Pioneers such as 23andMe and Navigenics use snips of genes to make medical predictions. Now new tools from more startups are on the horizon

By John Carey
Online Extra October 23, 2008, 5:00PM EST text size: TT

The first wave of personal genomics companies, such as Navigenics and 23andMe, may face an uphill battle turning gene analysis into a business. There are simply too many limitations on their ability to make accurate predictions about a customer’s health. But other promising business opportunities are coming in this field. Some analysts see a multibillion-dollar market forming around the craft of gene sequencing. The spoils, they say, will go to the companies that figure out how to read genes at the fastest speeds and for the lowest price.

Some of the most intriguing technology comes from Pacific Biosciences in Menlo Park, Calif. Building on innovations from academic researchers at Cornell University, the company is harnessing biology’s natural ability to copy DNA in order to read its code. Every cell contains an enzyme, called DNA polymerase, that makes long pieces of double-stranded DNA, one “letter” at a time, using an existing strand of DNA as a template. In the Pac Biosciences approach, a DNA strand to be decoded is given to the polymerase enzyme. As the enzyme copies the strand, a sequencing machine is reading each letter as it is added.

Speed Reading

“I was blown away by the sophistication and elegance of their approach,” says Dr. Tim Harris, director of the Advanced Technology Program and corporate vice-president for technology at SAIC (SAI), which is working with the National Cancer Institute on sequencing cancer cells. Adds J. Craig Venter, who sequenced the first human genome: “It’s pretty damn exciting, if they can live up to anywhere near the data they are claiming now.” Theoretically, says Hugh Martin, Pac Biosciences’ chief executive, the method could read an entire human genome in a few hours. Plus, the system is able to sequence parts of the genome that contain many repeated letters, which are virtually impossible to read now. By next year, the company hopes to be selling sequencing machines.

Other companies, such as Helicos BioSciences(HLCS), are chasing the same prize. One that made a splash recently is Compete Genomics in Mountain View, Calif. It announced in early October that, by the middle of next year, it will read the entire human genetic code at a price of $5,000 per genome. “That would be a dramatic drop in price in human genome sequencing,” says geneticist George Church of Harvard Medical School, who founded a company, Knome, that offers genome sequencing to individuals.

Such advances could transform the gene-testing business and force companies such as 23andMe and Navigenics, which rely on bits of genes as disease “markers” to switch to whole-genome sequencing Ultimately, says geneticist Greg Lennon, co-founder of gene startup SNPedia, information about the genome is “a commodity.” And the information is finite, he adds. “Whoever can provide it accurately with the best and cheapest technology will win here.”

Carey is a senior correspondent for BusinessWeek in Washington.