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Seventy-one years ago, Francis Crick stormed into the Eagle pub in Cambridge to announce to astonished lunchtime drinkers that he and fellow researcher James Watson had discovered “the secret of life.” Deciphering the structure of DNA launched a new era of scientific research and won them the Nobel Prize in Medicine.
Nowadays, finding out your DNA is very cheap and easy. Spit into a tube, send it to a lab and a genetics testing company will email you the results for as little as $99. The collapse in the cost of this technology is staggering, outpacing the enormous advance in computing power, known as Moore's Law. At the beginning of the century, the cost of sequencing a single human-sized genome cost more than $95 million.
This data revolution has enabled millions of people to trace their ancestors and discover lost relatives. It has also helped doctors diagnose genetic diseases and created an amazing research resource for scientists. While researchers are salivating over this treasure trove of information, investors appear to be less impressed. But interestingly, several billionaires have made contrarian bets that 23andMe, one of the largest testing companies, can reinvent itself as a valuable drug discovery company. Could it work?
Since its founding in 2006, 23andMe has had a rollercoaster ride, even by the lean standards of West Coast startups. Once seen as one of the coolest companies in the world, 23andMe has had little trouble raising $1.4 billion to fund an expansion of its direct-to-consumer DNA testing business. And it was closely linked to Silicon Valley royalty: Anne Wojcicki, the company's co-founder and CEO, received early support from Sergey Brin, Google's co-founder, whom she married (and later divorced).
Amid great acclaim, the company was listed on the Nasdaq in 2021 via a special purpose acquisition company backed by Sir Richard Branson, with a valuation exceeding $6 billion. But its shares have since fallen more than 95 percent and it is at risk of being delisted.
The problem with DNA testing is that you only need to do it once and it has now been adopted by early adopters. 23andMe's attempts to build a healthcare subscription business haven't expanded as quickly as hoped. The company also suffered a malicious data breach last year. Hence the need to reinvent companies.
Thanks to foresight, 23andMe created a therapeutics research division nine years ago to exploit its extraordinary cache of genetic data. Its database now includes 15 million users, 80% of whom agreed to share their anonymized data for research purposes. The company works with pharmaceutical giant GSK, focusing on immuno-oncology drugs. “We are like a telescope that can see 10 times further into the biological universe,” Jennifer Lu, head of therapeutics development at 23andMe, tells me.
What sets the company's approach apart, Lu says, is the size of its database and interactions with customers, which allows additional health information to be collected. Last month, 23andMe announced that the first participant had been dosed in a phase 1 clinical trial of an antibody that fights advanced solid tumors. The company has genetically validated two other drug targets.
The field of computational biology is developing rapidly, and many AI companies are exploring the possibilities of accelerating drug development in this data-rich field. Google DeepMind, the London-based AI company, even created a dedicated company called Isomorphic Labs in 2021 for this purpose.
Sir Demis Hassabis, co-founder of Google DeepMind, told me last week that Isomorphic's research was going “amazingly well” and that it was building predictive models to evaluate the properties needed to design a good drug, based mostly on insights gained from the AlphaFold protein. Structure database. But he said there's really big potential for researchers to apply AI to large-scale genomic data as well. “We have a lot of data in this world. The question is: How do we make sense of it all? This is where artificial intelligence comes in,” he said.
The challenge for 23andMe is to combine the mindset of a fast-paced healthcare company with a patient-centric focus on drug discovery, bringing together two radically different business cultures, skill sets, customer requirements and timelines. It can take seven to ten years after a drug enters clinical trials for it to be approved, assuming it is effective. Billionaire investors may be right to see value in 23andMe data. But it may take a different corporate structure – or an acquiring company – to make this happen.
john.thornhill@ft.com
