The next generation of consumer genetics

A rapid decrease in the cost of genome sequencing has fuelled mass adoption of consumer-centric companies and services - just last year over 29 million individuals took genetic tests. We deeply believe there is a huge opportunity to radically transforms people's lives with this data, and in this piece, we explore what key challenges new players and technologies would need to address to win this space.

Introduction

Since the announcement of the sequencing of the first human genome (the entire human DNA sequence) in 2003, the rate of progress in DNA sequencing has been astounding. The Human Genome Project cost $2.7bn and took 15 years but the outburst of innovation it drove led to rapid improvement in both the cost and speed of DNA sequencing. The cost to sequence a genome reached $300k in 2006 then $1k in 2016 before stabilising.

This rapid decrease in the cost of DNA sequencing has enabled the emergence of consumer DNA sequencing companies such as AncestryDNA and 23andMe, which have driven massive increases in the number of consumers who have used genetic tests with 29m consumers having taken genetic tests at the beginning of 2019 and the number expected to almost double in 2019.

More people had their DNA sequenced in 2018 than in all prior years combined as DTC genome testing companies marketed aggressively. This aggressive approach continued in 2019, with the 23andMe Health + Ancestry kit one of Amazon’s top selling items on Prime Day 2019.

The rapid uptake of consumer genetic testing means we are reaching the point where there is a market of millions of consumers with genomic data providing a potential market for businesses that can help consumers get more value from that data. 

Although, recently uptake seems to have slowed, with the news that 23andMe has laid off employees amid slowing sales, this could be an indication of the level of competition in the market, with multiple players offering very similar propositions. In addition, government involvement in genetic testing is growing with the UK govt. announcing a £200m project to sequence 500,000 volunteers in September 2019 suggesting that the population of consumers who have access to their genetic data will continue to increase.

The rise and fall of the genetic app marketplace

Helix and Color were early attempts to provide value to consumers beyond genetic testing with both providing a marketplace for applications that used consumer genetic testing data. These marketplaces would allow users to share their genetic data with third party app providers who would provide additional insight. 

Apps on the marketplaces ranged from those providing advice around diet or exercise to apps screening for specific health conditions to less obviously useful apps such as one enabling users to create a personalised scarf based on their DNA. 

However, despite substantial venture funding, with Helix and Color raising $300m and $150m respectively, neither company has made the app store model work with both moving away from the direct to consumer model to provide sequencing services for healthcare providers. These partnerships give access to large populations of patients to be sequenced and provides support from physicians for patients who have been tested. The fact that two well funded companies have moved away from the direct to consumer business model suggests that demand has been slower than expected to emerge. That said, the volume of funding raised may have played a part - as both attempted to scale more rapidly than the market would support - and in turn had to find sources of demand that could/can match their scale. 

Although the first attempts to build businesses that can help consumers capture the value from their genetic data didn’t pan out, I’m convinced there are opportunities in the space. Having researched the market, as well as speaking to entrepreneurs building products for it, two potential products stand out in terms of potential: health and fitness apps and data management platforms.


Health and Fitness apps

From lactose intolerance, which is due to a variant in the regulatory element of a single gene - to obesity, which is estimated to be 40-70% determined by genetics, health has a significant genetic component. Similarly, it has been suggested that genetic factors underlie 30-80 percent of differences in traits linked to athletic performance

As the sequenced population increases, there is real potential to leverage genetic data to help individuals better manage their health and fitness. Indeed genetic testing companies such as 23andMe already offer insight into a number of health predispositions such as Type 2 Diabetes, Celiac Disease and Parkinson’s Disease as well as the genetic impact on weight. However there is scope to build more comprehensive products that give consumers a more detailed view of the impact of their genetics on their health and fitness as well as providing actionable information on how to maximise their health based on their own genetic profile.

Genetically informed health and fitness advice has two advantages over the advice provided by existing apps. Firstly, by understanding the genetic component of health and fitness, apps can provide more personalised advice that will have better outcomes than the generic advice currently available. In addition, users are more likely to take advice that is personalised to them based on their genetics and this engagement will lead to better outcomes, even if the advice is similar to that provided by generic health apps. 

A study in 2016 showed that athletes who carried out a training regime tailored to their genotype (high intensity for power genotype, low intensity for endurance) improved at a rate more than 2x faster than athletes whose training was mismatched to their genotype. Genetics also impacts how quickly athletes recover and adapt, allowing standard models based on factors such as weight, height and age to be tailored to better reflect an individual’s unique capabilities and allowing training to be optimised for them. In 2016 Greg Rutherford, the Olympic and world long-jump champion claimed that he incorporated genetically guided information into his training and China recently announced that all Chinese athletes will undergo testing ahead of the 2022 Winter Olympics.

