Genomics

Consumer genomics’ future lies in drug development


  • A CB Insights report on Thursday said the 23andMe SPAC has just scratched the surface of genomic sequencing’s growth potential in 2021.
  • Funding for all sequencing startups, including DNA, proteins, and metabolites, hit a record high in the final quarter of 2020.
  • With the personal DNA testing market waning, industry growth will largely be through healthcare partnerships and drug development.
  • Visit the Business section of Insider for more stories.

DNA is a hot commodity again in 2021 thanks to a $3.5 billion SPAC deal between Richard Branson and 23andMe, the 15-year-old consumer genetics industry leader.

On Thursday, analysts at CB Insights wrote that they think consumer genetics company 23andMe has only scratched the surface of the market value of genomic and other personal sequencing data. Based on past research, the analysts predict investment in the space will continue to grow from 2020’s $7.1 billion to an estimated $7.4 billion this year.

Looking at funding activity through February 4, “omics” companies mapping out patient DNA, RNA, proteins, and metabolites have already publicly raised $692 million in equity funding less than halfway through the first quarter. Among them is Color, the San Francisco-based consumer genetics company that raised $167 million in a Series D round in early January. The company offers patient genotyping for cancer and heart conditions, but has since begun offering COVID-19 tests based on viral mRNA.

Comparatively, sequencing companies raised $1 billion in the same period in 2020.

Though there’s clinical value in testing the DNA, RNA, protein, and metabolic data from individuals to improve and track treatment decisions, the real power of “omic” data could come from discovering and developing new medicines specifically designed for a smaller group of patients.

“The personalized drug market is really the larger market opportunity here versus identifying which drugs a given patient should receive,” CB Insights analyst Kedar Karkare told Insider. Though it’s typically thrown into funding towards machine learning and artificial intelligence, companies specializing in protein, RNA and metabolite sequencing are also part of that effort.

Increased funding to companies specialized in genomics, transcriptomics, proteomics, and even metabolomics indicates the space has the financial momentum to drive a boom in personalized drug development.

We’re ‘just scratching the surface’ of genomic data

The report calls DNA the “new oil” of the healthcare world, adding that the 23andMe SPAC is “just scratching the surface” of the potential applications of consumer genomics.

According to Karkare, who has a doctorate in evolutionary genetics, 23andMe going public is the beginning of a massive opportunity in personal sequencing. More broadly, the COVID-19 pandemic has made sequencing of RNA and proteins top of mind in the healthcare industry, he said.

Although 23andMe CEO Anna Wojcicki told Insider that that demand for its consumer genetics testing services rebounded in 2020, CB Insights’ report thinks the overall market for direct-to-consumer testing is waning. The wave of early adopters seems to be waning, Karkare said, and the FDA has ramped up regulation in the space.

Instead, other companies like Color and Helix are shifting to partnerships with healthcare providers to provide the same services.

Beyond DNA, the report predicts that there will be even more value in sequencing RNA, metabolites, and proteins.

Sequencing will drive personalized drug development 

In the last quarter of 2020, six sequencing companies went public, CB Insights noted in its report. All of them specialize in using patient genetic data to help clinicians make treatment decisions.

The CB Insights report states that consumer genomics will feed into a growing demand for DNA sequencing’s broader medical applications like Tempus, which uses a combination of machine learning and molecular data to help oncologists treat patients.

The report cites 23andMe’s partnerships with GSK, Genentech, Pfizer, and Almirall to produce personalized drug candidates as evidence as to where the industry’s future growth lies. Its most advanced candidate, developed in tandem with GSK, is an anti-CD6 cancer drug in early stage clinical trials, according to the company’s most recent investor report.

Last year was a record funding year in the sequencing space, although the number of investment deals decreased in the final quarter. CB Insights’ 2020 report on the state of healthcare investment attributes this to investors shifting funds to later-stage companies, a sign that genomic sequencing has secured a more established foothold in the healthcare and biotech world.

At a global scale, the US no longer leads in sequencing investments, the report states, a trend that CB Insights expects will continue.



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