The People Business: The Renaissance of Population Genetics
This article was originally published in Start Up
New technologies enable the rapid processing of genetic information, but since gene data isn't associated with specific diseases and diseased tissues, in and of itself it isn't clinically useful. A new breed of start-ups aims to provide both the phenotypic and genotypic sides of the equation by creating databases of patients and patient samples. Still unclear is how much drug firms will pay for disease-associated gene data; genetics firms are taking various approaches to monetizing their databases, from focusing initially on high-value diagnostics to creating true target-discovery businesses, to selling their data along with associated software and services. There are also ethical issues to hammer out. The new companies must take care to protect patients' rights. They must consider the need for explicit consent to use the information collected from patients, especially when they are participating in research whose purpose is as yet undefined.
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Despite the in silico research ideals of many genomicists, no one has yet found a way around the basic requirement for using human tissue in gene expression studies-a broad array of it, well characterized, from healthy and diseased patients, and from world populations at large. That's why start-ups, drug discovery firms and others are creating a new resource: biorepositories--banks of tissue samples and data to serve the diagnostic, pharmaceutical and tissue engineering industries. As providers of services and products to research-based companies, these companies believe they are operating in a market that ranges from $500 million to $5 billion.
Given the ho-hum attitude investors have shown toward population genetics, Xenon Genetics' $45 million private placement is notable. Now that the dust has settled on two of the older companies in the field, deCode Genetics and Gemini Genomics, which went public in July 2000, it is clear that the market gives them little technology value. But Xenon believes it can differentiate itself by the breadth of its data, which come from 28 populations, and its product-oriented approach.
A number of genomics firms, attempting to capitalize on both the consumer movement and the power of genetics to create a personalized approach to health care, are trying to create consumer businesses. The two nearest-term opportunities are in aggregating pre-stratified, genotyped patients for clinical trials, often by teaming up with consumer health web sites; and providing pharmacogenetic tests of certain well-known drug metabolism variants. But the players face major hurdles not merely in coming up with proprietary tests, but in getting around ethical, privacy, and reimbursement issues specifically related to genetics, as well as in the potential problem of alienating physicians. At the same time, paradoxically, the consumer may offer the best route to preparing a market for genomic testing, which is likely to be resisted by much of the medical establishment.