The consumer genome. You’ll hear that phrase enough the next couple years that it will gain both the weight and lightness of inevitability.
It will feel inevitable because, as we’ve been hearing for years now, DNA is just another long string of crunchable, malleable, transportable code, so it’s just the next destination for the digital train we’re all riding at breakneck speed, accompanied by our ever-growing and ever-more accessible data clouds.
Most other information in this age has wound up in a paradoxical state: both decentralized—available in practically every corner of the Earth—yet also densely concentrated on the server farms of the few, who put it to uses that range from national security to ad targeting.
And so, perhaps, with your genomes, too. You will know your own DNA intimately, but a handful of entities want to have yours, and millions of others’, at their fingertips. A few have gotten a good head start.
What will it be worth? In vast pools, genomic data could unlock health secrets and change the way societies practice medical care. If indeed those much-promised benefits arrive, they will be measured in lives and years, and also in financial units: dollars, shares, earnings, savings.
This raises all kinds of questions for individual citizens, healthy, ill, or somewhere in between. What is the risk of sharing our data, and is it greater than the nebulous future rewards?
John Wilbanks, chief commons officer at Sage Bionetworks in Seattle, has thought about and planned for the sharing of scientific data as much as anyone in the biomedical field. I asked him if consumers should benefit financially from sharing their genomes.
“It’s hard to argue that [they] shouldn’t,” he wrote me in an e-mail last week. “But I don’t really like the idea that our genomes are somehow a primarily economic asset. I can also see a world emerging where a group of individuals can pool their data into something like a land trust or a credit union, and collectively decide how to manage it, including for money. But the last thing I want is to see a world akin to our consumer data world, one where we have no agency, no transparency, and we get ambiguously free stuff in return for something that is deeply human—our genes.”
San Francisco-based Invitae is one of those entities rushing into the consumer genome. Let’s dive more deeply into how it plans to proceed. Five years ago, it started as a subsidiary of Genomic Health (NASDAQ: GHDX), the first company to commercialize a genetic test to better characterize breast tumors.
It spun out independently, with backing from Genomic Health, in 2012. Unlike its parent, Invitae doesn’t want to create new tests based on research from its labs. It wants to be the great aggregator of what CEO Randy Scott—who founded Genomic Health—calls “generic genetics” into a “one stop shop” for tests. “We are not bringing in new tests, we are simply replacing at lower prices things that [people] are currently paying for,” he says.
By the end of the year, Invitae says it will be able to test for more than 600 genes implicated in inherited diseases. That’s 125 pre-packaged tests for diseases across five therapeutic areas. Only doctors can order the tests, and they can also mix and match genes from the menu to create customized tests. If insurers pay for the tests, Invitae charges either $1,500 or $950 each.
It has barely begun to sell those tests, however—and had only $3 million in revenue the first half of 2015—yet Scott is already talking about what lies beyond. At first, making a few hundred dollars above cost for every blood sample that comes in will be “enough to support the company,” he says.
“That might not look like a great business,” says Scott. But eventually the tests will be the loss leaders that ferry into the company what’s truly valuable: the genetic information of thousands upon thousands of people.
The first business beyond selling tests is what Scott calls “genome management”—storing and analyzing a person’s genomic information over his or her lifetime. One way to make money from that is to provide genetic counseling services direct to patients, which Scott says could start before the end of the year. The company already employs counselors to advise doctors who order tests as part of the baseline testing price. But Invitae will encourage more add-on genetic counseling beyond the boundaries of the tests ordered by doctors. “I can imagine a day where we have a genome checkup every year, having trusted advisors give you an update on information relating to your specific genome that could help wellness or disease prevention,” Scott says.
The next horizon would be to sell to third parties information and services derived from Invitae’s customer base. For example, drug companies are desperate to recruit volunteers for clinical trials. Invitae would like to connect its customers with those companies, with the customers’ consent.
If you take Scott’s vision piece by piece, none of it is unique. Part one: As Scott acknowledges, Invitae’s tests are just cheaper versions of what’s out there (although testing companies like Myriad Genetics are fighting back, as we’ll see in a bit).
Part two: Genome management, moving beyond disease testing into the amorphous “health and wellness” space, is something Seattle-based Arivale is pushing. Arivale, born from a “wellness project” spearheaded by Institute for Systems Biology president and genetics pioneer Leroy Hood, is combining personal health data, including a whole genome scan, with counseling. Another genetics luminary, Craig Venter, just jumped into that game, too, with San Diego-based Health Nucleus.
