DNA — how can you monetise the new gold?
Dr. David Koepsell has many degrees: in philosophy, law and science. He is also an author who has written extensively on data ownership, including biometrics and in particular on gene ownership. This last piece of scholarly research ended up being encapsulated in a book, Who Owns You? in 2009 whose arguments were also used in a high profile lawsuit taken by the American Civil Liberties Union against a company that had patented genes. The arguments proved successful and were eventually adopted by the US Supreme Court in the overturning of the practice of gene patenting. Not many people can claim to have helped change the law at this level.
Gene sequencing is a relatively recent phenomenon. At the turn of the century a combined international effort by the scientific community came together to map the human genome in what was called the Human Genome Project. There are 3 billion base pairs that make up the human genome and most of them are the same from person to person. In terms of variants there is less than a 1% difference that makes people distinct people, with individual traits, strengths and sometimes diseases or medical conditions.
Mapping the entire human genome was like taking a picture of Earth from the International Space Centre.
“Since the first mapping, we’ve been zooming in, getting a better understanding of the different genes, trying to make sense of the complicated code.”
Critical commercial popularity emerged in the years that followed where people could process their personal DNA to identify their heritage. Two large American companies, 23andMe and Ancestry.com, quickly established themselves as market leaders in this field, cornering the space and charging relatively small fees for these tests. What was not generally known initially was these fees for sequencing a person’s DNA were loss leaders; it cost considerably more to provide this service.
The reason for offering such competitively priced tests lay in the small print. Purchasers of the service were also asked if they would allow their DNA data to be used for scientific research. In most cases, people ticked yes; it seemed a fair enough request. However, it later turned out this data, packaged in the right way, was many times more valuable even than the initial fee. These companies acted essentially as DNA data brokers to the pharmaceutical industry, offering the data to the highest bidders. The price differential was significant and while this industry is largely unregulated and hard to measure, DNA data has achieved hundreds of millions of dollars in sales.
Nothing is of course ever as black and white as we might like it. The business model of selling DNA data is still not profitable for the testing companies despite the hundreds of millions of dollars in investment from companies such as Google. Sequencing DNA is an expensive business, far dearer than the cost charged to each individual and reliant on physical kits and logistics.
“Most people who have availed of the test agree to the scientific research — I didn’t and as a result I get frequent emails asking me to change my mind. I’m not going to, even to help their profit or especially not to help their profit.”
GlaxoSmithKline has entered into sweetheart deals with 23andMe for $300 million to have exclusive access to their datasets.
“The intention is for pharma companies to make profitable drugs, and that is good for everyone, but I also think that people whose data is being used ought to be paid for the value of that data. It all goes back to transparency.”
The value of data harvested from people’s DNA cannot be underestimated. In the future, medicine will be precision based and tailored to individual needs (ie individual genetics). People will be advised to personalise their health care down to specific and individual diet and exercise. Access to that data is still an issue as many of the commercial tests, and even some of the medical tests, don’t really sequence all the data.
“Typically a chip tests around 600,000 single nucleotide polymorphisms for any changes — but we need more to get an accurate image for what is going on with an individual’s health. This kind of testing is expensive.
“We are now plateauing in the overall testing numbers — with about 35 million people commercially tested — but it’s slowed way down with the result that the main commercial companies are letting staff go. So, we can see this new stage as an opportunity to get people back engaged, testing again but using transparency to monetise their data.
“Using our platform will be a game changer. People are part of the market, they can sell their data to a buyer and everything is transparent.”
David sees it as a new virtuous circle where people are paid for their data and the data is then used to create world changing treatments and drugs.
EncrypGen went live in 2018 and currently has 2000 people signed up to the platform and a further 1500 who have uploaded their data. There have already been commercial transactions on the site with researchers interested in using the data.
“We need more to make it viable, so we are aiming to grow the users past the 50,000 mark where we can make it commercially viable, indeed profitable. We also know how much it costs to acquire new users, it’s just a matter of capital.”
This is where EncrypGen is conducting a fundraise with CoinMetro, beginning on January 22 and concluding at the end of March. CoinMetro, with partner Ignium, has created a tokenized platform for raising money. They are issuing a convertible note as a debt instrument.
“That means people purchasing the convertible loan note are not buying shares in the company, at least not at the outset. At the end of the term of the loan note they can take the interest and original investment or if they really like us, then they can convert their investment into shares.
“This method of seed funding works for us as it doesn’t dilute the shares for other rounds. We are offering a two-year bond with 7% interest annually. The exciting kicker is that within two years our investors can choose to become involved in a multimillion-dollar company — as a reward for helping with the original investment — by converting their loan note into equity.”
EncrypGen is aiming to raise $1.5 million initially, with entry investments beginning at $100.
“It’s very accessible. We did that in part as we have a very strong community behind us. We have always been very transparent and straightforward and we are dedicated to making this work. We’ve done the science, we delivered the product on time and we are ready to start onboarding users.”
To onboard, upload DNA data and get involved go to EncrypGen.com