23andMe Brings Down the Price of Consumer Genetic Tests, Builds Up Relations With Big Pharma

5/24/11Follow @xconomy

23andMe is used to lots of eye-rolling from scientists. One geneticist, quoted a year ago in the New York Times, ridiculed the Mountain View, CA-based maker of consumer genetic tests for providing little more than “a really wonderful form of recreation.”

One year later, 23andMe CEO Anne Wojcicki stood in front of a room of genomic scientists at the Institute for Systems Biology in Seattle, and boldly declared that 23andMe is turning into “a research company.” Sure, the business still relies heavily on persuading consumers to buy a test to look at certain regions of their DNA, partly out of curiosity and potential health benefits. But now 23andMe is building up a second revenue stream, using its database of 75,000 customers and counting, to help drug companies and scientists engage with the public, with an eye toward advancing research.

“We got a lot of criticism early, from people who said, ‘You launched too early, there wasn’t tons of data behind it.’ It was probably true,” Wojcicki said in her May 15 talk to scientists at the Seattle conference. Things are changing now, she says: “We still give people access to their genetic information. But a lot more than that, we are really a research company.”

The big change at 23andMe, to enable this kind of shift over the past year, has been about price. The company, founded in 2006, introduced its first product at $999. Benefitting from the breakneck pace of faster/cheaper DNA sequencing the past couple years, 23andMe has progressively brought its price all the way down to $99, plus a $5 monthly fee. The test looks at regions of a person’s genome to determine things like ancestry, and genetic mutations that are thought to slightly raise or lower the risk of certain diseases.

Anne Wojcicki

Wojcicki’s Seattle talk didn’t include any financial data on how well privately held 23andMe is doing, and she wouldn’t provide any forecasts when I asked a couple follow-up questions. But she said the company has seen an accelerating demand from consumers since last Thanksgiving, when it lowered the price of its test from $199 to $99. The lower price has encouraged more consumers to give the test a try, but equally important for 23andMe is what happens after the customer pays for the first test.

The key to its research plan, Wojcicki says, is in maintaining a relationship with its consumers through use of targeted surveys. So far, the company has crafted 50 different surveys, and found ways to make them fun for consumers by sprinkling in random questions so it’s not just “one big topic” that bores people, Wojcicki said. About 50,000 people have taken at least one of the 23andMe surveys, and the average person who does a survey takes 10 of them, Wojcicki said.

It wasn’t totally clear to me from Wojcicki’s talk how this can help drug development, other than simply being able to provide access to patients. But she gave one example in which 23andMe surveyed its customer base three days before an important meeting with a pharmaceutical company. 23andMe asked its customers about their experience with dry eye, got “thousands” of responses, and took the data into the meeting, Wojcicki said.

“We’ve taken on partnerships with pharma companies, where they may want to put out a survey, and we’ll do that for them,” Wojcicki said in a short interview last week, following her talk. “We never return individual-level data. It’s always aggregated. We can ask questions like ‘Is there a genetic association in certain reactions to sunscreen?’ Things like that. We’ve found that consumers are really interested in how they can participate in research.”

Wojcicki didn’t name names of the pharma companies involved, but the company’s growing ability to survey distinct groups of patients—like, say, those with Parkinson’s disease—could be the sort of thing that helped attract a couple more drug companies into its investor syndicate last year. The company’s investors include Google (where Wojcicki’s husband, Sergey Brin, is the co-founder), Genentech, New Enterprise Associates, Johnson & Johnson, MPM Capital, and Roche.

Lee Hood, the high-speed gene sequencing pioneer who leads the Institute for Systems Biology in Seattle, said he was particularly interested in how 23andMe has … Next Page »

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