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How a genetic data company jumped from “Shark Tank” and into groundbreaking research projects.
DNAsimple CEO Olivier Noel (right) and COO Joel Cobble (left) talk business in a New York City restaurant earlier this month with Mark Cuban, who invested $200,000 in their company on this season of ABC’s “Shark Tank.” (Photo courtesy DNAsimple)
PHILADELPHIA — Last month, 2 Penn State doctoral candidates, Olivier Noel and Joel Cobble, invited friends over to watch a new episode of “Shark Tank.” The former lab partners are at the helm of DNAsimple, a start-up born out of their frustration with the tedious process traditionally used to recruit donors for genetics studies. They gathered that night to watch Noel pitch their solution on ABC: In essence, give saliva to researchers, get $50.
It takes just a few minutes to register online with DNAsimple, which launched 2 years ago. If donors fit a researcher’s parameters, Noel’s company confirms their medical history and then mails them a kit. Swab inside the cheek, mail it back, and get paid. Participants earn $50 each time their DNA is used in a study.
More than 40,000 entrepreneurs apply each year to appear on “Shark Tank,” and that isn’t solely for the opportunity to solicit powerful investors; nearly as enticing is the chance to pitch your product to the millions of people watching on TV (and the millions more who will later stream the show or catch reruns on CNBC). Within 2 minutes of Noel appearing on screen, the viewing party at his and Cobble’s house had stopped watching the television—they’d become transfixed by their laptops, which showed sign-ups for DNAsimple “going berserk.” DNAsimple.org crashed before the most coveted Shark of the bunch, Mark Cuban, closed a deal to invest $200,000 in exchange for a 15% stake, valuing the grad students’ company at $1.3 million.
What caught the tech billionaire’s eye? “It’s the ultimate example of doing well by doing good,” Cuban told HealthCare Analytics News™. “By monetizing the sharing of one’s DNA in a manner similar to donating blood or plasma, they can help enable research projects that may otherwise never reach the critical mass needed. I love the opportunity and the potential societal impact.”
The Problem and the Promise
Even with the improved accessibility of genetic data, it can often take several years for researchers to collect a sufficiently large and diverse sample. Particularly when DNA donors are recruited at nearby hospitals, studies that seek to investigate rare diseases may never achieve the necessary sample to get off the ground.
DNAsimple’s donor registry has surpassed 130,000, up about 500% since Noel appeared on the show. Now the company’s goal is to hit 1 million sign-ups by the end of 2018, which would vastly expand its ability to partner with academic and for-profit researchers.
Speaking recently with HealthCare Analytics News™ at their office in downtown Philadelphia, Noel and Cobble described their optimism about the company’s future while hardly mentioning its financial upside. Their first objective remains their foremost: to dramatically facilitate genetics research, while generously compensating people for a surprisingly unobtrusive contribution.
“The infrastructure that you have to set up to recruit people into a study is a major undertaking,” explains Carolyn Hutter, PhD, acting director for the Division of Genome Sciences at the National Human Genome Research Institute. Although Hutter was previously unfamiliar with DNAsimple, she says, “If this model works, they really are providing a service that would enable researchers to, ultimately, save money.”
But for all the intuitive resonance of DNAsimple’s model, Noel’s success at securing an investment might have seemed improbable to TV viewers, considering what appeared to be 5 major strikes against him when he stepped into the Tank.
The Sharks usually insist that entrepreneurs be singularly focused on their startup. Noel, who’s now 29, created DNAsimple while also pursuing an MD-PhD full-time. “That was not advisable,” he jokes in hindsight. If he sounds overextended as a student-CEO, Noel’s backstory helped put the Sharks at ease.
He emigrated from Haiti after the devastating 2010 earthquake, joining family in New York City. There, Noel held up to 5 jobs at once in order to pay his way through Queens College, where he studied biomedical research and graduated with honors, earning a full scholarship to Penn State. His company’s launch was boosted by the prestigious Y Combinator fellowship in Silicon Valley, where Noel and 2 co-founders won a $12,000, equity-free grant. This year he was recognized on the Forbes “30 Under 30” list for rising stars in science.
After Noel told his story on “Shark Tank,” the British billionaire Richard Branson, a guest investor that episode, interjected: “Can I make a non-political comment here? You are the exact reason that America should open up to immigrants.” And so the Sharks seemed satisfied with his commitment.
The Sharks rarely bet on companies that haven’t already generated significant revenue. To date, DNAsimple has delivered a full order of samples to about a dozen small-scale studies, so they’ve only paid donors a few hundred times. Researchers typically pay DNAsimple $155 per sample, and each kit costs $12.50 to manufacture. Compensation for a returned kit has increased over the company’s brief history from $30 to $40 to $50.
For a variety of reasons, but mainly to reduce overhead, DNAsimple doesn’t actually extract the DNA from saliva, nor does it store the genetic data. For potential donors who fear that their DNA results could later be used against them—say, to deny healthcare—DNAsimple protects participant anonymity at every step in the process. First, donors must consent to having their DNA analyzed for a particular study. Then, that study works with DNAsimple to confirm donors’ medical history. Donors return the saliva kit in a prepaid box, DNAsimple removes any trace of their names from the packages, and then delivers the samples to researchers. As a result, donors must provide a new sample each time they contribute to a study.
