Why the State of Personal Genomics is Not as Dire as You Think
Another Tale of the Struggle of Personal Genomics, Full of Sound and Fury, Signifying…What? After a while, the personal genomics news cycle can begin to feel predictable. Recently, and not for the first time, there have been rumblings that personal genomics pioneer 23andMe is struggling. The most recent “news” appears to be a December SEC filing disclosing a $4 million payment to an unidentified 23andMe executive. Gene Expression and BNET have taken the opportunity to recycle some of the company’s previous financial struggles, including co-founder Linda Avey’s departure and a well-publicized round of fall layoffs, and to speculate broadly about the state of morale at the company in addition to the well-being of the personal genomics industry more generally.
Avey herself, perhaps unintentionally, has fueled speculation that something may be afoot with a pair of recent posts (the original post has now been combined with an update) on her own blog. Avey has launched a preemptive strike against what appears to be an upcoming New York Times piece that will “question[] the viability” of the personal genomics industry and “hits too close to home” for Avey not to comment. (Or, as GenomeWeb headlines it, Linda Avey Versus the New York Times.)
Perhaps all of the smoke signifies a smoldering fire at 23andMe. Then again, it may represent nothing more than periodic reverberations from the social media echo chamber, where common memes are repackaged and recycled at regular intervals.
As Daniel MacArthur points out at Genetic Future:
…right now there’s a very easy ‘failed industry’ story to write, between deCODE’s demise, 23andMe’s problems, Navigenics’ bungled entry into the Australian insurance market, and so on. And to be honest, I’m finding it pretty hard to blame reporters for writing that story.
MacArthur is absolutely correct that a story about the struggling personal genomics industry is one that seems to quite nearly write itself. But as Avey points out, treating the struggles of any one company as indicative of problems elsewhere, or with the industry as a whole, is a bit “like comparing apples to appaloosas.”
Examining the Evidence. As described above, most of 23andMe’s recent “struggles” are not new developments. In fact, 23andMe has recently received a jolt of positive publicity thanks to the just-concluded PBS series Faces of America. Hosted by Harvard Professor Henry Louis Gates, and featuring celebrities ranging from Stephen Colbert to Mario Batali to Yo-Yo Ma, the final episode focused on genetic genealogy, with 23andMe providing the genetic testing that allowed Gates to probe the genetic heritage of the celebrities and their families, which in turn produced some surprising results. 23andMe is celebrating its recent exposure (Faces of America was also featured on Oprah this week, which I’m told draws a larger viewing audience than PBS or, for that matter, the GLR) by offering $200 off their Ancestry Edition and Complete Edition (which includes both the Ancestry Edition and Health Edition) products.
As for Navigenics, while it’s collaboration with an Australian life insurance company appears to have been a bit of a public relations misstep, I see no obvious connection between that development and the company’s financial affairs. On the contrary, last month Navigenics completed an $18 million Series C financing round in which it added multinational consumer goods giant Proctor & Gamble to its stable of existing venture capital investors.
Then there is deCODE genetics’ well-publicized bankruptcy (and subsequent emergence from bankruptcy), often cited as the strongest piece of evidence to date that personal genomics as an industry simply does not measure up. After all, what could be more damning than the provider of one of the three most prominent consumer genetic testing services filing for bankruptcy protection? Unfortunately, it’s impossible to say what role the success (or lack thereof) of the deCODEme service played in the bankruptcy of deCODE genetics. As I wrote at the time of deCODE’s bankruptcy:
Any bankruptcy filing is a final admission that the current business model is broken, although it’s often very difficult to tell from the outside just which pieces of the business model aren’t working. The deCODEme portion of the business might be operating satisfactorily.
