Personal Genome Management--the next big thing? by Matthew Holt

There are 160m Americans looking for health information online and somewhere in the realm of 10–30% of those are viewing and creating their own content. But that has made moderate impact on the mainstream press (with Laura Landro being an honorable exception). So it was a little  surprising to see both the WSJ and the NY Times feature a related issue in the last week—online genetic screening.

Suddenly the concept of getting your genome tested and laid out online is really hot. 23andme (with its Google connection and Esther Dyson on the board) and Navigenics (with Kleiner Perkins and MDV as blue chip VCs in a $25m round) are the two best known west coast players. 23andme has already found out that Warren and Jimmy Buffet are not related and you can go to their site and sign up for their service for under $1,000. (And learn lots more about it in this Wired article) But they’re not alone. In Boston, Knome is gearing up for something similar and Icelandic company DeCODE genetics, which already has a database with the island’s entire population in it, has also introduced a similar service called DeCodeMe.

And of course there’s The Personal Genome Project. It’s an effort led by George Church and includes 10 people who are putting all their genetic information online. (One is Esther Dyson of course)

Meanwhile, plenty of other companies are doing genetic testing mostly on genealogy grounds. The Genetic Genealogist Blog estimates that some 600,000 tests have been done and they are worth about $300 each. but for an annual market, that’s only $25m. The Genetic Genealogist Blog also has a long list of those genetic companies.

Finally, while there’s all this excitement about doing comprehensive DNA testing, DNADirect has been offering a direct to consumer service for a couple of years which offers the most common tests. You can see their price list here. One estimate which seems in the ball park is that the total market for that testing is $200m.

But let’s hang on a minute. The genetic test market is very small, and the management services that these companies offer around it are going to only be a share of the testing market itself. So the fact that Navigenics has already raised money at a substantial valuation means that some very astute people are thinking that genetic testing will turn from an occasional activity for a small minority of patients (usually those going into pregnancy with some type of risk factor) into a consumer norm that most patients will have as part of the standard testing they get done. And that management of that genetic information will be part of the new flow of consumer and clinician activity.

This is a big bet indeed. Of course there is no real current consumer DNA health management market. Frankly the consumer disease management and the personal health advocacy markets barely exist yet either. And the genetic testing/personal medicine market of course has even greater potential, but also is much harder to achieve.

So we’ll see. Are 60 million baby boomers ready to integrate genetics into their personal medical records? And are they ready to both pay for it (or get their third party intermediaries to do so)? And is the health care system ready for the consequences. If so, we’re into a revolutionary period. If not, well I think we know the short term outcome.

Matthew Holt

Comments

[Indu Subaiya]

I think a huge determinant of how this market will grow is whether and how products and services will crop up to support consumers after they get genomic testing. The "so what" needs to be apparent or the diagnostic information will be useless.

Will the companies mentioned or others that see an opportunity jump up and provide personalized behavioral modification programs to prevent one from getting heart disease if one is predisposed to it? Or will drugs and non-invasive monitoring devices be available to keep people from progressing to dementia if they have the mutation associated with Alzheimer's disease? Will health interventions be more or less effective if people know they "have the gene" for a particular disease.

We are betting on a lot more than science and business models with these technologies; we're betting on human psychology in terrain that is relatively uncharted. Overall, I'm bullish on these companies. I think price points will get lower over time and I think there will be tangible things people will be able to do with the information. I think we'll develop ethical codes that prevent outright discrimination. Health plans will still find a way to deny you coverage, but they do that now anyway.

To succeed, the leadership of these companies needs to actively develop the ecosystem around their individual products to ensure that consumers have the tools to act in the face of new information. They should partner with biopharma to expedite drug development, invest in training a LOT more genetic counselors than there are today, support research into the fear factor around knowing one's genetic predispositions, facilitate forums for people to share their experiences and success stories.

And lastly these companies should not be cavalier about what they are setting out to do. Ryan Phelan told me about a study of people's reactions to what they would do if they knew they had the Alzheimer's mutation: 8% said they would use that information to commit suicide at the earliest signs of the disease.

This is an area to tread lightly. The scientists and senior management at the helm of these companies need to be humble, respectful and flexible as the field evolves.

[elliottg]

Matt,

you're not seeing the bigger picture and integration with pharmacogenomics. A complete human gene sequence has already been done for about $1 million (a little less). Assume for the moment that costs will half three times in the next 5 years and another three times in the next 5 years. In 10 years, an individual genomic sequence will be under $15,000. (I think I am underestimating the speed at which this will happen). For anyone thinking about cancer therapy, diabetes management, or hypertension/CV disease, it will make sense to get this done AND insurance will pay for it. They will pay for it because the right medication regime (eliminating less effective choices) will save them tens of thousands of dollars. Also, at 15k, it becomes possible for wealthier people to do it for vanity or other reasons. Interestingly enough this time to affordability also coincides with the time that Fuchs thinks health care reform starts to become inevitable. That would eliminate some of the scary insurance and discrimination scenarios that this technology would have. So the potential US market is somewhere around 3x10^8 times 1x10^4 or about 3 trillion. Discounted back to present value and assuming that the leading company can count on 1/3 of the market (maybe more) and you have the reasons big bets are being laid. I wouldn't be surprised to find out that Microsoft and Google are making both internal and external bets.

[Matthew Holt]

Elliot, I'm a little confused about how you get to 3 trillion, but I think your logic is what the bigger bettors are following. The real question is a) will the health care system use that information in its work processes (it doesn't much now!) and more importantly, b) can this personalized medicine really work? In other words, if I know your real DNA, can I do anything effective with that knowledge.

If so, then this will be the future of testing. If not, well not all big bets pay off!

[elliottg]

Every person in the US gets a personal genome is the logic. I'm assuming that 10k is low enough of a price relative to the management of chronic or high-cost acute disease that almost everyone will eventually be getting genotyped. As to whether that information can be used, the answer is an emphatic yes. There is current research that is coming to fruition that identifies specific drugs that have more or less efficacy based on specific genes. Numerous couples go through genetic counseling already. We have people being tested for the "breast cancer" gene. If we add up the market for all of these individual tests, it is currently greater than the numbers you are quoting. Add into this the possibilities for targetted cancer treatment which will be coming to market in the next 5 years and the 5 year market is an order of magnitude greater and that rate of increase will continue.