Companies that are leading in the space include DNAfit and Genetrainer, both of which provide fitness and diet plans based on users’ genetic profile. Users can carry out a DNA test or use data from 23andMe or Ancestry.com. DNAfit combines genetic reports with support from dieticians and sports scientists to help users achieve their goals while Genetrainer allows users to connect wearables to combine genetic data with performance data.

DNAnudge, which recently showcased at CES and opened a Covent Garden store in late 2019 has an interesting approach to genetically personalised health, combining on the spot DNA testing with a wearable device that can scan food to give a red, amber or green score based on the users’ genetic profile. An app also provides tailored alternatives to high risk products. I have doubts as to whether the wearable device will fit with consumers’ habits but it’s great to see genetic based personalisation moving beyond athletes to the mainstream, where the real opportunity is.

The opportunity?

The precision of genetically based advice is currently limited by the lack of data linking genetics to health and fitness outcomes. However, as more people undergo genetic testing and begin to link their performance data, the understanding of the genetic impact on health and fitness will increase significantly. Given the current lack of data, any app that can capture performance data and connect it to genetic profiles would have a significant advantage as the data would allow more granular predictions and advice, producing superior results. 

This would also overcome one of the challenges of existing genetic profiling solutions that struggle to continue delivering value to users past the first report and so suffer from low engagement. By integrating with ongoing performance data, apps could deliver more value and build ongoing engagement allowing more effective monetisation. 

I’m excited for the potential for a second wave of genetic health and fitness apps that can combine more granular recommendations with best in class UX and engagement to drive mass engagement. Looking at existing winners in the fitness app space such as Strava, social and viral features could also be important to fuel engagement and growth. Imagine being able to compare genetic profiles with your training partner to understand who your responses to exercise vary, being partnered with someone who will respond to the same exercises due to shared genetics or being able to share a dashboard showing how much of your performance is genetic and how much down to your own hard work.


Data Management Platforms

Genetic data can give insight into the risk of a range of diseases, making it potentially very sensitive. As awareness of the value of genetic data grows, consumers will look for a way to control their genetic data and capture more of its value for themselves - giving rise to the need for data management platforms.

23andMe famously resells the genetic data of its users, with GlaxoSmithKline announcing a $300m investment in the company in July 2018 as part of a collaboration to identify novel drug targets based on users’ genetic data. The company has also previously worked with Genentech, Pfizer and Janssen. While these deals have the potential to improve drug discovery, users can be uncomfortable to find that their data is being used by pharma companies, with all of the value accruing to 23andMe rather than the people who provided the data.

23andMe is hardly alone in selling access to genetic data; in Jan 2018 a consortium of six pharma companies agreed to pay $60m to fund exome sequencing (sequencing the 1% of DNA that codes for proteins) of 500,000 volunteers from the UK Biobank in exchange for a period of exclusive access to the data.

Source / License

As these deals become more common, consumers will become more aware of the value of their genetic data, creating a market for platforms that allow consumers to own their data and control who it is shared with. Indeed, concerns around privacy were mentioned as a possible reason for the decreased demand for 23andMe’s testing kits. The rising importance of data privacy is also likely to drive increasing awareness of who owns genetic data, particularly as governments increasingly get behind national sequencing initiatives such as Genomes England and the 100,000 Genomes Project

As an example of the importance of data ownership for national sequencing initiatives, Icelandic pharma deCODE created a population wide genomic biobank covering half the adult population before being acquired by Amgen in 2012. deCODE was subsequently spun out into a separate company before being acquired by WuXi PharmaTech (a Chinese pharma company) in 2015.

Unsurprisingly platforms are emerging to allow consumers to control their genetic data and who it is shared with. Examples in the UK include Sano Genetics, Genomes.io and Lumminary. Sano Genetics and Genomes.io both provide data vaults and clinical grade sequencing with a focus on connecting data owners with researchers. Lumminary, on the other hand, provides a DNA app store powered by an anonymous, encrypted and private DNA vault, allowing users to procure a range of additional tests to better understand the results of their DNA profile. 

Sano Genetics enables users to share their genetic data with studies they support and allows users to upload their data from platforms such as 23andMe or have their DNA sequenced via a testing kit. The website provides a list of studies that users can donate their data to and studies can fund some or all of the cost of DNA sequencing. Alongside supporting research, users can also receive personalised reports detailing traits such as coffee & caffeine consumption, food allergies and pain sensitivity but the focus in on users who want to support research. Sano Genetics works with institutions such as Imperial College London, University of Cambridge and University of Liverpool who need to recruit patients for clinical trials.