There’s no disputing the financial struggles of deCODE genetics, and there have been hints – including in a recent Newsweek article in which deCODE’s new CEO, Earl “Duke” Collier, informs former CEO Kari Stefansson that if he’s interested in the deCODEme service he had “better buy it now” – that deCODEme may be on its last legs. But without additional information it seems to me unreasonable to conclude that deCODE genetics – a publicly traded company which burned through $676 million over more than a decade, and whose primary focus, unlike 23andMe or Navigenics, was never DTC genetic testing – was undone by the specific failures of deCODEme and the broader inability of the market for personal genomics to live up to its expected potential. As Avey points out, it was never realistic to expect deCODEme to rescue the much larger and long-troubled deCODE genetics.
It is certainly possible that in the not-too-distant future one or more of the existing personal genomics service providers – including 23andMe, Navigenics and/or deCODEme, which, it should be mentioned, do not represent the complete set of personal genomics companies - will disappear from the scene. But after taking a closer look, it’s not at all clear that the narrative of personal genomics as an industry struggling to survive is strongly supported by the publicly available evidence.
An Optical (Dis)Illusion. Why is it, then, that there is such a seeming rush to declare the death – or at least the decline – of the personal genomics industry? MacArthur points out that personal genomics is wending its way through the Garner hype cycle (chart below) and that “right now we’re firmly wedged in the trough of disillusionment, following a peak of inflated expectations for which personal genomics companies themselves must take the bulk of the blame.”
MacArthur’s assessment is spot on, with one caveat. My strong suspicion is that the Trough of Disillusionment is inhabited largely by those of us – whether academics or professionals, entrepreneurs or investors, early adopters or avid personal genomics observers – who have been watching and contributing to the field of personal genomics for several years (many since its inception in 2007 or thereabouts), and who may have grown weary of anticipating its full-fledged arrival.
But for most of society personal genomics is not yet a mainstream concept. Try stopping ten strangers at a shopping mall and asking them if they have heard of 23andMe. Or Linda Avey. Or, for that matter, George Church or Craig Venter or James Watson. These may be household names in your household, but that is not true of a majority of households. It is only very recently, with the introduction of bona fide celebrities to personal genomics – Stephen Colbert, Eva Longoria and even Oprah discussing genetic ancestry with Skip Gates, or Desmond Tutu and Glenn Close joining the ranks of individuals who have had their whole genomes sequenced and publicly announced – that personal genomics will even begin to make a mark on the broader social consciousness.
Time to Grow Up. Of course, personal genomics aspires to more than a celebrity plaything, and no matter how you view the personal genomics industry today it is easy to see that considerable work remains before a meaningful number of companies begin delivering transformative personalized genomic information and services to large numbers of individuals.
First, the underlying technology must still become less expensive and the underlying science more instructive. Rapid progress in both areas is a promising sign. More importantly, the nascent industry of personal genomics must grow up. This a process that is already underway, with significant segmentation driving the creation of increasingly distinct sub-categories within the field of personal genomics, an industry-wide trend that is not dissimilar from that which is occurring in the genomic sequencing field. (The segmentation of personal genomics will be one topic of conversation at the upcoming GET Conference, and I plan to touch on this in more detail in an upcoming post.)
Over time, the diversification of personal genomics will be a good thing, aiding in the identification of viable business models and separating legitimate businesses from snake-oil salesmen. But it will require time, investment (not all of which will be recouped) and quite probably additional legislative or policy interventions, particularly in the areas of intellectual property and regulatory review that apply to personal genomic services. None of this should come as a surprise, even if the pace of progress is at times slower (to the point of disillusionment) than many of us would prefer.
Looking ahead, I am confident that Avey is correct when she writes that personal genomics will become “such an every day concept that future generations will be amused that we even questioned its viability.” And judging from the abundance of activity and advancement in the field as a whole, as well as the dozens of entrepreneurs and investors that have contacted me in recent months to discuss their plans for starting or growing personal genomics businesses, I think it will hardly take a generation before personal genomics moves mainstream.
(Images courtesy of the Wikimedia Commons: Don’t Panic, Garner)
Dan- add to your list of supportive arguments the current viability of at least several dozen (perhaps several hundred?) of additional PG companies that so far have been operating in stealth mode, including the likes of Counsyl and Pathway Genomics which are just beginning to get media attention. For every one that dies there will be three others to take its place. Great post!
