23andMe isn’t the only company that conducts mail-order DNA tests that reveal consumers’ ancestry. There’s also MyHeritage, Living DNA and GPS Origins, to name a few. But it’s 23andMe, founded in 2006, whose name is becoming a synonym for spitting in a vial and finding out what percentage of you comes from where. Now the company has set its sights on expanding into an entirely new business — and investors are applauding.
Last week, the company confirmed that it raised over $250 million in a round of funding led by Silicon Valley venture capital giant Sequoia Capital. The funding would bring the company’s valuation to $1.75 billion — less than HelloFresh, more than Buzzfeed. The company won’t be using the investment to fine-tune its genealogical processes, but rather to improve its ability to comb through its customer’s genetic information for the purpose of drug research.
“What pharma companies do really well is running clinical trials and marketing,” 23andMe CEO Anne Wojcicki told Fast Company. “Those are really complicated and expensive things to do. Where we can potentially be really good is on the discovery side.”
Tech observers are saying that 23andMe’s new funds — plus a string of strategic hires made in the past couple years — are setting 23andMe up to function like a human genome research lab. Wired recently called the company “a DNA-data-mining operation digging for the next big drug.”
Many of the diseases 23andMe is interested in researching are diseases that can be transferred by individuals who do not have it. That includes many diseases that are linked to Ashkenazi Jews, including Tay-Sachs and Canavan disease. 23andMe currently offers tests for people who may carry genes for those diseases, and can also test for Gaucher disease type 1, an organ and tissue disorder whose recessive genes are carried by 1 in 15 Ashkenazi Jews.
23andMe’s burgeoning operation evokes the famous genetics experiment underway in Iceland, where a private company is exploiting the country’s ethnic homogeneity and meticulous genealogical records going back almost a thousand years to do similar pharmaceutical research. Iceland’s citizenry at first embraced the project in the name of pure science, but lost some enthusiasm and even began to challenge it in the courts when international drug companies began to buy rights to the data.
Spooked consumers and privacy advocates have expressed similar concerns about 23andMe, but the company only uses its customers’ data anonymously, and only if they sign a waiver permitting it. Over 80% of 23andMe’s customers sign up to be included in research.
23andMe also regularly sends out reports with the latest information about its customers’ genomes. In late August, the company sent an erroneous report to customers of Ashkenazi descent with a certain genetic profile telling them that some Ashkenazi Jews may be descended from the Khazars, a semi-nomadic tribe that roamed the Caucasus in the 7th to 10th centuries. That theory has been [disproved](http://forward.com/opinion/382244/how-23andme-fell-for-anti-semitic-khazar-canard/0 by historical, linguistic and scientific evidence. 23andMe issued a statement on the misinformation on their blog, calling the report an “unfortunate mistake for which we apologize.”
According to the Financial Times, companies that place the use or distribution of genetics data at the core of their business model are on track to receive, collectively, over $3 billion in funding this year. It’s a jump of over $1.5 billion from 2016. Analysts say that the boost in funding is coming because hardware-related problems of genetic testing — such as how to run hundreds of quick and accurate tests a day — are being solved.
“We’re definitely a mission-driven company,” Wojcicki told Fast Company. “There’s a lot of skepticism about that, but we really want to drive positive change in healthcare.”
23andMe is already well on its way. Its website lists numerous insights — expressed in white papers and scientific articles — gleaned from the pool of data it’s constantly growing as new customers sign up. Last week, the prestigious scientific journal Nature Genetics published a major study of genes associated with the degenerative disease, using data from the genomes of over 300,000 23andMe customers.
The genetic data of the 23andMe customers was used as control data in that study, in order to determine more DNA sequences associated with Parkinson’s. The scientists who published the study found 17 new markers, which may help scientists figure out what causes Parkinson’s.
23andMe began asking the FDA for approval to include tests for rare genetic diseases as part of their genetic ancestry profile several years ago. The company famously stumbled at first, receiving a scathing letter from the FDA that suggested the company had not provided proof that its genetic tests were accurate. The FDA demanded that the company stop selling its testing kits. 23andMe finally received approval from the FDA to offer genetic testing services in 2015.
Earlier this year, the FDA gave the company the green light to tell customers if they have genetic markers for ten diseases, including Parkinson’s and late-onset Alzheimer’s disease. The company is currently trying to get approval to tell customers if they are at risk for breast cancer.
23andMe is making further use of its genetic data by selling exclusive access to certain pharmaceutical companies. Genentech, a major biotechnology corporation based in San Francisco, is currently the only group with access to the anonymous genomes of 3,000 23andMe customers who have Parkinson’s disease. After two years the data will be available for free.
Correction: 12/14/17 — An earlier version of this article incorrectly stated that 23andMe does not test for genes associated with Tay-Sachs disease and Canavan disease. The company tests for both. We regret the error.