a business? In baby steps. GenePeeks is first trying to build up credibility, and business, by offering its service at sperm banks, where it feels it has a clear advantage over standard practices—and doesn’t face competition from conventional carrier testing. Morriss says currently, most sperm banks just screen donors for a “handful” of diseases, 10 or so based on the ethnicity of the donor. Silver adds that conventional carrier testing “has no utility” in sperm banks, because every single person carries recessive gene mutations, and the industry standard is to reject donor applicants who come up positive on any genetic test—meaning, if carrier screening were widely implemented, they’d have no donors.
GenePeeks is trying to form partnerships with sperm banks to keep expanding the catalogue of donors that it can match with clients. There are no economics involved in these partnerships: the sperm banks just get another service to offer, and GeenPeeks gets access to more data and potential clients.
While Morriss says GenePeeks can break even selling to sperm bank clients, the much bigger opportunity is offering their service to everyday couples looking to have children. GenePeeks’ challenge is first to get there by amassing credibility and building a sustainable business, and then differentiate itself in a market where a slew of companies—startups and heavyweights alike—are duking it out with various versions of carrier tests.
Silver argues, however, that the company’s technology has the capability to do a few things conventional carrier screening can’t. For one, he says, conventional screening looks for a finite set of the most common mutations, but doesn’t screen for the other, less common ones that can also cause a disease. GenePeeks can, because it’s sequencing the whole genome of each parent and combining them. This means that GenePeeks’ test might reveal carriers of, say, cystic fibrosis who wouldn’t show up in other tests, Silver says.
Secondly, Morriss adds that the technology could eventually enable the company to look at more complex diseases that involve multiple mutations.
“That’s something that the carrier testing world will never able to do,” she says. “And the limit there is just how quickly the research can go in terms of uncovering the genetic origins of those diseases.”
GenePeeks has a lot of work to do to get there, of course— it’s a very early-stage company at this point. The startup is only partnered with two sperm banks so far, and its database only consists of about 100 donors. GenePeeks, which just launched Matchright at the end of May, also has yet to see if these sperm bank clients will be willing to pay $2,000 apiece to help alleviate the real—but low—risk of passing on an inherited genetic disease. As of now, seven people have received a personalized GenePeeks catalogue in test runs; the company hasn’t made a sale yet.
And Morriss notes two of the big strategic challenges GenePeeks is facing right off the bat: creating awareness, and deciding just how long to stay in the sperm donor market before trying to make the leap. The company is currently raising a “few million” dollars of venture debt, but Morriss knows GenePeeks will need much more capital if it wants to expand and take on carrier testing more broadly. For now, it’s treading cautiously.
“The thinking is, let’s build [this company], let’s provide a fantastic service for this community…and then earn the right to think about expansion,” Morriss says. “We definitely want to walk before we run.”
