23andMe: Current personal genomics market leader turned market loser?

On Oct 26, 2016 23andMe announced it will not invest in one of the breakthrough advancements of genomics– next-generation sequencing or NGS. This decision seems to be a strategic play  to brand the company as personal genomics product with mass social media marketing appeal rather than a precision medicine company invested in the discovery of solutions for incurable diseases. This decision is a critical misstep and likely to shuttle 23andMe just another lifestyle health fad that is likely to fade into the back of my closet along with my 1990s tomogotchis.  I predict 23andMe to be a market loser.

Personal genomics landscape & 23andMe

Over the past decade, genome sequencing and data storage costs have plummeted.  At a price point as high as $1M to sequence a genome less than 10 years ago, sequencing companies like Ilumina have exponentially decreased the cost of sequencing.

Since then, entrants like 23andMe can provide a $99-$199 test in exchange for information about ancestry and potential disease risks. In 2013 the company hit a speedbump when it faced regulatory challenges from the FDA, reprimanding the company for selling unsolicited medical advice back.  After a thoughtful pivot, 23andMe was back on track – boasting over 1M customers in it’s database and raising over $115M in 2015.  23andMe now provides more basic genetic services to their customers including carrier status, wellness, genetic ancestry and health traits.

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23andMe technology

23andMe focuses on sample collection and insights as a personalized genetics service direct to consumers. In order to more cheaply sequence the gene, 23andMe relies solely on SNP or single nucleotide polymorphism sequencing. But as Siddhartha Mukherjee noted in his book in The Gene: An Intimate History – complexities and nuances of genomic interpretation are far and varied.  Very few diseases are one-gene mutation diseases and most involve a complicate cascade of not only genome mutations but genome modifiers on top of those genes.  This is the type of mutations and modifiers that aren’t captured from basic SNP sequencing and ultimately the data 23andMe collects.

Value Creation Opportunity Missed

If 23andMe is to find value in providing patients with disease risk and treatment information, an incomplete sequence of a customer’s gene (through SNPs) is a missed opportunity. Numerous other competitors are taking a bite into NGS technology. Veritas Genetics provides whole genome sequencing along with testing for prenatal and BRCA (breast cancer mutation).  Color Genomics provides specific hereditary cancer risk genetic testing.

The Rock Report on Genomics defines the value creation of genomic data in two axes: clinical and personal. 23andMe’s move to invest in personal utility is short sighted as a sub-standard technology will not only eliminate the clinical utility of the product but impact personal utility for customers as well. Somehow 23andMe is banking on the idea that customers will still have the curiosity to explore their genetic data and create a more superficial social experience around genome rather than look at it for it’s real value:  clinical implications.

Beyond the direct to consumer market, 23andMe’s value creation for its partners, including research and drug discovery to pharma and biotech is also undermined when the integrity of the genome is not the gold standard.

Value Capture Challenges

Value capture is also difficult as most consumer don’t trust technology companies and are more comfortable with genomic data or health data in the hands of their insurer, biotech or government before technology (e.g. Consumers have 14% willingness to share data with technology companies, according to the Rock Report). Even then, the network effects of genomic adoption through 23andMe is limited when the data sequencing technology (SNP) done is incomplete. If anything, there needs be a greater platform to understand applications of genome sequencing and its interpretation. The company Helix is taking a much more viable value capture model by not only using whole genome sequencing, but creating a platform to enable companies to create new genomic applications.  Current partnerships range from Mt Sinai School of Medicine to National Geographic.

Implications & the Future

With the announcement that 23andMe is not investing in nextgen sequencing has also followed with the key employee exits including many key members of the R&D and clinical team including chief medical officer Jill Hagenkord. The company is pivoting to more of a marketing machine rather than a scientifically grounded company. Would instead the model be for collecting and studying genetic information be in the hands of industry? Non-profits?  or government entities?  Pharma / biotech? Where do consumer put their trust to handle and keep their genomic data? And who has the capabilities to interpret and commercialize it? Who knows who the next champion will be – but with this company – it will likely end up with 23 genes and no me.

Sources:

http://www.nytimes.com/roomfordebate/2015/03/02/23andme-and-the-promise-of-anonymous-genetic-testing-10/23andmes-dangerous-business-model-17

https://www.buzzfeed.com/stephaniemlee/23andme-anne-wojcicki-next-generation-sequencing?utm_term=.lum5nzg5kd#.epdXwk6Xyn

http://www.mobihealthnews.com/content/depth-consumer-genomics-and-road-legitimacy

https://rockhealth.com/reports/the-genomics-inflection-point-implications-for-healthcare/

http://medcitynews.com/2016/12/new-kid-on-consumer-genomics-block/

https://www.law360.com/articles/772679/fda-challenges-direct-to-consumer-genetic-tests