23andMe’s Growth Slows
In an interview, CEO Anne Wojcicki says consumers likely concerned about how privacy can collide with social-media, law-enforcement
23andMe Inc.’s sales growth was hit by privacy concerns last year, its chief executive said Thursday, at the same time touting the company’s drug development pipeline that she hopes will power its next phase.
“The market definitely slowed last year,” said 23andMe co-founder and CEO Anne Wojcicki, speaking at The Wall Street Journal’s Tech Health conference in San Francisco. “My hypothesis is that you have some of the effect from Facebook , people concerned about privacy, you had Golden State killer and so people pause.”
23andMe’s direct-to-consumer sales increased about 5% in 2018 from 2017, according to credit-card data analyzed by research firm Second Measure. The firm estimates sales growth but not overall revenue. Such growth would be tepid for the highly valued consumer genetics-testing company. Its valuation was last set at $2.4 billion in a 2018 funding round, according to Lagniappe Labs, publisher of the Prime Unicorn Index.
Ms. Wojcicki said the sales estimate was “slightly off,” adding that the company’s sales grew more.
After this story was published, a 23andMe spokeswoman said that the 5% figure was significantly off but declined to provide a specific figure as the privately held company doesn’t release sales data.
Facebook faced controversy over the past year regarding its privacy practices. Investigators announced they solved the decades-old Golden State serial murder and rape case in California using relatives’ DNA in a public database. There has been a recent push among privacy experts for greater transparency by testing companies over who gets access to their data.
In recent months, law-enforcement agencies and genealogists have used relatives’ DNA and family trees to solve other cold cases. Databases are already large enough that 60% of white Americans can be identified through relatives’ DNA and online family trees, according to a study published last year. This week, the president of Family Tree DNA, a large DNA testing company, issued an apology to customers for not informing them in a timely way that it is allowing law-enforcement agencies to submit DNA samples from crime scenes for testing and search for genetic matches in the database.
“The companies need to find ways now to attract people who are not power users but are a little interested in genetic testing or not interested at all,” says David Mittelman, former chief scientific officer at Family Tree DNA, who co-wrote a paper about the growth in testing last year in Genome Biology. Dr. Mittelman is also CEO of a DNA sequencing company.
For its next act, 23andMethe company is hoping to use the data it gathers from consumers to develop new drugs. Ms. Wojcicki said the company has developed 13 compounds it hopes will one day become drugs. Two of the compounds she said are in “late stage” testing in animals.
23andMe also signed a $300 million agreement last year giving the pharmaceutical company GlaxoSmithKline rights to use genetic data for drug discovery.
In the interview Ms. Wojcicki also hit back at criticism of her company’s genetic tests, leveled by the New York Times in an editorial last week. The editorial called the company’s tests more “parlor trick than medicine” and said consumers would be better off getting more definitive clinical genetic workups in consultation with a doctor. Ms. Wojcicki said many patients who could benefit from such workups don’t qualify for insurance reimbursement for them. She said her company’s tests can give them useful information and potentially help them qualify for a more extensive test.
Ms. Wojcicki said the company has no immediate plans to go public in the near future. “I think it sounds awful,” she said of transitioning to public markets. “When we have earnings that are like Google and go up 20% every quarter” it would be a better time, she said. “You want to be public when you’re super stable and growing.”
Write to Rolfe Winkler at rolfe.winkler@wsj.com and Amy Dockser Marcus at amy.marcus@wsj.com