Also angling in on consumer genomics is biotech hardware giant Illumina (NASDAQ: ILMN) of San Diego, whose machines power much of the world’s gene sequencing. With funding help from Warburg Pincus and Sutter Hill Ventures, it just spun out Helix, a $100 million attempt to build a consumer genomics business that mimics Apple’s app store.
The idea is to lure consumers to have part of their genomes sequenced via cool apps—at first, perhaps nutrition- or sports-related—at a “no-brainer price tag,” as Illumina CEO and Helix chairman Jay Flatley told Technology Review in August.
Consumers would just get the tidbit of information they pay for, but all their data, controlled by Helix, would pool with everyone else’s data, attract more app developers, and, voila, a feedback loop—all with Helix taking a cut of every transaction.
Which leads to part three of Invitae’s consumer genomics vision: being a middleman. Helix is building up to it, but 23andMe has been there, done that, letting its genetic-test customers volunteer their data for research.
People who have ordered 23andMe’s ancestry “spit kits” for $99 can check a box to say, yes, you can use my information for research purposes. (The company also offered health-related tests until the FDA shut them down in late 2013; it has promised for some time to return to the health field, and in February got FDA approval for a direct-to-consumer product that tells prospective parents if they’re carrying genes that could lead to children with the rare disorder known as Bloom syndrome. 23andMe expects to have more carrier tests to provide together as a set later this year.)
Of its 1 million-plus customers, more than 80 percent have consented to participate, according to a 23andMe spokesman. The company has sold those data, aggregated, sliced, and diced, to companies like Pfizer (for irritable bowel research) and Genentech (Parkinson’s). What’s more, 23andMe is using that treasure trove of data to create an in-house drug discovery group. Top Genentech scientist Richard Scheller was so impressed that he joined 23andMe to run the new group.
In other words, 23andMe’s customers have paid $99 apiece to help 23andMe vault to a billion-dollar valuation—as of its recent $115 million fundraising—but 23andMe generally doesn’t pay for their participation unless they go above and beyond by giving blood or filling out extra surveys. (A spokesman noted that the company’s research is overseen by an institutional review board.)
Invitae’s Randy Scott sees a potential competitive advantage there. He says Invitae will share revenues with customers who share their data, although when and how are “difficult to predict.”
“We plan to help patients to share their information when appropriate and only with their consent,” says Scott. “We plan to be open and transparent with patients about opportunities that rise on a case by case basis.”
As he squares off with all the well-heeled competition, Scott thinks sharing will be good business: “If you go to a social networking site, and every time an advertiser was pinging you the network made money and you also got a piece of the action, would you still stay in a network where they’re taking your private information and making money off you?”
Scott invokes Walmart and Amazon as models for his “one stop” gene-test shop. He invokes Google and Facebook as models for an information platform. But when he talks about market reach, he thinks Invitae will end up like “AT&T or Verizon or Sprint”—one of a few behemoths that dominate a massive sector. He adds quickly that Invitae hopes to have better customer service than the phone and cable companies.
Without that scale, the other parts of the business—the genome management, the data brokerage—won’t work.
So that’s the vision. What’s the reality? In a low-margin, high-volume business, promises of disruption can outstrip actual results. Case in point: The Wall Street Journal exposed the gap between marketing and reality last week with its investigation of Palo Alto, CA-based Theranos, which touted new technology that required only a few drops of blood—and a finger prick instead of a needle—for run of the mill blood tests. The accuracy of that technology, and how much Theranos has actually used it, was thrown into question. In a follow-up story, the Journal reported the FDA has told Theranos to stop using its finger-prick technology for all but one of its 200-plus tests.
This isn’t to imply Invitae is the next Theranos. For one, unlike Theranos, Invitae is submitting its work to peer reviewed journals. But it’s fair to say that Invitae has a lot of crawling to do before it walks, runs, or flies.
First, it needs to convince doctors and insurers that its tests are worth ordering and paying for. It has a $475 per test option for people who want to pay out of pocket, but real revenues require insurance payments. Convincing insurers to cough up is a long process, and even at Invitae’s relatively modest $1,500 or $975 price points, they will need to see data. As Scott told analysts on a call this summer, “Every conversation starts with some level of skepticism because… almost everybody coming to them claims they can reduce cost.”
