23andMe Shifts Focus To Genetics-Based Drug Development

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Google-backed genome testing startup 23andMe announces that it has hired renowned scientist and pharmaceutical executive Richard Scheller to fill the company’s newly created position of chief science officer. He will lead the company’s efforts to begin using genetic data for drug discovery, a new monetization strategy for 23andMe. Scheller spent 14 years leading drug research for Genetech and during his career has been awarded some of the fields most prestigious awards, including the Lasker Price, which is often called America’s Nobel Prize.  Scheller explains, “I wanted a new challenge, I wanted a new area of science to learn more about, I wanted to see if we could really take advantage of the full potential of the human genome and thought that this is the best place to do that.”

The new monetization strategy is a significant pivot for 23andMe, which launched with the goal of building a business-to-consumer model company that generated revenue by selling genetic testing kits to the public, processing the samples, and delivering personalized reports. Forbes reports that even if 23andMe were able to double its sales, this strategy would still only bring in $80 million. Compounding its monetization strategy is the fact that the company has struggled to gain FDA clearance to sell its personal genetics kits, which has limited its consumer appeal. Still, prior to running into problems with the FDA, the company’s testing kits sold well and it now presides over the world’s largest genetic database, with over of 800,000 sequenced personal genomes and 250 million individual data points. While not all that data will be legally available to researchers, 23andMe reports that 80 percent of its customers have consented to having their genetic data used for medical research, and so the available dataset is still significant.

For the past year, 23andMe has been working to monetize that data by finding support roles for itself in the pharmaceutical industry. In early 2014, the company teamed up with Genetech on a genetics-based study of Parkinson’s disease, publishing findings in July. Next, in January 2015, Genetech signed a $60 million deal with 23andMe to provide genetic data and research support for further studies into Parkinson’s disease. Now, having new insights into the drug research process and with Genetech’s lead researcher on board, 23andMe will go it alone, a monetization strategy that could be worth billions compared to the millions it’s brining in from personal genetic tests and genetics research support roles.


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