A deal being announced today with Genentech points the way for 23andMe, the personal genetics company backed by Facebook billionaire Yuri Milner and Google Ventures to become a sustainable business – even if the company’s discussions with the U.S. Food and Drug Administration stretch on for years.
According to sources close to the deal, 23andMe is receiving an upfront payment from Genentech of $10 million, with further milestones of as much as $50 million. The deal is the first of ten 23andMe says it has signed with large pharmaceutical and biotech companies.
Such deals, which make use of the database created by customers who have bought 23andMe’s DNA test kits and donated their genetic and health data for research, could be a far more significant opportunity than 23andMe’s primary business of selling the DNA kits to consumers. Since it was founded in 2006, 23andMe has collected data from 800,000 customers and it sells its tests for $99 each. That means this single deal with one large drug company could generate almost as much revenue as doubling 23andMe’s customer base.
From what I know 23andMe has been losing money for on the sales of kits. They were loss leaders. And 23andMe isn’t a non-profit. Though “insiders” have been talking for years how 23andMe has wanted to start selling its huge database to pharma/biotech, even if you were a casual consumer you could connect the dots and assume that there’s a reason they were collecting data on your traits and pestering you to fill in all sorts of personal details on your profile. It’s a business. And businesses try to work the angles to make a profit.
Nevertheless, some people are outraged. My question is simple: is there something about genetic and medical information that privileges it and makes it more precious than the enormous cloud of data private firms already have on you? I don’t think genes are magic, so I’m not convinced, though there are some real issues like life insurance risk for those with highly penetrant disease variants.
Years ago I had a discussion with Mike Snyder about the utility of genomic information for practical ends such as in personalized medicine. The problem to me seemed to be that sample sizes for most academic and even industry studies were just too small. Everything was too under-powered to really find much new and interesting. The real juice would be squeezed by enormous sample sizes on the order of hundreds of thousands, as well as whole genomes at reasonable coverage, intersected with non-genetic data. Yes, health history, but also various lifestyle factors. All of this requires a level of permeability across what are today information silos, and also a comfort of individuals with their information swelling the massive data cloud. The upside on the individual scale is a yield of new results. Of course the problem is that this system encourages “free riding” from those who wish to receive the benefits of the research, but do not want to “opt-in.” They get the benefits of science without sacrificing their privacy. 23andMe has at least shown that this isn’t an insurmountable problem, as it has convinced hundreds of thousands to opt-in to its research. The question is whether this was done transparently.