23andMe's $60M deal with Genentech shows an alternative path forward for diagnostics companies

Consumer-oriented genetic testing company 23andMe's up to $60 million partnership to provide Big Pharma company Genentech with access to information on about 3,000 Parkinson's patients illustrates the value of diagnostic companies' genetic information, as opposed to their actual products, which are under increasing regulatory scrutiny.

The most notable example is, well, 23andMe. It is mired in an infamous kerfuffle with the FDA, which has blocked sales of the Personal Genome Service in the U.S. The good news regarding the parallel strategy is crucial to its survival. The deal calls for a $10 million upfront payment to 23andMe as well as up to $50 million in milestones. While the Personal Genome Service test cost $99 in the U.S., this deal would yield a maximum payoff per Parkinson's patient of $20,000.

And the looming FDA regulation of laboratory developed tests promises to shelve other diagnostics products in the future. Upon announcing the proposal, Commissioner Margaret Hamburg gave a fierce critique of those providers not currently under FDA purview. The 23andMe-Genentech alliance could be a harbinger of things to come.

23andMe CEO Anne Wojcicki

"I think that this illustrates how pharma companies are interested in the fact that we have a massive amount of information," 23andMe CEO Anne Wojcicki told Forbes. "We have a very engaged consumer population, and these people want to participate in research. And we can do things much faster and more efficiently than any other research means in the world."

Parkinson's has long been an area of interest to Wojcicki and her husband, Google founder Sergey Brin. The now-separated couple have donated more than $150 million to the Michael J. Fox Foundation for Parkinson's Research and performed testing to them for free (it has 12,000 Parkinson's customers in total), according to the MIT Technology Review.

But the company's data has also been used by researchers to predict asthma as a side effect for Genentech's cancer drug Herceptin, and Silicon Valley startup Reset Therapeutics is using the database in its quest for rare disease drugs, Forbes reports.

Although they agree to do so legally (perhaps unwittingly), how will customers react upon finding out they are essentially paying to participate in the research projects of for-profit companies like Genentech?

"I'm sure some people will feel great, no problem, and some will feel cheated," Hank Greely, director of the Center for Law and the Biosciences at Stanford University, told Forbes. "And the reactions will form a bell curve."

So far 23andMe's Parkinson's patients have shown a willingness to participate in outside research projects, Forbes says. 23andMe can share anonymous, pooled genetic data at will, but Genentech must seek permission from individual patients in the upcoming study because it wants to use anonymized, individual-patient data.

- read the Forbes story
- read MIT Technology Review's take

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