Bob
Dan,
Counsyl is not exactly fully DTC. It partners with physicians and does a great job. I am certain the other SMART DTC companies will do the same.
-Steve
Great post, Dan!
Four more substantial reasons why the future of Personal Genomics is bright:
1) Personal Genomics is a sine qua non of Personalized Health-Care. As health care system costs (in the US at the least) become unsustainable, P4 (Personalized, Predictive, Participatory Prevention, a coinage of LeRoy Hood) is already a disruption towards Personalized Health-Care, no matter what anybody says.
2) Those whose say actually matters a lot (chiefly, Francis Collins, M.D./Ph.D. Director of NIH) in his book totally endorses both the science and practice (even at his personal level) genome-based-prevention, with the book “top praise” as an official endorsement coming from Barack Obama.
3) DTC business models are currently limited both to microarray SNP-interrogation technology and operating in an “open loop” manner. Both are to change; migration from SNP-s to affordable full DNA analysis is under way, and the “open loop” where the consumer is not yet empowered to use their interoperable health- and genomic data, overridden by their personal preferences in their daily consumer activities, becomes a closed (“repeat customer”) business model. HolGenTech, Inc. changes this business model both via barcode-shopping by your genome, and via genome-based-web-recommendation of products and services, see YouTube http://www.youtube.com/watch?v=mSRMCDCVg6Y
4) DTC has been mostly US-based (except for the initial DeCodeMe in Reykjavik, now reorganized after bankruptcy of Iceland). Just days ago, however, an ambitious Genome Testing Institute in Korea (see postings in “News and Blog” in HolGenTech.com) opened shop with SNP-based DTC, with the declared ambition not only to migrate ASAP to full DNA-based genome analysis, but becoming the world’s dominant business by extending beyond Korea to China and India. Personal Genomics is a global business – with the Beijing Genome Institute, Japan’s RIKEN (with 99% homogeneous Japanese population and extremely high incidence of Alzheimer’s), Hong-Kong and Singapore’s Genome Institute all sure to join the fray.
Pellinisz_at_junkDNA.com
[Full disclosure: Founder of Silicon Valley based HolGenTech, Inc.]
Steve:
You are correct about Counsyl, which is one of the reasons why the post uses the “personal genomics” label, and not “Direct-to-Consumer (DTC) genomics/genetics.” DTC is part of, but not coterminous with, personal genomics. Companies such as Counsyl, Navigenics, DNA Direct and others are increasingly driving that point home, as well as helping to demonstrate the breadth of the personal genomics field.
Andras:
While I don’t think DTC is limited to SNPs (see: Knome and Illumina, both of whom offer DTC components, albeit for the wealthiest of consumers) I think most agree that it is only a matter of time before SNPs are replaced wholesale with complete sequencing. The real question, then, is how and what services will be provided to consumers (and patients) that come in the door already in possession of a complete genome sequence. It may be that the “repeat customer” model you describe takes hold, but I actually envision more of a marketplace approach, based around a single interrogable dataset (the genome, and related inputs – health history, consumer preferences, etc.) with multiple entities striving to develop the most useful and/or interesting personal genomics services and/or applications.
I also think your final point is an excellent one. To the extent that personal genomics is largely focused on the US market today, there’s little reason to expect that situation to persist over the long- or even medium-term. BGI’s massive Illumina purchase is, I would expect, just the tip of that iceberg.
Dan,
I am delighted that you resonate so well to the “Globalization by Korea [Asia]“, in part because this breaking news went unintentionally (or intentionally?) relatively undetected in the heated debates in the USA. Points we are making in HolGenTech.com (news and blog) that Asia is much less slowed down by FDA-type regulatory issues, monopolistic for-profit-business of health care, collective societies are less concerned about individual privacy when it comes to efficacy, and in most of them health-care is centralized government-service (rather than for profit “sick-care” as Francis Collins puts it in his Personalized Medicine book).
