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(Adds comment from Australian regulator paragraphs 14-15, edits)
By Christina Farr
SAN FRANCISCO, May 6 (Reuters) - Genetics startup 23andme is forging ahead with plans to sell its full-fledged test kit, but will focus on overseas markets after facing regulatory hurdles at home from the U.S. Food and Drug Administration, a person with knowledge of the matter said.
The Google Inc -backed firm is targeting English-speaking markets, with Australia, Canada and Britain the most likely contenders, the person said, declining to be named as they were not authorized to speak to the media.
A spokesperson said the company was considering expanding abroad, but declined to give details. "We are in the process of evaluating international opportunities," said 23andme spokesperson Catherine Afarian
Last year, 23andme agreed to stop selling its $99 DNA test in the United States 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 the genetic test could prompt patients to take "morbidity inducing" actions, like unnecessary surgery.
The FDA may take years to decide on the gene testing kit. In the meantime, 23andMe aims to offer partial or full genetic-testing services outside of the United States by the end of the year, 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 includes 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 of its 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.
Australia's Therapeutic Goods Administration (TGA), the regulatory agency for medical drugs and devices, said genetic tests like 23andme's could not legally be supplied in Australia, but could be imported for personal use.
"It is strongly recommended that those people wishing to undertake testing of this nature talk to their GPs and utilize tests that have been fully evaluated and registered," a TGA spokeswoman said, urging caution on evaluating the test results.
Legal experts say 23andme may run into the same regulatory hurdles abroad as it has in the United States.
The European Parliament recently proposed regulations that would restrict companies like 23andme from carrying out genetic tests without "informed consent" from a medical professional.
"A movement is underway in Europe to target genetic testing services," said Eric Vollebregt, an Amsterdam-based intellectual property lawyer with Axon Lawyers 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. (Additional reporting by Byron Kaye in SYDNEY; Editing by Bernard Orr and Miral Fahmy)