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Illumina Reorganizes, Creates Two Divisions; Stuelpnagel and West Stepping Down

This article has been updated to include additional background information and Illumina's stock price.
 
NEW YORK (GenomeWeb News) – Illumina said today that it has reorganized its operating structure and divided the firm into two new divisions, the Life Sciences Business Unit and the Diagnostics Business Unit.
 
The life sciences segment will provide all of Illumina’s products and services related to the research market including the BeadArray, BeadXpress, and sequencing product lines. The diagnostics segment will focus on developing diagnostic content for the firm’s BeadXpress platform and eventually its next-generation sequencing instruments.
 
Jay Flatley, president and CEO of Illumina, said that the reorganization will result in “the acceleration of the integration of our sequencing and genotyping technologies. Additionally, it will enable us to put more focus on developing our diagnostics business.”
 
Illumina also announced several management changes, which it said was a primary reason for the timing of the reorganization.
 
The firm said that John Stuelpnagel, senior vice president, COO, and GM for arrays, will move to part-time status as of April 1, and will step down from the board of directors. He will continue to work on a “key projects” as an Illumina Fellow, the firm said.
 
John West, senior vice president and GM of sequencing, also has resigned effective Feb. 1. West, the former CEO of Solexa, joined Illumina a year ago when his firm was acquired for roughly $600 million.
 
In addition, effective immediately, Senior Vice President and CFO Christian Henry will become acting general manager of the sequencing business. His goal will be to oversee the integration of the sequencing business into the new life sciences unit, which is expected to be completed before the end of the second quarter, Illumina said.
 
Illumina has already hired general managers for the two new units, but the firm did not disclose the names of these new executives. They are both expected to be on board at the company by April 1.
 
The reorganization and management changes come after a couple of years of rapid change for Illumina. The firm, which a few years ago was focused primarily on selling instruments for gene expression research, has greatly expanded its operations through acquisitions and R&D efforts that have moved it into the genotyping, next-generation DNA sequencing, and molecular diagnostics markets.
 
Over the past year, Illumina has launched its next-gen sequencing instrument, called the Genome Analyzer, the BeadXpress multiplex instrument for research and molecular diagnostic applications, a microRNA expression profiling assay, and the Human 1M BeadChip, which is targeted at genome-wide association studies.

The firm is currently battling it out with Affymetrix for the market lead in the genotyping market, and the Genome Analyzer has already made significant contributions to Illumina’s revenue growth.

Although the BeadXpress was launched late in the first quarter of 2007, company officials have said that they expect diagnostics to start making a mark on the firm’s top line in 2008. Illumina’s strategy has been to market BeadXpress to CLIA-approved labs and encourage them to build their own tests on the platform. But the firm also said early last year that it planned to sell the instrument to partners that will develop content and market the system on their own. It has not yet provided an update on that part of its strategy.

Illumina also may deploy its own content on the platform this year, which would be a product of an alliance it struck with Decode Genetics in May 2006. The firms plan to develop diagnostics for gene variants that Decode has shown to be risk factors for developing diseases such as type II diabetes, myocardial infarction, and breast cancer.

Flatley also has said that he expects diagnostic sequencing with the Genome Analyzer to be a revenue contributor in a few years.

Illumina’s shares were down 2.7 percent at $57.50 in early afternoon Nasdaq trading.

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