Alexander Kel sells programs to pharmacists that adjust the composition of medications. And is about to take part in the personalized medicine boom

“We can deconstruct your genome!” is a bold statement that greets everyone who visits Genexplain.com. The founder of the German company of the same name, a native of Novosibirsk, Alexander Kehl, is not a member of the billionaire family, like Anne Wojcicki, the wife of Google creator Sergey Brin, whose service 23andme analyzes the DNA of any mortal. But Kael approached the increasingly popular business of personal gene research from academic science. The company he created brings in $1.5 million a year.

The idea of individual treatment for each patient appeared at the end of the 2000s in the USA. The catalysts were the growing penetration of the Internet and the pharmaceutical crisis. “The pharmaceutical business is built on developing a blockbuster drug that can be sold to a billion people,” explains Kael. “However, the nature of things is such that there are no remedies that are equally suitable for all people.”

Kael's business is selling computer programs to pharmaceutical companies that calculate how much a particular medicine can harm patients. The theoretical biology specialist took the first step in this direction 10 years ago, creating the Institute of Systems Biology company in the Novosibirsk Academic Town at the Research Institute of Cytology and Genetics, where he then worked. Over the course of several years, a team of young programmers created a “virtual model of a human cell.” With it, Kael claims, it is possible to analyze specific DNA and predict how the patient’s body will react to certain medications. The next step was the creation of an Internet platform where any programmer could upload programs related to bioinformatics. The idea was to create a project for sharing developments in the biotechnological field, similar to Wikipedia or Linux programming communities. “Developers all over the world knew how to communicate with each other and transfer data - it was just a matter of creating the right shared environment,” recalls Kael. At the same time, he worked as vice president for research at the German company BioBase, specializing in writing software for biological research, where he learned to sell software in his field.

In 2010, sensing a boom in personalized medicine, Kael left BioBase to focus on his own business. To begin with, he monetized his Internet platform (other similar portals, for example the American Galaxy Bioinformatics, remain non-profit). Programmers who posted their software were given the opportunity to sell it to pharmaceutical companies. (The owner of the platform takes a percentage from them.) Revenue from the platform, which recently moved to Genexplain.com, is still small - about $15,000 a month. Programmers at the Institute of Systems Biology also sell their software to pharmaceutical companies and institutes. Novosibirsk clients include Johnson & Johnson, Bayer and Novartis.

And the main hit of Kael’s business is the PASS program, which predicts the biological activity of molecules. Experimentally, for example on animals, such tests would take years. PASS allows you to analyze 60 million molecules in a few hours and provide a high probability list of substances that may have activities related to cancer, diabetes, etc. The program has been sold since 2002; During this time, more than 200 publications were published in scientific journals citing the results of her work. “Now we consume drugs that were invented 10-20 years ago using means thirty years ago. What we are doing now will help make medicine for our children or grandchildren,” says Kehl.

PASS accounts for the majority of Kehl's sales (about €1 million per year); buyers include pharmaceutical companies like Amgen, Genentech, Eli Lilly and industry research institutions. “They have a well-known platform in the scientific community, we are testing its new version, and we plan to buy Genexplain services on a commercial basis,” Andrei Zinoviev, a researcher at the Curie Institute in Paris, told Forbes.

However, the head start that Kehl and other geneticists have gained by cultivating their scientific garden since the 1990s is rapidly dwindling. The personalized medicine software market is already worth $1 billion, and the smell of money attracts big predators.

System integrator Oracle in February 2012 began research in US hospitals to develop a program that analyzes information from hospital databases (patient history, medications prescribed to them). The goal is to determine the effectiveness of treatment with certain medications depending on the genetic characteristics of the patients.

Medical concerns are forming strong scientific divisions and also buying promising startups. For example, the company Ariadne Genomics, founded by Russian scientists, which sells a program that searches for information on the results of research on various substances and cells in the databases of scientific and medical institutions, was recently purchased by the Dutch concern Elsevier.

Realizing that it was difficult for the Russian platform to sell its services, Kehl registered Genexplain in Germany. He called his friend and former BioBase CEO Edgar Windenger as a co-founder. His main goal in the coming years is to reach not B2B clients, but the end consumer.

People want to know what the likelihood of getting a particular disease is. Genexplain plans to reduce the cost of deciphering the genome taken from biosamples sent by the client, and sell information about people's health directly to them. So far, according to Kael, his specialists can read the genome in two days, spending $1,000 on it. The price is uncompetitive: the same 23andme promises to predict the future for $299.

However, Genexplain has an advantage - 23andme does not analyze the entire genome. More in-depth research is needed, and Kael is quite capable of conducting it, admits Ariadne Genomics founder Ilya Mazo. He estimates investments in the development of a mass service at $3–4 million, and Kehl himself at $6 million. He ordered a business plan from Ernst & Young and, as he himself claims, together with Edgar Windenger he is looking for a strategic investor.

But Kael still wants to make money from information for the pharmaceutical industry. This is research based on Genexplain's growing data bank. After all, by donating his blood for research, the user gives away information about his genome. “You can’t collect a lot of money from end consumers, but people are useful to us in creating an information environment,” says the scientist. “We plan to make revenue from products for large businesses, which will be based on our database.” How realistic are these plans? “Personalized medicine is a very hot topic, in its wake, professional and serious researchers such as Genexplain can create services for recognizing diseases through genome analysis. But we must understand that the first publications on the ability to predict the likelihood of common diseases appeared recently, so the risks of this type of business can be realized in 20 years,” sums up Andrei Zinoviev from the Curie Institute.

How to make money on computer programs for geneticists