Genetic Testing Company 23andMe Finds New Revenue With Big Pharma

The past two years have been a rough and transformative time for the controversial DIY genetic testing company 23andMe. At the end of 2013, the Food and Drug Administration requested that the company shut down its main service, an analysis of a person’s genome gleaned from spit samples that anyone who purchased a kit could send in, noting that interpreting human genes—understanding what changes in DNA mean, and how they contribute or don’t contribute to disease—is still too much of a black box.

But things may be looking better for the company in 2015. On Jan. 6, it announced a $10 million partnership with biotech company Genentech, which will sequence the entire genomes of 3,000 23andMe customers with a higher risk for developing Parkinson’s disease. Genentech is hoping the information will speed development of more effective drugs against the neurodegenerative disorder, in which motor nerves in the brain start to deteriorate. “What attracted us to 23andMe and this opportunity is the work 23andMe has done together with the Michael J. Fox Foundation in the Parkinson’s space,” says Alex Schuth, head of technology innovation and diagnostics for business development at Genentech. “They have built a community of individuals and their family members who have contributed DNA samples. What is unique about this cohort is that it gives us an opportunity to connect clinical data on how patients feel and how their disease is progressing, with their genomic data. That’s unique.” The 23andMe customers will be asked to sign new consent forms as part of any Genentech studies.

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The agreement is one of many that 23andMe CEO and co-founder Anne Wojcicki says are in the works, and hint at the company’s most valuable asset—the genetic information on the 800,000 customers who have sent in their DNA-laden saliva since the company began selling kits in 2006. “Databases, and big data, is suddenly trendy,” says Wojcicki, “especially in health care where people are recognizing that when you have really large numbers, you can learn a lot more. I think we are leading part of that revolution.”

But for the past year, the company hasn’t been sending back health information to customers who pay the $99 for an analysis. Instead, customers are getting reports on their genetic ancestry, with the promise that when the FDA permits it again, they will receive health-related information based on their genetic profile. Wojcicki says that since the FDA action, sales of the kits have been cut by about half, and while they are slowly climbing back up, they haven’t yet reached pre-2013 levels.

Regaining that market is a top priority for 23andMe, says Wojcicki. “Everyone at the company has some kind of role, some involvement, in thinking about the FDA,” she says. “It has transformed the entire company—our product, our execution, how to think about marketing, every aspect of it.” The two entities are exchanging requests and responses, and while she hopes to have a resolution in 2015, it’s not clear yet when the health-related services will be offered.

In the meantime, the genetic information 23andMe has already collected is becoming a potential gold mine for academic researchers and for-profit drug developers. The company has more than 30 agreements with academic researchers for which they receive no monetary compensation, so that scientists can learn more about certain diseases and contribute to basic knowledge about what goes wrong in those conditions. Wojcicki says she’s balancing opportunities with both non-profit and for-profit companies to optimize the value of 23andMe’s database. “Some research has absolutely no monetary capacity, and we should still do those, because fundamentally what 23andMe does is represent the consumer,” she says. “And some research does have monetary capacity, and we should do those too. Because the reality is that the group that is going to develop a drug or treatment or therapy for something like Parkinson’s disease is going to be a for-profit company.”

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