This story appears in the November 1, 2015 issue of Forbes. Subscribe
This morning, 23andMe, the Silicon Valley maker of over-the-counter genetic tests, is announcing that it is raising $115 million from investors including Fidelity Management & Research Company, Casdin Capital and WuXi Healthcare Ventures, bringing the total raised by the company to $241 million.
Forbes understands the investment values 23andMe at $1.1 billion.
That’s a pretty dramatic return to form (or at least funding) for a company that, two years ago, looked like it was facing extinction as the Food and Drug Administration told 23andMe to stop letting consumers use the company’s tests to get any health-related genetic information. Instead of punting, 23andMe got into the business of discovering drugs and is now preparing to re-launch its health testing business.
"Two thousand fifteen was better than 2014 and 2013," says Anne Wojcicki, the company’s co-founder and chief executive. "Without a doubt."
Forbes agrees. We’re including 23andMe as one of six privately held companies – unicorns, in Silicon Valley parlance – that are being featured as separate covers for the new issue of Forbes Magazine. In an essay for the magazine, Miguel Helft, Forbes’ San Francisco bureau chief, argues that all the fuss about private company valuations is much ado about nothing. When it comes to unicorns, he writes, there is no bubble.
In the summer of 2013, it looked like 23andMe was done. The company’s head of regulatory affairs in Washington, D.C., left. A new head of marketing was hired, who started to prepare a large push to consumers. And Wojcicki was going through her own personal distraction: although it wasn’t public, she was separating from her husband,
That’s an understatement. Wojcicki had thought that the FDA was in the loop, and aware of 23andMe’s advertising campaign. But it wasn’t. In November 2013, the FDA wrote the company a scathing letter, saying that it hadn’t had any communication with 23andMe since May and that if the company told customers anything about genetic results that had to do with their health, it would be breaking the law. So much for 23andMe’s ad campaign and expansion plans.
Instead of punting, Wojcicki decided to put in the work to convince the FDA that 23andMe’s tests do have value. And in the mean time, she pushed forward on efforts to generate from the 600,000 (now 900,000) people who had given their consent for 23andMe to use their genetic information for research.
In January she announced a drug-discovery collaboration with
In February, 23andMe received FDA clearance for a test to check whether parents are carrying a gene that could cause Bloom syndrome, a disorder marked by short stature and skin problems, in children. Now Wojcicki says she hopes the FDA will allow 23andMe to market some health-related tests again soon. "There's a huge value in actually being the only one who's gone through the FDA process and can sell directly to consumers," she says. Some of them, she hints, may have higher margins than the $99 test.
To be sure, drug discovery is hard and convincing literally millions of people to buy tests is even harder. But Wojcicki won't give up, and she could end up controlling a new gateway to the health care system. "This is a multiyear vision for how we bring genetics en masse to consumers," Wojcicki says. "This is just step one."
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