Image courtesy DNAsimple
Early on, Noel’s team realized that it’s too risky to pay for a saliva contribution before an order is locked in, a move that could have grown its registry—and its debt. The emphasis has been on refining the process, especially by filling orders for studies of rare conditions, while building the database of people who’ve signed up to provide samples.
Many genetics studies evaluate thousands of samples—sometimes tens or hundreds of thousands—and therefore DNAsimple’s value to researchers is directly tied to the size of its donor registry (and its quality, since the diversity of participants can be as important as their sum). This creates a growth-stunting Catch-22: It takes a large registry to get money from studies, but it takes money from studies to grow the registry. Cuban must have realized that publicity from “Shark Tank” would provide a shot in the arm for sign-ups, and if the registry exceeds a certain threshold, partnership opportunities would increase exponentially.
The Sharks are reluctant to invest in products facing serious competition. DNAsimple is hardly the only service that collects saliva for DNA; around 2010, saliva replaced blood as scientists’ preferred source of DNA. One perk of using saliva is it’s clearly safe to mail—after all, as Noel points out, spit already seals envelopes and secures stamps.
Many genetics studies can get samples from biobanks. In 2016, the National Institutes for Health awarded the Mayo Clinic $142 million over 5 years in order to build a first-class biobank, part of President Obama’s Precision Medicine Initiative. Like DNAsimple, this Minnesota biorepository aims to enroll more than 1 million participants.
Sarah Nelson, a research scientist and PhD candidate in public health genetics at the University of Washington, described a common shortcoming of biobanks. “There’s always a concern with batch effects,” she says, “where you have genetic data cobbled together but without the medical information needed to answer your research question.”
Another alternative to recruiting donors from hospitals is partnering with companies that sell direct-to-consumer gene-testing services, such as 23andMe. In 2015, Pfizer announced an agreement to conduct research using 23andMe’s database. A year later, the pharmaceutical giant had used 450,000 samples from that database for a study evaluating genetic indicators of depression. A week before the Pfizer deal, 23andMe announced a $60 million agreement with Genentech. Bloomberg News reported that in 2014, 23andMe formed 14 such partnerships with researchers.
One advantage for a business like 23andMe is that it makes money on both ends: Customers pay to have their DNA analyzed and then aren’t compensated when the company sells their data for research. The 23andMe database now exceeds 3 million people, HealthCare Analytics News™ is told, and more than 80% of those customers consent to having their data aggregated for analysis by researchers.
Noel and Cobble point to several areas where DNAsimple claims a competitive edge: Saliva samples are purchased for each specific study, and exact demographics can be recruited with targeted advertising. The registry includes people from all over the US and Canada, with whom researchers can communicate directly (though still anonymously), requesting precise biographical and medical info as needed.
Although biobanks can supply samples on demand, they usually store a massive number of them, using maybe 2% of the collection at a given time. DNAsimple avoids that storage expense entirely.
The Sharks are wary of working with entrepreneurs who lack a money-first mindset. Early on, DNAsimple was approached by an academic who had spent a year looking for samples from just 1 or 2 people with a very rare disease. Noel and Cobble were thrilled to be able to supply that researcher with 6 samples. Did they hike the fee for each kit delivered, considering the obscurity of those samples compared to supplying saliva from 6 people with more conventional backgrounds?
They didn’t, and wouldn’t, for now. Noel and Cobble are no less proud of that deal. “Maybe a traditional business person would not appreciate that, but we get excited as researchers first,” Noel says.
The Sharks hardly ever give in to negotiations. Cuban, who’s notorious on the show for being ferociously uncompromising, offered Noel $200,000 for 20% of the company. When Noel asked if Cuban would go down to 15%, viewers probably expected Cuban to blanch.
Instead, he shrugged, said “OK,” and they had a deal.
The negotiation was taped this summer, and Noel and Cobble have found Cuban to be a surprisingly accessible partner. They’ve been awed, they explain, by his shrewd guidance on virtually any aspect of their business.
Although the company considers the diversity of its registry a major asset, Hutter, of the National Human Genome Research Institute, questioned whether the type of people who sell their saliva would represent a random sample. In any case, there are many genetics studies for which randomness isn’t necessary. DNAsimple is open to expanding overseas, where it would have to adapt to varying consent laws. As the registry grows, Noel says that basically any part of their operation could change.
The company’s office in Philadelphia happens to be next door to the Chemical Heritage Foundation Museum. It’s a fitting coincidence, given the sort of impact Noel’s team hopes to have. “Who’s ready to join me in saving mankind?” he said to close his pitch on “Shark Tank,” playing along with the show’s typical grandiosity. If nothing else, his company is trying to save scientists doing potentially life-saving work a considerable amount of time and money. It’s that simple.
Danny Funt is a freelance journalist based in New York. He can be reached on Twitter @dannyfunt.