23andMe’s New Formula: Patient Consent = $
Facebook generates about $8 a year in revenue from each of its users. But what if you offered a company not just your photos and updates, but your entire genome?
Then you could be worth as much as $20,000.
That’s my rough calculation for what Genentech could pay direct-to-consumer gene testing company 23andMe for the chance to trawl the DNA of each of several thousand of its customers for genetic clues to Parkinson’s disease.
The deal between the two companies, announced today, provides some fascinating insights into the evolving DNA business and the commercial prospects for 23andMe, a high-flying company that’s had some problems in the U.S. with regulators. According to detailed coverage over at Forbes, Genentech will pay as much as $60 million for access to 3,000 Parkinson’s patients in 23andMe’s database.
The backstory is that 23andMe pioneered direct-to-consumer genetic tests starting in 2006. It asked consumers to spit in a tube and send it in, and sent back a detailed summary of their risks for common diseases like macular degeneration. But then in 2013 the U.S. Food & Drug Administration banned the test out of concern that the information wasn’t accurate.
That put a big crimp in 23andMe’s business, but it didn’t end it. As Forbes points out, the real business here is mining this data:
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.
The company hasn’t stopped gathering DNA data either. It still sells its Personal Genome Service health kits in countries like Canada. In the U.S. it continues to offer a more limited genealogy test to people who want to learn what their DNA says about their ancestry and relatives.
The result is that 23andMe may have the largest DNA database anywhere that’s open for medical studies. Of its 820,000 customers, the company says, about 600,000 have also agreed to donate their DNA data for research purposes. According to Forbes:
“I think that this illustrates how pharma companies are interested in the fact that we have a massive amount of information,” says Anne Wojcicki, 23andMe’s chief executive and co-founder. “We have a very engaged consumer population, and these people want to participate in research.”
It’s also a reminder that 23andMe’s real business isn’t selling $99 tests, but selling access to data that it has managed to crowdsource as cleverly as Facebook has gathered other personal details. To some observers, that’s pretty worrisome. In 2013, journalist Charles Seife, writing in Scientific American, called 23andMe intentions “terrifying.”
As the FDA frets about the accuracy of 23andMe’s tests, it is missing their true function, and consequently the agency has no clue about the real dangers they pose. The Personal Genome Service isn’t primarily intended to be a medical device. It is a mechanism meant to be a front end for a massive information-gathering operation against an unwitting public.
Seife’s worry is that the consents customers agree to when they donate their DNA could turn out to be meaningless. Once you are hooked, companies like Google and Facebook often change their privacy policies to expose more and more of your data. Why should DNA be any different?
So far, 23andMe seems more sincere than sinister. Parkinson’s disease is personally important to Wojcicki and her husband, Google founder Sergey Brin: his mother was diagnosed with the disease, which runs in families. Todd Sherer, the head of the Michael J. Fox Foundation for Parksinon’s Research, told me that the couple (now separated) has been the organization’s biggest donor, giving more than $150 million.
But Seife is right about the economics of DNA. It’s collecting free-and-clear data and amassing willing users that counts. According to the Fox Foundation, 23andMe actually gave its testing service away to Parkinson’s patients. That helped it assemble enough of them to create a useful resource it could sell to Genentech to start mining.
As part of its research, Genentech will gain access to the stored spit samples of 3,000 Parkinson’s patients in order to access their full genomic information. That is something that is allowed by the agreements customers signed. But to make sense of the DNA data, Genenetech will also need a lot of extra information about people’s health situations and medical records.
In this case, Forbes reports, the company will be reaching out to them to craft new agreements to access that, too.
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