An earlier version of this article attributed a statement to NCGR President Greg May that was actually made by HudsonAlpha investigator Shawn Levy. The story has now been corrected.
The future is uncertain for gene-expression microarrays as applications based on high-throughput sequencers continue to come down in price. At the same time, the market for genotyping chips is less likely to face competition from sequencing, according to two analysts familiar with the industry.
Writing in separate research notes, Leerink Swann's Dan Leonard and Goldman Sachs' Isaac Ro both cited the recent availability of new sample-preparation kits and higher-throughput instruments as evidence of the gene expression market "tipping in favor" of sequencing over microarrays. Both Leonard and Ro released their notes after attending the American Society of Human Genetics annual meeting in Washington, DC, last week.
In terms of the expression market, the analysts predicted that Affymetrix's expression business, in particular, will struggle as transcriptome sequencing, or RNA-seq, becomes more affordable and popular. However, in genotyping, the analysts predicted continued demand for whole-genome genotyping chips for use in association studies and cytogenetics research.
In a note released on Nov. 5, Leonard wrote that Leerink Swann continues to "struggle to see secular growth in the microarray market, especially in gene expression," where Affy is the market leader. "The improvements in sequencing instrumentation and sample prep noted by both [Illumina] and [Life Technologies] could enable RNA-seq to further encroach on arrays for gene expression studies," Leonard wrote. "The turn-around time for RNA-seq analyses is compressing [and] complex data analysis could be the last barrier to eventually fall."
Sequencing vendors like Illumina, which also sells arrays for gene-expression profiling, have long predicted that so-called digital gene expression performed on their sequencing platforms will eventually wrest the market from array platforms. Since Illumina debuted DGE applications on its sequencers three years ago, CEO Jay Flatley has touted the application as a replacement for array-based expression tools (BAN 2/12/2008).
According to Leonard, though, the comparative cost equation between expression arrays and RNA-seq has "changed dramatically" only in the last six months.
"Assuming plentiful computing resources," RNA-seq now costs about $800 per sample versus around $650 per sample for arrays, "with much better data," Leonard wrote. The "purchase decision then tips in favor of RNA-seq for labs with the computing resources to interpret the data output," he wrote.
Leonard noted that between 40 percent and 50 percent of Affy's revenues are derived from expression array sales — representing approximately $150 million based on the company's 2009 revenues — while expression array sales pull in between $5 million and $10 million per year at Illumina, leaving the former more exposed to the shift.
The "outlook [is] murky for gene expression arrays," he concluded.
One of the reasons for the reduction in sequencing cost is the availability of new sample-prep kits. At ASHG, Illumina launched its TruSeq sample-preparation kits for DNA, RNA, and small RNA applications and the TruSeq Exome Enrichment Kit, for use across the company's portfolio of sequencing platforms. Greg May, president and chief operating officer at the National Center for Genomic Resources, claimed in a statement that the availability of TruSeq means that "RNA-seq is now cost-competitive with microarrays."
In his note, Leonard said that Illumina's TruSeq sample prep kits are "incremental to its current offering and further speed the sequencing sample prep process, as well as lower its cost." Referring to Shawn Levy, an investigator at the HudsonAlpha Institute for Biotechnology, who spoke at an Illumina workshop at ASHG, Leonard said that "TruSeq RNA kits cut the number of purification steps required in RNA-seq sample prep in half."
In a note released on Nov. 7, Goldman Sachs' Ro argued that the availability of TruSeq is "likely to hurt Affy's gene expression business." He cited a presentation at an "Illumina-sponsored luncheon, [where] one customer showed that in a side-by-side with [Illumina's HiSeq 2000 sequencer] and Affymetrix's GeneTitan, the cost and time were roughly equivalent." Ro wrote that this "new dynamic will put pressure on Affy's gene expression business as customers with HiSeqs will opt to perform RNA-seq instead of purchase a GeneTitan."
He added that the company's research "continues to show that Affymetrix’s GeneTitan is having difficulty gaining widespread adoption," and that Illumina's new, lower-priced reagents could drive researchers looking for a gene expression instrument toward the HiSeq 2000 because it would also allow them to do sequencing.
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In addition to gene expression, the new TruSeq kits could impact other array-based applications. Leerink Swann's Leonard said that the low cost of the whole-exome kits, around $300 per sample versus a "street price" of $800 per sample for competitors, should make Illumina a "major player" in a market "historically dominated" by Agilent Technologies and Roche NimbleGen.
New Genotyping Chips 'Well Received'
While the future of the array-based expression and even sequence-capture markets may appear bleak to analysts, both Leonard and Ro had more positive predictions for the genotyping array market.
According to Leonard, the outlook for genotyping arrays is "more secure" than expression arrays. Genotyping arrays could "fare better than their expression siblings as the cost of sequencing falls," he wrote, noting that "GWAS still have a place in research."
Additionally, genotyping arrays can "serve a complementary function to sequencing " as "data from genotyping arrays can inform coverage of whole genome sequencing," a method he likened to an "internal control in a diagnostic test." As genotyping arrays cost about $200 per sample, Leonard wrote, the arrays "could be a cost effective tool to check sequencing coverage at a low price."
Likewise, while Ro predicted that sequencing will pressure Affy's gene-expression business, he said that the company's Axiom genotyping arrays have been "well received by customers, especially their custom genotyping arrays." Additionally, he said that Goldman Sachs' contacts "spoke positively" about Affy's cytogenetic arrays, noting that "several" studies presented at ASHG used the firm's SNP 6.0 arrays to conduct cytogenetic research.
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