23andMe has made a name for itself providing a service many people didn’t even know they needed: a complete DNA profile, including risk percentages for diseases such as Parkinson’s and Alzheimer’s. But the FDA is putting a stop to the sales of the $99 kit that has made the company so successful, according to Bloomberg.
Since being founded in 2006, 23andMe has amassed more than $161 million in funding over four rounds, largely due to the vote of confidence the company received from Google. The relationship, of course, is no secret — 23andMe was started by Anne Wojcicki, Google founder Sergey Brin’s (now estranged) wife and the sister of long-time Google executive Susan Wokcicki. Still, it has proven to be attractive for other investors as well, garnering $50 million in Series D funding in 2012.
But the company’s run-in with the FDA could threaten the entire business, as the government group has sought to punish 23andMe for promoting health benefits without approved to do so. In an extensive warning letter, the FDA urged the startup to “immediately discontinue” the sale of its $99 saliva-based genome testing kit, citing ignored recommendations and incomplete testing that make it impossible for the government group to identify whether the process is accurately profiling DNA.
According to Bloomberg, 23andMe submitted applications to the FDA twice in 2012 for the least stringent approval processes for medical devices, but the approval has been stalled due to lack of significant evidence. As the product claims to evaluate a consumer’s risk for disease, it needs FDA approval to keep its doors open.
23andMe has yet to respond to the open letter, but it will be interesting to see how the company plans to wiggle its way to FDA approval while continuing to sell and administer tests. It’s certainly not the first startup to bump up against regulations — Airbnb and Uber are two lightning rod examples of the government putting the brakes on a Silicon Valley startup. But there is a chance that it could become the red-tape poster child for other medical startups seeking to hack healthcare.