Regarding your wondering about the future business models, Asia also provides yet another interesting and highly significant aspect. “Mobile is Huge in Asia”. Thus, HolGenTech already received much interest from Asia, precisely because “tele-medicine” (not to use the strange term of “tele-health-care…”) is the most aggressively growing sector within Personalized Health Care (which is, according to PricewaterhouseCoopers, is the only 11% growth-segment in the USA, while the entire Chinese economy is growing with that rate). With the enormous distances in China and India (and the relative scarcity of hospitals compared e.g. to the US), “tele-P4″ is likely to play a faster growing and more prominent role even compared to our medicine – with the US already much slower in digitalization of health-data than comparables.
As the Google phone already has 16 Mb memory (usual desktops come with 2 Mb…), one sees no reason why individuals should divulge e.g. their “personal preferences” to a cloud of any color, government server, etc., rather than keeping them encrypted within the awesome computer they carry (just because it doubles as a phone). Ultimately, it is also a question where the affordable full DNA sequences will reside. I daresay, that since they forever resided in our privates :-) one may even want to “keep it that way” – in electronic storage tucked under our skin; for fast and private syncing under individual control – just as with natural DNA.
I intentionally strayed into the future further than the usual “next quarter”. Those who will read Francis Collins’ fantastic book will find themselves in the same mindset “We are not in Kansas any more”…
Pellionisz_at_junkDNA.com
Dan: I love it! Co-Terminous.
What do most people think when you say Personal Genomics. Heck even the DTC companies said \Genomics finally gets personal\…….
DTC Genomics is moving towards Consumer and Provider directed genomics. Which is just about the only thing that will keep this industry afloat for the next 10 years till we can figure out what most of this stuff does……
On a lighter note, did you see the FDA black box for Plavix 2C19 testing? This is where the field should be, NOT Ear wax……..
If it is medicine, say so.
-Steve
Andras,
I completely agree. You are spot on. Asia is the market here and will be for the next 30 years. Imagine the help you could give people who have no hospital!
Congratulations on your launch. Good Luck.
I was just talking to a friend of mine yesterday who got a screening from Pathway Genomics at a pretty good discount, and they said, “It’s interesting, but the big downside is that you don’t get access to the raw data like you do with 23and me.”
I wholeheartedly agree with his assessment.
We are converging towards the HolGenTech business model – I would say with some obvious bias.
Pathway Genomics provides actual advice – but does not reveal the raw SNP file, whereas 23andMe makes the raw file available (with hardly anyone downloading incomprehensible bunch of numbers), while puts the focus on the social aspects and tends to stay shy on specific advice. HolGenTech not only combines the advantages of both approaches, but provides Personal Genome Assistant (PDA serving as PGA) and Personal Genome Computer (PGA, any computer to start with, and migrating to HPC as the industry migrates both to analysis of full DNA analysis of COMPLEX structural variants, like fractal defects).
As for the Plavix 2C19 testing, HolGenTech technology is eminently capable to moving to the pharmacogenomics market, but since it is a minefield of FDA regulation and medical establishment, will wait until they will be required, for economical reasons. The financial driver will NOT be Big Pharma (they are happy to sell any high-priced drug, effective or not…) – but when the pices are right it will be the Big Insurance that will require proof that the medication they reimburse is actually effective (for their own good).
From HolGenTech’ viewpoint, we’ll just do very well on the unregulated “supplement market” and never pretend (use a disclaimer) that we rate one thing higher over another. We’ll just make “genome based recommendations” – just like the “past activity based recommendations” e.g. Google “sponsored ads” don’t pretend to pontificate what is better than something else. It is implied in e.g. Google “sponsored ads” that those products and services that can afford to pay for sponsored ads are economically doing better than their competitors (who can’t afford “sponsored ads” – thus may not be that good).
“Survival of products that fits people’s genome better” – but personalized. But than again, we look at your genome, not your identity; providing “Personalization without getting personal”.
Pellionisz_at_JunkDNA.com, Founder of HolGenTech, Inc.