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.
…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.