Color: a unicorn born amidst the COVID-19 pandemic

Color: a genetics testing company took advantage of the COVID-19 pandemic to transforms itself into a digital public health unicorn with a colorful future.

With the recent announcement of a $167 million Series D funding round, Color becomes a unicorn, with a $1.5 billion valuation [1]. The announcement does not come as a surprise to any student at Harvard Business School. For many of these students, a coffee chat at Chao or a lift session at Shad does not go by without a quick stop for Color COVID-19 test drop off.

A California company, founded in 2015, began as a genetics testing company, offering patients and their physicians an affordable and convenient way to “understand their genetic risk of cancer” by testing for most common mutations associated with cancer [2]. Its genetics product offering began with BRCA1 and BRCA2 saliva test, mutations in which are responsible for most of hereditary cases of breast and ovarian cancers. At the time, a similar test could cost a patient or their insurer $4,000. Color offered the test for $249. Today, they offer testing for 72  additional genes, which cover the most common causes of inherited cancer and heart disease as well as metabolism of medications [3]. The price of the expanded offering remained unchanged – true to its founding mission to reduce disparities in access to high-quality genetic testing.

A key strategic move for the company was its proposition as a business-to-business company, focusing on partnerships with employers, unions, and governments to provide these services to their employees, members, and constituents, which differentiated it from its direct-to-consumer competitor, 23andme. Color also built a reputation for itself by building out its partnerships with some of the top academic institutions in the US, including the Broad Institute, Harvard University, and Stanford University. In its early stages, the company heavily invested in software design to ensure seamless and interactive delivery of sensitive information to their customers. The platform also connected all customers to free genetic-counseling to ensure that any user of its product had no unanswered questions after learning about their result [2]. Additionally, Color prioritized incorporation of big data and bioinformatics into its strategy to position itself to become a frontrunner in digital public health.

When COVID-19 struck the US early last year, the testing was very limited. Many people with suspected infection were denied testing, as it was reserved only for the sickest patients. The greatest limitation was the capacity of PCR tests, which were time and resource intensive. Color saw an opportunity to take advantage of the digital infrastructure it has built to contribute to the testing effort. Once it developed a CLIA test, a much faster and cheaper testing technology, it opened up its first testing lab in San Francisco in April 2020, which became the highest capacity site in the United States [4]. Since then, the company has signed on countless partners for its COVID-19 testing platform, including local governments, hospital systems, and businesses [3].

Although the testing technology and autonomization of the testing process was important for Color’s success, it was the digital platform it has developed as a genetics testing company and the analytical tools behind it that allowed it to make significant contributions to the public health effort of containing the spread of COVID-19 through “risk screening, test ordering, results delivery, case management, contact tracing, and public health agency case reporting” [5].  The company also stayed true to its mission, making its platform available to others. According to the company, their integrated software platform contributed to vaccine research and epidemiological and observational studies.

The pandemic has brought a lot of companies to a stall. However, Color was able to use the pandemic to position itself as a leader within the digital public health space, saving lives, while also transitioning itself from a California start-up into a unicorn. The digital platform it has built over the last year will continue to power the public health and clinical research efforts across the country long after the pandemic is over.

 

References:

[1] Morris, D., 2021. Health-tech platform Color is a unicorn after new funding round. [online] Fortune. Available at: <https://fortune.com/2021/01/04/color-unicorn-funding-round-valuation-health-tech/> [Accessed 10 February 2021].

[2] Kendall, M., 2021. New Product from Color Genomics Makes Comprehensive Genetic Testing for Breast and Ovarian Cancer Risk Affordable. [online] Businesswire.com. Available at: <https://www.businesswire.com/news/home/20150421005174/en/Product-Color-Genomics-Comprehensive-Genetic-Testing-Breast> [Accessed 10 February 2021].

[3] Color. 2021. Products For Your Patient. [online] Available at: <https://www.color.com/providers/products> [Accessed 10 February 2021].

[4] Letter on the CDC & FDA. 2021. Color; Color to launch COVID-19 testing lab, open-source infrastructure to bolster national response to pandemic.

[5] PR Newswire. 2021. Color to launch COVID-19 testing lab, open-source infrastructure to bolster national response to pandemic. [online] Available at: <http://www.prnewswire.com/news-releases/color-to-launch-covid-19-testing-lab-open-source-infrastructure-to-bolster-national-response-to-pandemic-301032363.html> [Accessed 10 February 2021].

 

 

 

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Student comments on Color: a unicorn born amidst the COVID-19 pandemic

  1. Super interesting especially to see how the pandemic has affected the valuation of the company, and of course a super relatable article. It would be interesting to see how the business sustains this success especially after the demand surge due to a global pandemic cools down. Nevertheless, they truly did position themselves strategically and have created and captured value across the country.

  2. Vartan – fascinating article. I’m curious what percentage of their business at maturity will come from B2B testing sales. Do employers have meaningful incentives to fund genetic testing above and beyond what insurance covers? How will their willingness to pay for expensive testing with a long term payback period change as the employer/employee relationship continues to fray in the new gig based economy.

    1. I wonder if life insurances will be a logical partner as they benefit from preventative health efforts much more than employers and payors, which on average lose its employees and members in less than 3 years.

  3. Vartan – thanks for sharing the story behind something that has become so essential to our every day life here on campus. As I read you blog I cannot stop questioning what will be the evolution of this company as the pandemic comes to an end? Echoing Pranav, from your experience in the field, what do you see as the natural progression for a company that has been built in such an integrated manner to the current context? I imagine from yoru writing that the software solution it provides to genetic testing is the true value that will be sustained post pandemic.

    1. I see a lot of potential for the company to leverage their strong relationships with hospital systems and public health departments to collect and monetize anonymized patient data by selling it to biotechnology and pharmaceutical companies. Additionally, they have been able to build an expertise in guiding public health policies to mitigate spread of infections, which can be applied to future outbreaks. Although I am certain or perhaps hopeful that we will not have another pandemic in our lifetimes.

  4. Very interesting post. Nice to see how quickly Color turned into solving the COVID testing problem by leveraging their existing capabilities. I wonder how easier and more natural this move was for them to make, than it was for an incumbent lab which already detains high expertise in testing operations, but lacks the needed digital capabilities.

    1. You raise a great point, Marcos. Despite making their technology and digital platforms available to other laboratories, few could justify investing in new equipment required to run CLIA testing, due to capital expenditures required, limited physical space in testing laboratories for new machines, and inferior ability to automate the entire testing process by focusing on a single test for COVID-19.

  5. Great post! I do wonder how Color evolves and changes in a post covid world. Will the “winners” of covid have staying power or will they be looked back on as flashes in the pan. I also wonder how Color has changed peoples expectations around the ease of testing.

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