By mid-2016, Invitae says contracts with several insurers should be in place. It continues to make its case. For example, the company is touting a study, run with Massachusetts General Hospital, Harvard University, and Stanford University, that shows Invitae’s sequencing platform provides comparable results to older sequencing methods. It specifically included mutations of the BRCA1 and BRCA2 genes, highly implicated in breast and ovarian cancer. Tests for those mutations were locked up for years by Myriad Genetics (NASDAQ: MYGN) of Salt Lake City, UT, which charged thousands of dollars per test. The Supreme Court’s 2013 dismissal of Myriad’s patents—making it impossible to patent a gene itself—allowed Invitae to exist. But it hasn’t slowed down Myriad much.
Myriad still owns about 90 percent of the market for hereditary cancer tests. It has pivoted by rolling its BRCA tests into a broader hereditary cancer panel and expanding its product line. It was profitable to the tune of $80 million, on $723 million in revenue, in its just-ended fiscal year, even though the sales bump it received in 2013 from Angelina Jolie’s famous disclosure, that she carried the high-risk mutation and elected to have a preventive double mastectomy, had already faded.
Its shares are actually trading about 25 percent higher than the week before the Court’s landmark decision. (When I contacted Myriad for comment, spokesman Ron Rogers referred to slides from a recent company presentation.)
Geneticist David Mittelman, a serial entrepreneur who has launched three genomics startups, says Myriad is still the gold standard. “The sequencing part of the test has been commoditized,” he says, referring to the identification of people’s DNA sequence, “but the interpretation of that sequence isn’t commoditized. While the gap will narrow in the future, Myriad likely maintains the most comprehensive database of variants at this time.”
Myriad has the revenues. 23andMe has the database. Helix has the hardware. Invitae has the cash. With its February IPO and a subsequent public fundraise, it has brought in more than $300 million. Scott predicts the company will ride higher revenues and cost-cutting—even while moving into larger San Francisco headquarters—to become profitable without going back to the markets. The firm posted a net loss of $43 million in the first half of 2015.
Staring any Big Data visionary in the face is also the reality of security and privacy: There’s very little of either. The U.S. has put in place some discrimination protection, the Genetic Information Nondiscrimination Act of 2008, which in theory means one can’t be fired from a job or denied insurance based on one’s genes. But what lies beyond? Anything can be hacked, as recent news headlines have demonstrated. And supposedly “de-identified” genomic data—stripped of personal tags, made anonymous—can be re-linked to its owner.
Even if our genomes aren’t stolen, can we trust the corporate keepers, or will they inappropriately spill the beans on our medical conditions? Remember the story about Target sending pregnancy-related coupons to a teenager’s house?
“These are new waters,” says Marcy Darnovsky of the Center for Genetics and Society in Berkeley, CA, who worries that in the era of consumer genomics, actual diagnosis that leads to better health outcomes will take a backseat to the shiny lure of genetics. “In certain situations, genetic testing is really useful,” says Darnovsky, citing in particular the rare single-gene diseases that can cause mysterious ailments in children and send parents on “diagnostic odysseys.” But in most cases, she says, reading our genes won’t be much help at all.
John Wilbanks of Sage Networks is a bit more optimistic. “Our knowledge is accreting slowly,” he writes. “But it does feel like the slope of the curve at which we accrete causal knowledge about genes is changing, which is a hopeful indicator. It’d sure help if everyone contributed what they knew to the global map of genetic information, because right now we’ve just got pieces of the map in place.”
Perhaps that contribution and accretion is inevitable, but by whom and under what terms is still very much up in the air. Invitae’s Scott acknowledges no system will be 100 percent secure. “That’s another reason you ought to be the one who owns [your own data],” he says. And you’re choosing to take on that risk.”
If people start to ask where they want their information stored and how much risk to take, Scott will be there to make his pitch: Do you want a company that says “‘Give us your data, we’re going to store it and then sell it and makes millions off it,’ then they have a data breach?” he asks. Or do you want “a company that says ‘You own and control your own data, we’ll do the best we can to secure it, but you’ll benefit from sharing it’? We’re not here to just exploit you to make money, we’re here to help connect you with people, and if and when appropriate you can monetize that. That strikes me as fairer system.”