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This start-up is betting your genes will yield the next wonder drug

Silicon Valley company 23andMe is a pioneer in personal genetic testing. The decade-old, privately held company based in Mountain View, California and backed by Alphabet's Google Ventures, made a name for itself through direct-to-consumer "spit" tests, kits sent directly to customers at home who ship back a sample of their saliva for genetic analysis to determine whether they are carriers for a range of diseases.

For $199, customers curious about their ancestry, physical traits, personal wellness, and carrier status for certain diseases have access to more than 60 genetic reports offered by 23andMe through genotyping, which is different from full-on DNA sequencing.

"It's like going through the library but opening up each book to certain pages and looking at certain lines," said Erynn Gordon, 23andMe's director of clinical development. "We're looking at specific spots in the genome that we know are more frequently changed in carriers."

The 23andMe spit kit, packaged for the mass market for genome sequencing
Source: 23andMe
The 23andMe spit kit, packaged for the mass market for genome sequencing

But how useful or necessary these sorts of genetics are for consumers is still an open question. A recent poll commissioned by STAT News and the Harvard T.H. Chan School of Public Health found that only 50 percent of Americans know about genetic testing, and only 6 percent of adults surveyed said they had undergone genetic testing themselves. Of that number, 81 percent said the testing was "helpful" — for determining their or their children's future health problems, or for digging into their ancestry — and 10 percent said it wasn't.

"Direct-to-consumer genetic testing is a different realm. It's relatively big and still relatively controversial over whether or not that should be done in the medical system," said Lawrence Brody, director of the Division of Genomics and Society at the National Human Genome Research Institute.

Among companies that offer personal genetics testing, there is a split in belief as to how those tests should be offered to people. According to 23andMe, which has raised a total of $241 million in venture capital, consumers should have direct access to personal genetic information as it relates to whether they are carriers for certain diseases like cystic fibrosis or sickle cell anemia.

"If we're going to have this genomics revolution, it's going to be driven by the consumer," said 23andMe CEO and cofounder Anne Wojcicki at Future of Genomic Medicine IX in March, which was No. 6 on the 2016 CNBC Disruptor 50 list. Wojcicki is the former wife of Google co-founder Sergey Brin.

The Food and Drug Administration disagreed with 23andMe on how far it could go in putting the consumer first in the genetic information boom. In 2013, the FDA ordered 23andMe to stop marketing the health data of their genetic analysis kits, however, the product stayed on the market offering ancestry data that enabled customers to identify DNA relatives and explore their ancestry. At the time, the federal agency said 23andMe was selling a medical device directly to consumers without marketing authorization, and therefore needed to go through the FDA approval process. The FDA won some considerable concessions from the Google-backed company. In 2015, 23andMe received FDA approval for a scaled-back suite of tests.

For this reason other companies such as Color Genomics and Counsyl that also make genetics tests for consumers involve people's primary care physicians from the start. Counsyl, for example, says that 85 percent of its carrier-screening tests are performed by drawing blood at the doctor's office. But even the saliva samples that are sent to Counsyl by customers for analysis begin with a doctor conversation.

"Direct-to-consumer testing is a model for addressing certain issues, but we think that our model is stronger in the sense that it's partnering with health care providers who can have a direct relationship with the patient," said Eric Evans, Counsyl co-founder and chief science officer.

Anne Wojcicki, co-founder of 23andme.
Getty Images
Anne Wojcicki, co-founder of 23andme.

Whether physicians find any sort of clinical utility in a patient getting information about their own genome is questionable. A survey of physicians conducted for STAT News found that 74 percent of doctors think analyzing a patient's family medical history will offer them and their patients better clues than genome sequencing in gauging the likelihood of a heritable cancer.

And whether customers fully understand the results of their own genetic tests — and what to do with that information — is another question entirely. It's important to note that carrier-screening tests are not diagnostic tests. They're more like risk assessments: the probability that a woman carrying a BRCA gene mutation will likely develop breast cancer.

"I think we learned that patients really want their physicians involved in these kind of tests and the decisions that ensue thereafter," said Shivani Nazareth, director of women's health at Counsyl and a board-certified genetic counselor. "If you want genetics to be accessible and consumer-friendly, you can't just give them the data."

"If we're going to have this genomics revolution, it's going to be driven by the consumer." -Anne Wojcicki, 23and Me CEO and co-founder

This is where 23andMe disagrees. The company says its genetics reports it prepares for customers are thorough and clear. When it received the go-ahead from the FDA, 23andMe had to show that 90 percent of its customers were able to comprehend their own genetics reports. Even so, 23andMe has its own seven-member medical team to answer physicians' questions, and it's currently producing webinars to educate physicians about the questions their patients might bring to them after completing a 23andMe test.

But Gordon also points out there are reasons for people to have genetic tests done that are totally independent of their healthcare providers. Some people might want ethnic or ancestral information, and others "are interested in pursuing more than what their doctor is willing or able to offer."

What is likely is that more and more people will be having their personal genomes examined. So far, about 600,000 people working through 6,000 health care providers have taken a Counsyl test. And 1.2 million customers have received genetic information from a 23andMe test. Of those, 80 percent have even given 23andMe permission to use their genetic data for the company's new internal therapeutics team.

"We are trying to understand what predisposes someone to developing a certain kind of disease," said Joyce Tung, vice president of research at 23andMe.

The splicing of big tech and big pharma

The internal therapeutics team will use 23andMe's genetic database to try to discover new drugs — a critical piece in increasing the value of usefulness of direct-to-consumer genetics testing.

Over the last year it has assembled an internal therapeutics team that will use 23andMe's database containing the genetic data of more than 850,000 customers to try to discover new drugs. Separately, big pharmaceutical companies like Genentech and Pfizer are paying 23andMe for access to specific genetic data related to particular diseases in order to possibly create drugs for treatment.

"The drug discovery business is separate from collaborations with pharmaceutical companies. Their main goal is to make drugs to meet disease needs. We are trying to understand what predisposes someone to developing a certain kind of disease," said Joyce Tung, vice president of research at 23andMe.

This is the sort of information that 23andMe assembles in personalized reports for customers approximately two months after someone has submitted their saliva for analysis. It's also the same genetics information used by 23andMe's year-old therapeutics team, headed by Richard Scheller, chief science officer. Scheller was previously head of research and early development at the Roche Group, Genentech's parent company.

The initiative holds a lot of promise, although Tung cautions it's still the early days.

"Sometimes if you ask Richard he says, 'Check back with me in five to 10 years,'" she said. "Drug discovery is a really long process."

Andrew Zaleski, special to CNBC.com