23andMe Dives Into Biotech With Ex-Genentech R&D Star at Helm

Published: Mar 18, 2015

23andMe Dives Into Biotech With Ex-Genentech (RHHBY) R&D Star at Helm
March 12, 2015
By Mark Terry and Riley McDermid, BioSpace.com Breaking News Staff

Mountain View, Calif.-based 23andMe announced today that it is launching a new therapeutics group and has appointed former Genentech exec Richard Scheller as chief science officer and head of therapeutics.

Backed by Google Ventures and Facebook billionaire Yuri Milner, 23andMe’s focus has been selling personal genetics tests to consumers. A secondary component of its business model has been selling genetic data to pharma companies. The new venture will be an attempt to develop medications utilizing the data it has acquired.

23andMe has to date collected data from 800,000 customers who have used its $99 kits to submit their genetic information to a central research bank, a repository that has had consumer privacy advocates crying foul and large biotech firms salivating since its founding in 2006. The startup said Jan. 6 that it will receive an upfront payment from Genentech of $10 million, with further milestones of as much as $50 million.

“With Dr. Scheller joining the team, we are putting significant resources into translating genetic information into the discovery and development of new therapies for our customers and the world,” said Anne Wojcicki, 23andMe chief executive officer and co-founder in a statement. “This is a major step forward to realizing our mission to help people benefit from the human genome.” Wojcicki is also the wife of Google Inc. founder Sergey Brin.

Scheller was executive vice president of research and early development at Genentech, and oversaw the company’s basic research in oncology, immunology, neuroscience and infectious disease. He also served on the faculty of Stanford University for 19 years, as well as acted as an investigator at the Howard Hughes Medical Institute of Stanford University Medical Center. Scheller retired in December.

Dr. Scheller has an incredible reputation in the biotech industry as a leader who is both visionary and also capable of tremendous execution on the business side,” said Andy Page, president of 23andMe in a statement. “We are in the process of actively recruiting a world-class team of scientists and researchers.”

The company said that the partnerships with pharmaceutical companies to utilize 23andMe’s enormous genetic database will continue. The difference with the company’s internal development group is it will have “the opportunity to look broadly through the database and not have a particular restriction to what we’re looking for,” said Scheller in a statement. “Then we’ll work on the very best and most convincing targets that come out of the search process.”

23andMe ran into a roadblock in late 2013, when the U.S. Food and Drug Administration (FDA) slapped its hand for overly-aggressively marketing the saliva-based test kits as medical tests. As a result, the company was forced to stop selling the kits for medical or diagnostic uses, although they could continue to sell them without offering clinical diagnostics—they became something of nonmedical ancestry discovery novelties, although the data they accumulated helped open new avenues of business.

Wojcicki has said that it was an incentive for the company to transform itself. It has also worked hard to fix its relationship with the FDA and hired a number of senior executives involved in legal, regulatory and medical aspects of the company.

The Genetech deal is the first of 10 to be signed with large biotech and pharmaceutical firms—with details on those deals presumably to arrive later—and said it remained steadfast in its resolve to bring DNA sequencing to the mass consumer. The size of the deal is a ringing endorsement for the company’s mission, Wojcicki told Forbes.

“I think that this illustrates how pharma companies are interested in the fact that we have a massive amount of information,” said Wojcicki at the time. “We have a very engaged consumer population, and these people want to participate in research. And we can do things much faster and more efficiently than any other research means in the world.”

Indeed, Alex Schuth, head of technology innovation and diagnostics business development at Genentech, told Forbes that he was initially interested in the startup because of the 12,000 patients 23andMe has recruited with the help of the Michael J. Fox Foundation.

“That is something unparalleled,” he said. “Obviously the goal for us for this collaboration is target discovery to find new medicines for patients in a disease-modifying sort of way.”

So far, 23andMe’s partnerships have been limited but lucrative. It has a deal in place Pfizer Inc. to enroll more than 10,000 patients with colitis or Crohn’s disease and it said in January that it will use its connection to Genentech to help that company tackle genetic causes or markers for Parkinson’s disease.

Some privacy advocates reacted to the January deal with dismay, pointing out that many of 23andMe’s “community,” as the firm calls its database, may feel misled that they donated their DNA information to what they thought was a nonprofit, only to have it sold on to biotech’s highest bidders.

“I’m sure some people will feel great, no problem, and some will feel cheated,” said Hank Greely, director of the Center for Law and the Biosciences at Stanford University. “And the reactions will form a bell curve.”

BioSpace Temperature Poll
Vertex Pharmaceuticals made news last week when it terminated leases on three properties in Cambridge, Mass, that freed up 313,000 square feet of space in the Genetown area. The company has spent a significant part of 2014 consolidating its operations on the South Boston waterfront, leasing 291,000 square feet of office space at West Kendall Street in Cambridge’s Kendall Square. So we wanted to ask the BioSpace community: Is Boston going to be getting more biotech leases anytime soon, or fewer tenants?

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