Text|Amino observations.When capital is hot, companies with a sufficiently good business model can always enjoy a valuation that exceeds expectations.
That's the case with 23andme. After its backdoor listing in 2021, its market capitalization once reached $6.5 billion. And in fiscal year 2022, it is nothing more than a revenue of 2$7.2 billion, a loss of 2$1.7 billion company.
Cooking oil with fire, consumer genetic testing companies, to become human health management experts as their own responsibility. Such ambitions deserve higher expectations from the capital market.
It's always good to be ambitious, but there's always a contest between ambition and reality.
At present, many consumer genetic testing products are almost just a flash in the pan, and 23andme is no exception; The global market has a long way to go if it wants to reach the expected order of 10 billion.
The enthusiasm of capital has long since faded. Today, 23andme's market capitalization has fallen to around $300 million. From $6.5 billion to zero, the fall of 23andme highlights a problem: consumer genetic testing that does not really solve medical problems is only a consumer product with a limited ceiling after all.
So, where is the way out for consumer genetic testing companies?
01 A mouthful of saliva or a tube of blood can detect all your genetic information and predict your risk of genetic diseases, such as atrial fibrillation, coronary artery disease, etc. Will there be a market for such a consumer genetic testing product?
The answer is yes. In 2015, the global market began to explode. According to Blackstone's press release, Ancestry's annual revenue has exceeded $1 billion (revenue is divided into gene sequencing and membership subscriptions, of which about $800 million comes from membership subscriptions).
Capital also recognizes this track. Whether it is Wall Street or China, a number of consumer genetic testing star companies have emerged.
It is against this background that 23andme has risen to become another giant, with a market capitalization of $6.5 billion at one point. As far as the consumer genetic testing business is concerned, 23andme's products are not complicated, and there are two core scenarios:
One is ancestry tracing, that is, delineating specific family groups through genetic characteristics; The other is health risk assessment, which uses genetic testing to assess your risk of gallstones, Alzheimer's disease, diabetes, and so on.
Although once highly sought after by capital, 23andme's performance was much bleaker. In fiscal 2022, the company's consumer genetic testing revenue was $200 million; In fiscal year 2023, that figure is still $200 million, stagnant.
The revenue scale of 23andme is far behind that of Ancestry, and the core is that Ancestry's success is based on its veteran users accumulated over the years. Ancestry was originally a family tree**, and then homeopathic gene sequencing technology was introduced, and finally through genetic testing reagents, it helped users view the results of ethnicity and achieve the purpose of family tree traceability.
But for 23andme, it doesn't have a unique advantage, so it can only acquire users through platforms such as Facebook and Google and digital advertising on **, which is not satisfactory.
In addition to ancestral traceability products, products such as genetic disease risk are tepid in the field of genetic testing, and 23andme is also difficult to perform. These two factors have led to the fact that in the field of consumer genetic testing, 23andme, a giant, has staged a scene of opening high and going low, and its latest market value is less than 3$500 million.
02 Consumer or medical products? In essence, the fall of 23andme highlights a problem: consumer genetic testing, which does not really solve medical problems, is only a consumer product after all. The companies that have entered the game can only be regarded as consumer companies that have caught the hot spots.
The reason why the overall testing volume is average is that the pain points solved by consumer genetic testing products are not clear.
Diagnostic products, such as colorectal cancer early screening products, solve the pain points clearly, not only the performance is close to the "gold standard" colorectoscopy, the compliance is much higher than that of colorectoscopy, and it is cheaper, so the demand is strong.
In addition to curiosity, health assessment products do not provide consumers with a conclusive result of whether they will develop a disease, but can only provide an ambiguous answer: you may have a higher risk of developing a disease.
Although there is also a scientific basis for this test, it is not reliable. Because the existence of gene defects does not equal the probability of disease, and we do not have the ability to detect mutated genes for some diseases.
According to some studies, the consumption of genetic testing products does not have much benefit for consumers in terms of disease prevention in the future. In this case, there is no rigid demand for consumer genetic testing products. In the case of the inability to form a consumer trend, it naturally limits its user ceiling.
If you don't have enough users, you can also use the frequency to make up. Unfortunately, in terms of product frequency, consumer genetic testing products are also not dominant. Because most products, one use is enough, and there is no need to use it once a month or even a year. The small number of users and the low frequency of consumption lead to the low demand for consumer genetic testing products.
The reason why the market size of consumer genetic testing is difficult to grow is that in addition to the factor of quantity, there is also the difficulty of growth.
From a global perspective, the price of consumer genetic testing products is not high. In the U.S., the 23ANDME Basic Ancestry and Signature Test Kit starts at $99 and has a medical service surcharge of $100. This is already the ceiling, as the competitors' are either the same or slightly lower.
Neither a medical product that meets the needs of patients, nor a consumer product that meets the rigid needs of users, consumer genetic testing naturally falls into a dilemma.
03 Become a serious medical companySo, what is the future of consumer genetic testing companies? 23andme believes that it is a serious medical company.
The core reason is that 23andme believes that it has mastered the genetic code. Through a large number of sample testing, 23andme has accumulated a massive gene database.
According to it, more than 80% of users are willing to give away data for companies to use as research. And the company can use this data to go.
Determine whether specific genetic variants affect an individual's likelihood of developing certain diseases.
On this basis, the company's monetization model can be described as extremely high. On the one hand, the company can carry out the research and development of corresponding targeted drugs, and reap the commercialization and cooperation income of drugs; On the other hand, the company can also carry out the development of corresponding companion diagnostic products and earn revenue from combination products.
According to 23andme, it has already developed two potential FIC molecules. From the perspective of positioning, it seems that there is hope to become a spoiler of immunity. For example, the most advanced 23ME-00610 has a core scenario of solving the problem of drug resistance of PD-1 antibodies.
In other words, the current 23andme is working hard to transform into an innovative pharmaceutical company. But for 23ANDME, it also faces many problems faced by AI pharmaceutical companies.
First, whether the technology is feasible. After all, it is unknown whether 23andme's massive genetic testing data is valuable, and whether the value can be reflected in the field of innovative drug research and development;
Second, whether it can go on in the capital winter. In fiscal year 2023, the company posted a net loss of more than $300 million, and the loss trend continues. The latest financial report data shows that the company's cash balance on the books is only 2$5.6 billion.
In addition, the company's stock price has continued to fall, and the stock price has been below $1 for more than a month. Judging from the company's current situation, the situation is not optimistic.
Whether the research and development of innovative drugs is the way out for consumer genetic testing companies is still a question that needs to be answered.