23andme’s DNA Data Mining Operation Partners With GSK

The pharmaceutical giant GlaxoSmithKline recently announced an equity investment (https://www.gsk.com/en-gb/media/press-releases/gsk-and-23andme-sign-agreement-to-leverage-genetic-insights-for-the-development-of-novel-medicines/) along with an R&D collaboration with the direct-to-consumer genetic testing service 23andMe. The deal includes a $300M equity investment and a four-year research collaboration in which all activities are co-funded (50%/50%) and all proceeds are shared from new treatments and medicine arising from this collaboration. This deal also includes the option for a fifth-year in which GSK is the exclusive drug discovery collaborator with 23andMe.

23andMe has experience with pharma giant collaborations before but nowhere near this magnitude. In late 2013, the future of 23andMe was in peril as the FDA issued a stern, public warning demanding the company to immediately cease issuing its saliva collection kit as the regulatory agency was concerned about the public health consequences of possible inaccurate results the kit reports. 23andMe soon paused selling their testing kits only to resume two years later in which they report FDA-approved genetic risk tests, not diagnostic tests. During that period, 23andMe realized the value of their DNA data from their then 600,000 individuals who agreed to donate their data to research.

In 2014, during the downtime, 23andMe partnered with Pfizer to investigate the genetics of colitis or Crohn’s disease among other projects. Early the following year, they announced a $60M deal with Genentech that included access to DNA database. 23andMe’s research potential was demonstrated when researchers at Pfizer published (https://www.nature.com/articles/ng.3955) 17 Parkinson’s disease (PD) risk loci comparing 6,476 PD patients with 302,042 controls, suggesting numerous potential new drug targets for PD. Last year, the pharma company Lundbeck and the Milken Institute think tank announced a collaboration investigating genetic roots of psychiatric disorders, including bipolar disorder and depression, with the goal to pursue drug discovery in these areas.

Whether heavily betting on R&D was in the initial business plan or not, 23andMe has shown clear successes, outlived its initial competitors, and continues to draw major interest from the pharmaceutical industry who are now properly valuing of the massive pool of genetic data.

Emory Entrepreneurship & Venture Management