23andMe's Triumph -- And The Long Road Ahead

This morning 23andMe announced that it’s back, once again offering direct-to-consumer genetic tests from which consumers will draw health conclusions. This time it has the approval of the Food and Drug Administration.

It was a long road – appropriately, the FDA told 23andMe to stop giving consumers health data 23 months ago – and the 23andMe that is returning looks very different from the one that went into sleeper mode back then.

Instead of offering real-time information on what genetic research had to say about any disease risk a patient might have, now 23andMe is focusing on giving consumers “carrier status” information on 35 genes that can cause diseases. This is mainly of interest to prospective parents. Do you have a gene that can cause sickle cell anemia? Does your spouse? If both of you come up positive, your child has a 25% chance of having the disease.

The new 23andMe test will also cost $199, double the previous price. “I think at $199 we’re an exceptional value,” says Anne Wojcicki. But Wojcicki also sees the decision as the beginning of a future where 23andMe will work with the FDA to make more genetic testing available. She’d like to get back to giving people information about what they can learn from their genes about which medicines they should or shouldn’t take, or what conditions they are at risk for. “At some point that is the mission of the company and that is what we aspire to get back to.”

In the meantime, there are more pressing executional matters. Wojcicki says the company has not settled on an FDA-compliant marketing plan, but would love to do so this holiday season.

The story of 23andMe’s return should serve as both encouragement and a warning to companies (think Theranos) that hope to disrupt the healthcare system. You can get a lot of you want, but it will take longer than you expected and will take a lot more work. The first thing that Wojcicki had to do was admit she was wrong.

During a period when her staff had been undergoing upheaval and she was in the midst of a separation with ex-husband Sergey Brin, Wojcicki had been shocked to find out that the FDA had thought 23andMe was stonewalling. “It never, ever occurred to me that we would just have to stop returning the health reports,” she says.

Wojcicki and 23andMe president Andy Page went on a listening tour to figure out what they didn’t know. (Inarguably, they should have figured that out before.) One of the people they met, through a common investor, was Kathy Hibbs, the general counsel at Genomic Health. During a meeting when they were talking to her about what they needed to learn, they leaned in and offered her the job.

Hibbs said no – she had a job – but kept thinking about the offer. The question of whether and how genetic test results could be given to consumers was one every other company in the space had dodged by involving physicians. 23andMe now had an FDA warning, and that would mean working out an answer. To a regulatory lawyer, it was a huge opportunity to set precedents that would shape the future of health care.

It made Hibbs’ parents nervous, but the new job didn’t mean moving her family. So she took it. Wojcicki gave her five binders detailing every interaction that 23andMe had with the FDA, and Hibbs proceeded to read them in their entirety seven times.

What Hibbs found was that 23andMe and the FDA were not even speaking the same language. The FDA is guided by laws and regulations that limit what it can say, and 23andMe wasn’t picking up on the agency’s cues. FDA officials would leave 23andMe an opening to change the way carrier testing was regulated, for instance, and 23andMe would ask an unrelated question.

The big issue for the FDA was that the agency needed proof that 23andMe could convey to consumers what a test result meant. The agency insisted that 23andMe do studies to prove comprehension, and that those studies include not just the educated and relatively wealthy types who have been 23andMe’s customers so far but an entire cross-section of the U.S. population. The initial studies were done in Bloom Syndrome, where 23andMe got its first FDA approval. But the FDA wanted to see a second set of data, in cystic fibrosis, which is more complicated because there are different genetic mutations that carry different risks. “The FDA cares about every word on the page here,” says Brad Kittredge, 23andMe’s vice president of product.

In the end, the agency was fine with 23andMe’s marketing so far. The two big questions are how fast 23andMe will be able to expand what it can offer consumers, and how interested consumers will be in the limited offerings the company currently has for sale. When the FDA stopped 23andMe two years ago, the company was on a publicly declared mission to get to 1 million costumers. It has managed to pass that figure. More than that, it can monetize that data by doing more than selling tests. 23andMe always planned to sell access to its data to drug companies that could use it for drug research, and it is now also searching for new medicines in house.

“If you are somebody who has a disease you are not complaining when someone starts to do work for you,” Wojcicki says. “That is your hope.”

There could be more controversies ahead. As part of its new design, 23andMe will tell users if law enforcement agencies ask for their genetic information. So far, the company has never been forced to give that data up. But the idea is likely to make those who are uncomfortable with its business model more uncomfortable.

At the very least, Wojcicki has been able to convince her investors. As reported in the most recent issue of Forbes, 23andMe raised $115 million from investors including Fidelity Management & Research Company. The investment values 23andMe at $1.1 billion.

OCT 21, 2015

Source: http://www.forbes.com/