23andMe Adds On: More About The Gene-Test Maker’s Drug R&D Ambitions

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it from doing in late 2013, when it ordered 23andMe to stop promoting its Personal Genome Service to consumers as a way to gain insight into medical conditions or to assess risk of disease. To do that, the kit would need to be approved as a medical device or diagnostic, with a certain body of evidence behind it. Page would only say there has been “progress” in discussions with the agency.

(The company received the FDA’s marketing clearance last month for a genetic test to determine whether a person is a carrier of the mutation that would put his or her children at risk of Bloom syndrome.)

Apple’s ResearchKit has also raised questions about selection bias: How to study health in populations that might not be representative of broader society. Is that a concern as 23andMe gets into drug R&D? After all, a majority of those in the database are there because they paid $99 to learn their genomic profiles. (23andMe has also distributed kits for free to people who agree to participate in research projects, such as those focusing on Parkinson’s, lupus, and African Americans.)

That cost—not to mention the curiosity spurring someone to pay for the service—would seem to skew the database toward those who have disposable income, a certain level of education, and are inclined to trust science.

It’s true, Page said, that “people first have to want to engage in their own genetics. They endorse our mission to access, understand, and benefit from the human genome. Naturally there will be populations that are underrepresented, we’re well aware of that, but there are lots of ways we try to make it as representative as possible.”

The free kits are one method. Another is replication studies, triangulating results from the 23andMe database with results from other databases.

The test kit business is doing fine, according to Page, with nearly 300,000 sold in 2014. (23andMe is privately held, so there’s no way to independently check financial claims.) So why get into the drug business? It can bring huge profit margins, but it also requires massive, long-term investment before reaching profits.

I asked if 23andMe’s low-margin consumer business needs a high-margin counterpart. Page said drug R&D “seemed to be a natural outgrowth of where we are” now that it has entered more than 20 collaborations with academic groups and pharma companies—Genentech, Pfizer (for irritable bowel disease), and Reset Therapeutics of San Francisco are the only three industry partners disclosed.

So what happens to those partnerships now that 23andMe is also mining the database for drug targets? Are the therapeutic areas covered by those partnerships now off-limits?

Page didn’t exactly say no. He stressed that the company doesn’t yet know what it will pursue. Then he noted that the exclusive work its partners do in the database is limited, and most of the work flows back into 23andMe. There will be a firewall: Scheller’s research group won’t know what 23andMe’s partners are doing, and vice versa.

Scheller: 23andMe and him.

Scheller: 23andMe and him.

It could be that Scheller’s team will feed new targets to partners, just as small biotechs with promising technology platforms do all the time. Or Scheller might decide to do work around a target and bring a drug into the clinic. The big budget decisions will be made by 23andMe’s executive team, Page said, not just by Scheller.

23andMe will raise capital this spring to fund Scheller’s group, Page said. Most of the work in 2015 will be bioinformatics and data analysis; “I’d be surprised if there are more than 15 people by the end of the year,” Page said, but the group will then “scale appropriately,” perhaps doubling in size in 2016.

And as 23andMe moves into new headquarters in Mountain View, CA—near the train station for those coming down from San Francisco, Page pointed out—Scheller will also start looking for lab space “likely in the Bay Area.”
“I’d be surprised if we didn’t have a lab in the next 18 months or sooner,” Page said.

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