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Illumina Q4 Revenues Rise 45 Percent on Sequencing, Array Growth


This story was first posted on Feb. 10.

By Justin Petrone

Illumina last week posted a 45 percent increase in revenues for the fourth quarter of 2010. The San Diego-based firm reported total revenues of $261.3 million for the quarter ended Jan. 2, compared to revenues of $180.6 million for the fourth quarter of 2009.

In an earnings call, chief financial officer Christian Henry attributed the firm's Q4 performance to demand for its next-generation sequencing products and microarrays. "Our revenue growth was driven primarily by our sequencing products but also by solid year-over-year growth in our microarray business," Henry said.

Product revenue for the fourth quarter was $246 million, up 47 percent over the same period in 2009, and Illumina generated total consumable revenue of $132 million in Q4, up 26 percent on a year-over-year basis. Henry said the consumables growth was "largely the result of our expanded installed base of sequencers," but noted that annualized consumable pull-through across Illumina's installed base of microarray scanners was "at the high end of our targeted range of $400,000 to $500,000 per system." He added that orders for microarray consumables were at "record levels" in the fourth quarter.

Instrument revenue for the quarter was $110 million, up 81 percent over the fourth quarter of 2009. Henry said the growth in instrument revenue was "largely due to the success of the HiSeq 2000" sequencing platform and that the firm shipped a "record number" of HiSeq systems last quarter.

At the same time, Illumina has now been able to complete shipments of its HiScanSQ, which allows customers to analyze arrays and perform sequencing on one instrument. Shipments of the HiScanSQ, which the company launched last March, were delayed as the firm scaled up to meet large orders for the HiSeq, which shares many components with the HiScanSQ (BAN 11/2/2010).

Henry said that the firm's ability to "break this bottleneck" during the quarter resulted in microarray instrument revenue growth of more than 100 percent year over year. He did not provide instrument sales numbers.

CEO Jay Flatley added that the company saw "record revenue in microarray instrumentation in Q4, as we were able to reduce our backlog of HiScan and HiScanSQ systems."

Flatley noted that the firm had been "biasing most of the shipments toward HiSeqs" rather than HiScans "because they have higher reagent consumption."

Waiting for GWAS

Flatley said that fourth-quarter chip orders increased 14 percent year over year, but were down sequentially compared to the third quarter.

Flatley attributed the sequential decline in whole-genome genotyping array sales to the fact that the firm's 2.5-million-marker Omni2.5 BeadChip became available in Q3, so only early adopters were likely to use the chip during Q4.

According to Flatley, the market is currently divided between first adopters and those waiting to see the results of those initial studies using rare variant content. "We're seeing some researchers who believe strongly in the [rare variant] hypotheses, and they're the ones who are buying the Omni 2.5 and they are now immersed in doing these initial proof-of-principle studies," he said. "And then we have a lot of people on the sidelines sort of waiting to see what happens out of those studies."

Flatley said that Illumina expects to see results from these early studies around mid-year, which will lead to an "inflection point" in the adoption of rare-variant chips for GWAS. "That part of the market, I think, will start growing in the back half of the year," he said.

He described the company's array business as "stable" and said it "continues to demonstrate a valuable and complementary relationship to our sequencing portfolio across multiple markets."

He also discounted the idea that association studies could be performed on the firm's sequencers rather than on its array platform. "We really continue to believe that unless you're looking for rare Mendelian diseases, then sequencing isn't going to be the answer for a long, long time," he said.

"Arrays are cheaper, faster and, frankly, more accurate than any sequencer that's out there," said Flatley. "As long as the science supports the complexity that you have on the arrays, [then] arrays will be the way that GWAS is done, not sequencing."

Q4 and FY 2010 in Full

Illumina's net income for the quarter was $38.4 million, compared to $11.7 million for the fourth quarter of 2009.

The firm's R&D spending for the quarter was $45.8 million, up 13 percent from $40.4 million year over year, while Illumina's SG&A spending climbed 25 percent to $62 million from $49.5 million.

For full-year 2010, Illumina reported revenues of $902.7 million, a 35 percent increase over 2009 revenues of $666.3 million. The firm's product revenue for the year was $842.5 million versus $627.2 million for 2009, and service and other revenue was $60.2 million, up from $39.1 million.

Illumina's net income for FY 2010 was $124.9 million, compared to $72.3 million for FY 2009.

R&D spending for the year increased to $177.9 million from $140.6 million, and its SG&A expenses were $221 million, up from $176.3 million.

Illumina finished the year with $248.9 million in cash and cash equivalents and $645.3 million in short-term investments.

Have topics you'd like to see covered in BioArray News? Contact the editor at jpetrone [at] genomeweb [.] com.