Gene startup 23andme casts eyes abroad after U.S. regulatory hurdle

SAN FRANCISCO Tue May 6, 2014 4:03pm EDT

SAN FRANCISCO May 6 (Reuters) - Home genetics startup 23andme is forging ahead with plans to sell its full-fledged test kit - just not in the United States.

The Google Inc -backed firm is moving to English-speaking markets abroad after facing hurdles from the U.S. Food and Drug Administration, according to one person with knowledge of its plans.

Late last year, the company agreed to stop selling its $99 DNA test until it obtained marketing authorization from the FDA. In a public warning letter, the FDA said it feared false positive or false negative results from 23andme's genetic test could prompt patients to take "morbidity inducing" actions, like unnecessary surgery.

Now, 23andme has formed a team internally to explore the path to approval overseas, the person with knowledge of the company, who asked not to be named, told Reuters.

"We are in the process of evaluating international opportunities," said company spokesperson Catherine Afarian without sharing specifics.

While it awaits the agency's approval, a process that could take years, 23andMe aims to offer partial or full genetic-testing services in one or more countries outside of the United States by the end of the year, with likely contenders including Canada, Australia and the United Kingdom, the source said.

23andme currently sells an abridged version of its test in over a dozen countries, which excludes analysis about a person's health risks. This test does include raw health and ancestral information, such as a person's ethnic heritage.

The full test analyzes probabilities that a person may come down with a certain disease or condition, such as diabetes.

Formed in 2006 by Anne Wojcicki, wife of Google co-founder Sergey Brin, 23andme previously said it could deliver insights about people's genetic predispositions toward 254 diseases and conditions, all from a swab of saliva.

Wojcicki, the company's chief executive, worked as a health care investor and analyst for over a decade before starting 23andme. In a company blog post, Wojcicki stressed that she "stands behind the data" and would work in concert with the FDA to "lay the groundwork" for regulatory approval - for however long that takes.

"In the meantime, if a route to faster approval exists for 23andme, it's smart to consider it," said Patricia Zettler, former associate chief counsel with the FDA who now serves as a fellow at Stanford University's center for Law and the Biosciences.

In fact, if the company doesn't start selling its test abroad, she added, "it might be more difficult to get the data to support authorization in the U.S."

Bradley Merrill Thompson, a Washington D.C.-based attorney with Epstein Becker Green, said Canada is a logical choice for health entrepreneurs because it boasts an affluent health system and clear regulatory guidelines.

"But in most countries, regulators will be concerned about whether 23andme's medical predictions would trigger actions," said Merrill Thompson, who counsels clients on FDA regulatory issues. According to Thompson, medical device regulation differs country-by-country and is highly dependent on the claims a company makes about its product.

Going international may seem like a practical strategy, but 23andme may run into the same concerns as it has back home, legal experts say.

Europe may grow less receptive to a company like 23andme in the near future, said Eric Vollebregt, an Amsterdam-based intellectual property lawyer with Axon Lawyers. The European Parliament recently proposed regulations that would restrict companies like 23andme from carrying out genetic tests without "informed consent," from a medical professional.

That would prevent 23andme from providing health information direct to consumers' homes.

"A movement is underway in Europe to target genetic testing services," said Vollebregt, who has spoken in support of 23andme and against the amendment.

Another layer of complexity is the question of whether 23andme should be regulated as a medical device, which comes with more stringent requirements. The FDA regards it as such, but regulators abroad might classify it as a health service. Bioethics experts like Duke University's Nita Farahany, have argued that 23andme poses no more risk to patients than a common fitness tracker.

"Just because information can help in the diagnosis of a medical condition does not mean that it should be considered a 'medical device' subject to FDA jurisdiction," Farahany wrote on a Duke University news site. (Editing by Bernard Orr)