|23andMe CEO Anne Wojcicki|
23andMe has bounced back from a difficult couple of years with a $115 million fundraising round that values the company at $1.1 billion. The cash will enable 23andMe to set up new lab space to fire up its nascent in-house drug discovery program and invest in a next-generation sequencing facility.
Fidelity Management & Research led the Series E round--which doubled the amount 23andMe has raised to date--with support from new backer WuXi Healthcare Ventures and existing investors Google Ventures and Illumina ($ILMN). 23andMe will use some of the cash to get its U.S. testing business back on track and continue to expand globally, perhaps into China with the support of WuXi ($WX). Direct-to-consumer genetic tests are no longer the sole focus of the business, though. 23andMe's ability to part investors from $115 million has as much to do with its drug discovery plan.
The database of genotypic and phenotypic information on 900,000 consenting research participants 23andMe has built through years of testing is the cornerstone of the plan. "Leveraging this platform will allow 23andMe to change drug discovery from one mostly initiated by small biological models, to a discovery process initiated by data scientists working at scale," Google Ventures general partner Blake Byers told Bloomberg. Such faith in the power of data is central to the identity of Google ($GOOG), but, to date, has proven more applicable to tech than drug discovery.
Pfizer ($PFE) and Roche's ($RHHBY) Genentech are among the drug developers that think 23andMe could be one of the companies that makes database-driven discovery work and have struck deals to get a piece of the action. But with former Genentech early-stage R&D chief Richard Scheller at the helm of 23andMe's drug discovery team, some investors think the in-house operation will represent the zenith of the model. "23andMe knows their dataset better than any external group," Byers said. The challenge now is to turn data, knowledge and money into a pipeline of early-stage drugs.