaging is, ‘own your data.’ But data companies — as they get larger and monetize — are less likely to give you back your data. It's part of our job as the broader community to hold them accountable."
Right now, 23andMe lets customers download their genetic data in a machine-readable format with just a few clicks.
"It's part of our job as the broader community to hold them accountable."
However, the supplemental data customers submit via surveys is not. Customers can delete their accounts so that 23andMe can no longer contact them to participate in research, but their genetic information will stay in the database.
"We really believe that your DNA is your DNA," Catherine Afarian, 23andMe’s head of public relations, told The Verge. "It's your information and you should control it. You can download the raw data and take that information anywhere you go."
To be clear, 23andMe isn’t promising a share in the profits if some of your genetic information goes into the next miracle drug. What the company is promising is that customers will always be able to download a copy of their data, and use it however they see fit. It’s hard to say exactly how those rights will play out, however, since none of this has ever gone before a judge.
Brave new world
Personal genetics is scary new territory, and open data is just the start of the criticism. 23andMe has been accused of inaccuracy and overestimating the significance of its reports. Furthermore, genetic information is difficult to interpret. Without a doctor to explain things, some patients may believe their results are much more dire than the reality. Direct-to-consumer genetics tests have been banned in some states, including New York and Maryland.
Privacy is another issue with widespread genetics testing. 23andMe only looks at data that is anonymized and aggregated, and the Genetic Information Nondiscrimination Act of 2008 prohibits employers and insurance companies from discrimination based on genetic information, but customers are still worried about who else might start asking for genetics reports: life insurance providers, schools, athletic organizations. As genetics testing becomes more common and the data passes through more hands, there’s an increased chance that the data could accidentally leak out.
"I would let Merck make billions of dollars and save my friends’ lives from HIV," Wilbanks said. "I would happily donate that. I'm worried about people losing their life insurance. I'm worried about people being able to find life and happiness. I'm worried about people getting trolled, I'm worried about people getting bullied if information leaks. Those are the things that stress me out."
The dystopian movie Gattaca, in which genetics testing is ubiquitous, affordable, and regarded as fate, can be helpful in thinking of more nightmare scenarios. You don’t have to look to science fiction to get creepy tales of ethical genetics quandaries, however. When Henrietta Lacks went to Johns Hopkins hospital to treat her cervical cancer, doctors removed some of her tissue, which was preserved after her death without her family's knowledge. Her cells turned out to be very unique in that they grew robustly in the lab, a huge breakthrough for cancer research.
23andMe is entering uncharted legal and ethical waters
There are now 11,000 patents involving the "HeLa" cells, and whole vials can be ordered online. Her family was left confused and angry, as pharmaceutical companies profited wildly off the unauthorized discovery while Lacks was buried in an unmarked grave and her descendants can’t afford health insurance.
But by moving into DNA data mining, 23andMe is entering uncharted legal and ethical waters. The Supreme Court just agreed to hear a case that will determine whether or not it’s legal to patent a gene. That decision will affect 23andMe, which received a patent on a genetic variant that may guard against Parkinson’s disease.
The announcement of that patent was ill-received by patients, who bristled at the idea of 23andMe owning, and profiting from, one of their genes. The prospect of patenting people had customers worried that they might have to pay a licensing fee in order to access their own genetic information.
Wojcicki had to add an addendum to the announcement that addressed the issue but did little to clarify it. 23andMe customers will always have access to their genetic data, she promised, even if some of it ends up being patented and included in commercial applications. She defended the need for patents in healthcare innovation. "23andMe is a business," she wrote, "with a mission to improve lives."
As 23andMe and other companies move into the genetics data business, such issues become more pressing. There’s also the uncomfortable fact that 23andMe is not yet profitable, and the pressure to make money may one day cause it to act against its customers’ interests.