Genomes.io has more of a focus on monetising DNA data, allowing users to securely store their data and earn money by sharing it with researchers. Users can have their whole genome sequenced and earn tokens by connecting additional data, such as health surveys or electronic health records. Security is a major focus, with blockchain based de-identification and audit to ensure that users control their own data. The business also works with partners such as medical research charities, population sequencing initiatives and genetic biobanks to provide a storage and management platform for their genetic data. Genomes.io recently raised £1m from Crowdcube and is part of the Consensys Labs Tachyon Accelerator.

Lumminary provides a DNA app store with apps covering areas such as fitness, nutrition or ancestry. Users can upload data from previously conducted DNA tests or can order a test with whole exome or whole genome sequencing available. The platform gives users control of their genetic data and allows them to selectively share that data with app providers to get better insight into their genetic profile. 

Each of the platforms takes a slightly different approach, but all stand to benefit from the increased uptake of DNA tests and growing consumer concerns around privacy. 

The opportunity?

As more consumers take DNA tests, and more organisations use genetic data, there will be a need for a platform that allows them to manage their data in a private and secure manner and a marketplace for the use of genetic data should emerge. As marketplaces hit scale they should benefit from network effects as more genetic data increases the value for researchers and more researchers gives consumers greater ability to monetise their data. There’s also the potential to capture other data sources such as medical records or exercise data to understand the link between genetics and health.

The key to succeeding in the market will be to achieve scale in terms of the number of genetic profiles on the platform in order to increase the volume of data available for researchers. There are two ways of reaching that scale. 

The first is to grow through consumer sign ups, in which case the key to growth will be building a strong brand and delivering value to users to drive uptake. Privacy/data security alone is unlikely to be enough for most users so providing incremental value will be key. Examples could include additional insight into customers’ genetic profile, allowing them to donate their data to causes they care about or enabling them to share in the value created by their data through some monetisation model. 

The alternative route to scale is through B2B partnerships with organisations that carry out large scale DNA sequencing. This will require close relationships with sequencing organisations (and the corresponding enterprise sales capability) as well as a platform that can solve their pain points around consent, privacy and data management. Interestingly, this seems to be the path that Helix and Color have chosen as they move from the DNA app store model and work with population health organisations and Color’s recent $75m fundraise suggests that it is bearing fruit.

Timing is likely to remain a significant factor for companies targeting this space as they rely on increased penetration of testing. In particular, building a consumer brand requires enough people to have taken a test and care enough about privacy to use a data management platform rather than one of incumbent testing providers with their strong brands and broad distribution. 


Conclusion

With the uptake of consumer genetic testing there is a rapidly growing opportunity for businesses that can help consumers to capture value from their DNA profile. As shown in the health and wellness space with companies like DNAfit or Genetrainer, the early adopters are likely to those with acute needs, such as athletes or those with genetic conditions, but like Strava or wearable fitness trackers, I expect genetic based personalisation to move from niche applications to mainstream adoption in the next few years.

I’m particularly excited by the potential of data management platforms like Sano Genetics, Genomes.io and Lumminary to benefit from network effects as they achieve scale. The market remains nascent but with increased uptake of consumer genetics, combined with the emergence of initiatives like the 100,000 Genomes Project from Genomics England, which achieved the 100,000th sequence in December 2018, I’d expect leading players to achieve meaningful scale in the next 24 months.

Excitingly, the emergence of data management platforms should act as an enabler for a broad range of businesses that use genomic data by removing friction and guaranteeing user privacy. The failure of Color and Helix to build sustainable B2C offerings suggests that consumer demand isn’t yet strong enough for a DNA app store, but any business that needs access to users’ genetic data will benefit from the existence of trusted platforms that can handle trust and privacy in a transparent manner. I look forward to seeing the range of companies that emerge in areas such as chronic disease management, personalised healthcare and, who knows, maybe mental health.

Finally, any company in this space will need to have a robust and transparent approach to the ethics of the data they capture and use. The recent pushback for George Church’s dating app, which would have helped users screen out partners to avoid the risk of passing on rare heritable conditions such as Tay Sachs shows that although businesses using consumer DNA data won’t struggle for attention, there is a risk of a negative response if trust, privacy and ethics aren’t front and centre.

Building in trust, privacy and transparency from the outset will allow tomorrow’s consumer genomics giants to avoid the backlash that today’s tech giants are undergoing while bringing massive benefit to consumers, who will be able to better understand and manage themselves and their health.

Luke joined Forward Partners from REV Venture Partners, a corporate VC, where he was responsible for deal origination, investment due diligence and portfolio reporting. He was previously a consultant with the strategy consultancy Oliver Wyman, where he worked across the retail, aviation, healthcare and FMCG sectors.

Luke originally planned a career in science and he holds a PhD in biochemistry. His focus at Forward Partners is on sourcing and executing new investments.

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