The sequencer ABI launced in 1988 was called the 370, not the 377, as originally reported. Also, because of an editing error, ABI at the time was an independent company. It was not yet called PerkinElmer.
NEW YORK, Nov. 22 (GenomeWeb News) - In 1988, when Applied Biosystems sprang onto the market with the first generation automated sequencer, the ABI 370, everyone who wanted a sequencing machine flocked to the company.
Thanks in large part to IP for its automated, four-color, fluorescent DNA-sequencing technology, ABI has dominated the sequencing market since then, with GE Healthcare and Beckman Coulter distant rivals. Today, companies developing next-generation sequencing machines that promise the $100,000 genome are facing a very different market.
The two leading the pack, Solexa and 454 Life Sciences, are launching their technologies around the same time, and a number of companies racing to develop their own machines are watching to see which inroads these companies pursue. Both are flush with cash. 454 has partnered with Roche for a deal potentially worth $62 million, and yesterday, Solexa announced a private stock deal expected to net the company $61 million.
"454 sees a large market for high-throughput sequencing, today in research, and in diagnostics in the future," President and CEO Christopher McLeod told GenomeWeb News this week. "Our business strategy is to address both of these market opportunities in two ways: selling customers instruments and reagents through our partnership with Roche Applied Science ... and selling customers sequencing services."
454 sold its first nanotechnology-based sequencing system in March and commercially launched the product with Roche Diagnostics in October. The company began offering sequencing services in 2004 and will continue to nurture this revenue stream. According to McLeod, the company is currently evaluating opportunities to support clinical trials involving diagnosing cancer and infectious diseases, such as HIV. The company would not say whether it would partner with another company for clinical diagnostics ventures.
"It's one that right now we are looking to develop potentially on our own or potentially partner with someone," McLeod said. "Certainly Roche Diagnostics would be a great partner, but we want to make sure we get the right financial deal for 454." As part of their deal, Roche can sell 454's instrument to all markets except for "regulated diagnostics" and has the option to negotiate for an expansion of the agreement within the next five years to include this market.
McLeod said one large market on which the company hopes to capitalize is comparative genome sequencing to speed drug development. 454's technology has already been used to identify a drug target for a novel antibiotic identified by Johnson & Johnson Pharmaceutical Research & Development.
"Johnson and Johnson came to us a year ago, and they had developed a new drug for a particular tuberculosis strain," though they didn't know the target, McLeod said. "In less then a month," 454 researchers identified the drug's target, which turned out to be ATP synthase, by comparing the genome of the tuberculosis strain on which the drug worked against resistant strains.
The company is also looking into opportunities to use the technology for ultra-deep sequencing, where scientists look at a specific gene in great depth over a number of samples. For example, AstraZeneca's lung cancer drug Iressa only works on a subset of individuals who have a certain mutation in an epithelial growth factor receptor. McLeod said his company has been working with cancer researchers to help them "identify linked mutations, and from a scientific perspective, this is very important because you can tell true haplotypes with our technology," McLeod said.
McLeod said among the factors driving sales of faster machines is sequencing the genomes of additional organisms. If one compares the list of genomes that researchers want sequenced against the ones that have already been sequenced, "only about 25 percent of the current market is being met," he said.
According to data from the Genome OnLine Database, a resource that monitors genome-sequencing projects, there are 411 completed genome projects and 1,034 ongoing projects. "There is a growing backlog because no one is investing in increasing the capacity of the genome centers," McLeod said. "It's just too expensive."
454 also sees promise in the National Institutes of Health's controversial cancer genome project. If funded, the project would aim to identify and characterize all the sites of genomic alteration associated at significant frequency with all major types of cancers.
"The implications are huge because to do this could potentially generate over a billion and a half dollars of sequencing work," McLeod said. He said his company has been talking with key, nongovernmental players in cancer research "to try to get this project underway." The NIH confirms that the project would cost around $1.5 billion with $100 million in pilot funding to potentially be dispersed in 2006.
Like 454, Solexa sees an opportunity in the cancer genome project. "With the Solexa instrument we expect to be introducing next month, you would need about 750 instruments operating 24 hours a day for five years to be able to accomplish this task," said Solexa's CEO John West. This effort would process 15,000 samples.
West told GenomeWeb News he expects Solexa's primary business will be selling instruments and reagents, "but we also expect to implement our new SBS technology in our existing service business".
West is also optimistic about the potential for next-generation sequencers to generate profits. "When the 3700 system was introduced, ABI went from zero to a $300 million revenue stream in 11 months," West said.
Solexa is also more focused on human resequencing. Because of this, instead of showing the merits of its single-molecule array technology by walking up the scale of species after sequencing the virus Phi-X 174, Solexa immediately jumped to sequencing a human bacterial artificial chromosome. "We've been able to handle many of the difficult types of subsequences that have troubled other sequencing chemistries in the past," said West, listing homopolymers as one example.
The research community is clearly a priority for Solexa, and West said the company has zeroed in on a strategy to reach them. For starters, the shop has identified the top 25 genome centers -- "a fairly substantial business opportunity," West said. The company has also identified the top 25 core laboratories that already have state-of-the art DNA sequencers and the top 25 commercial DNA sequencing service centers.
Solexa also has an existing service business aimed at gene-expression applications, and it plans to implement the sequencing services there. Its existing clients include
West said Solexa hopes to deploy its initially small sales force to reach its primary targets, which include existing Solexa customers, large genome centers, leading core laboratories, large commercial DNA sequencing services, and big pharma and biotech DNA-sequencing and gene-expression core facilities.
Kate O'Rourke covers the next-generation genome-sequencing market for GenomeWeb News. E-mail her at [email protected].