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23andMe Pharma? That’s the Plan, Says the Genetic Test Maker

Xconomy San Francisco — 

[Updated 3/12/15, 4:52pm. See below.] From data gatherer to drug developer. That’s the bold step Silicon Valley genomic data firm 23andMe wants to take, and it announced this morning it has hired Richard Scheller, formerly Genentech’s top researcher, to lead the way.

It’s dramatic news, but it’s also not surprising. Dramatic, because 23andMe recently had to back down from its attempt to be a new, disruptive healthcare player. In late 2013, the FDA forced 23andMe to stop promoting its “spit kits”—genetic profiles drawn from people’s saliva—to the public as a way to gain insight into medical conditions or to assess risk of disease, such as breast cancer. The agency said 23andMe didn’t have enough evidence to back up the test’s accuracy.

23andMe backed away from the health market, but it has continued to sell raw genetic data without medical interpretation, and to sell its kits to track one’s ancestry. [Update: It also received FDA clearance last month to sell a test to consumers to determine whether a person could pass to his or her children the genetic disorder Bloom syndrome.]

Its consumer business will continue, but now it’s diving back into the world of regulated healthcare in a major way. Scheller starts next month as chief science officer and head of therapeutics. He’ll be digging into 23andMe’s nearly 900,000-person database—their genetics augmented with personal information drawn from surveys—for clues to attacking both common and rare diseases, 23andMe said. (Scheller wasn’t immediately available for an interview; we will soon post separately a Q&A with 23andMe president Andy Page.)

The move into therapeutics is not surprising—or, one might say, it’s a logical next step—because there’s a long tradition among biotech companies to first build a technology platform and let bigger companies use it for their drug R&D efforts, then, if all goes well, to use the platform for in-house R&D.

And that’s exactly what 23andMe is doing. Since the FDA slapdown, the company has forged alliances with Genentech, for Parkinson’s disease, and Pfizer, for irritable bowel syndrome, opening its database to their researchers.

To unravel the mysteries of these diseases and others, drug developers want broad, deep access to genetic and other data, and tech companies are starting to make those data available in a big way. Apple this week unveiled a program called ResearchKit that lets iPhone users submit their personal health data and funnel it toward research for a variety of diseases. (They launched the program with apps for heart disease, Parkinson’s, asthma, diabetes, and breast cancer.) Because the data will be coming from iPhone users—a slice of population with digital savvy and disposable income—several researchers have already warned that ResearchKit data could be tainted by selection bias.

Google wants to gather and funnel data, too. Its Google X skunkworks team is building a long-term health study called Baseline, and it has recently teamed up with Biogen Idec to capture and analyze data from multiple sclerosis patients using wearable devices and other methods. (Google X chief Andy Conrad told Bloomberg, however, that “we’re never going to be a drug company—we don’t manufacture drugs.”)

But 23andMe has decided—like countless biotech firms before it—that it can be a drug company.

It helps, of course, to have at the helm a scientist who has overseen ambitious programs and big infrastructure. One of the country’s top neuroscientists, Scheller ran Genentech’s early research group for more than a decade. Before that, he spent two decades at Stanford University, and his combined body of work has led to top prizes and national appointments.