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Illumina Tells Wall Street AgBio is ‘Significant’ for Arrays, Preps Dx Play

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Illumina continues to see the agricultural biotechnology market as a “significant” growth opportunity for its microarray business, while it is positioning itself to enter the molecular diagnostics market, which it predicts will reach $20 billion within the next decade, according to a company official.
 
Illumina Chief Financial Officer Christian Henry said the company continues to emphasize its opportunities in agbio and molecular diagnostics. Henry’s comments reinforce those made in June by CEO Jay Flatley, who similarly highlighted the agbio and molecular diagnostics segments at various investor conferences (see BAN 6/17/2008).
 
At the UBS Global Life Sciences Conference, held this week in New York, Henry told investors that Illumina is currently a “market leader” in three markets: genotyping, gene expression, and second-generation sequencing. According to Henry, the gene expression and genotyping markets are each worth around $700 million, whereas the overall sequencing market, including the market for second-generation sequencers like its Genome Analyzer platform, represents a $1 billion opportunity.
 
This week, Henry said the global agricultural biotechnology research tools market is currently $300 million and is clicking away at a 25-percent compound annual growth rate. For Illumina, the agbio market and the genotyping market are intertwined, and the company sees new chip formats plus the lower cost of SNP-genotyping as translating to an increased presence in the animal and plant-testing space.
 
“The agricultural market offers a very significant opportunity for the company,” Henry said. “In 2007, agbio revenues represented roughly 5 percent of our total revenue,” or about $18 million. Earlier this month, during the Thomas Weisel Health Care Conference, Henry predicted that “within a few years” revenues generated in the agbio market could comprise 15 percent to 20 percent of Illumina’s total revenues.
 
The key factor in reaching the agbio market has been a lower cost in genotyping, Henry said. “In 2000, it was roughly $1 to get one SNP call. Today it is hundredths of a penny,” he said. “What are the implications of that? The implications are that we can create new markets,” said Henry. “The agricultural market was not even a possibility even two years ago because of the inordinate cost and the number of samples they need to run. Today we are really starting to see a penetration into the agricultural market.”
 
Illumina’s initial thrust into the agbio market has been via organism-specific SNP chips. Over the past year, the company has launched the BovineSNP50 BeadChip, and subsequently launched the CanineSNP20 and EquineSNP50 BeadChips by the end of the second quarter. In July, the company tapped GeneSeek, a Lincoln, Neb.-based genotyping services company, to become its first certified service provider targeting agribusiness customers (see BAN 7/29/2008).
 

“The species [that] people are looking at vary, from wheat and corn to pigs, tomatoes, fish — you name it.”

Beyond chips for equine, bovine, and canine studies, Illumina is also taking advantage of its iSelect custom array offering as well as multiplex array formats to serve the diverse needs of its agbio customers.
 
According to Henry, iSelect has become Illumina’s main vehicle for selling to the market. “The species [that] people are looking at vary, from wheat and corn to pigs, tomatoes, fish — you name it,” he said. “The flexibility they have using this technology is they can get a rapid turnaround and use it on thousands of samples for very, very low cost.”
 
Illumina is not the only array company with its eyes on the agbio market. Both Affymetrix and Agilent Technologies have made it clear in recent months that they, too, are aware of the potential for their array businesses in agriculture. Agilent has pledged to roll out up to 30 new species-specific, whole-genome expression arrays by year-end, while Affy is looking to expand its agbio-related genotyping offering (see BAN 5/6/2008).
 
Dx Building Blocks
 
Unlike its chief rival, Affymetrix, which sells its GCS3000Dx platform for use with several tests, Illumina has decided against transforming its research-oriented BeadArray system into a diagnostics platform. Instead, the company has positioned its digital microbead-based BeadXpress reader as the system of choice for diagnostic applications.
 
At UBS this week, Henry said that, in the future, BeadXpress will receive 510(k) clearance from the US Food and Drug Administration to “work in a diagnostics environment.”
 
“The molecular diagnostics market is still in its infancy,” Henry said. Illumina estimates that the market currently hovers around $3 billion but that could blossom into a “$20 billion endeavor” by the end of the next decade.
 
“That’s not saying that Illumina will be earning $20 billion in 10 years,” he said, “but what we are doing is getting the building blocks in place.” According to Henry, that means “making sure that sequencing is really robust, refining the software and data management, and putting all those tools together so that when you have the right set of markers, you have the entire infrastructure in place to put the right kind of diagnostic product out there.”
 
Henry noted the March appointment of Greg Heath as vice president and general manager of molecular diagnostics, and said that since Heath’s appointment, the firm has been evaluating ways to turn its “core set of assets into a diagnostics business.”
 
At Thomas Weisel, Henry pledged that Illumina will begin earning some diagnostic revenues over the next few years. The firm has existing partnerships with Iceland’s DeCode Genetics and India’s Reametrix and others to develop tests for type II diabetes, myocardial infarction, and breast cancer.
 
Flatley said in June that the first tests could appear on the firm’s platforms by 2010, and that by 2013 the company could be earning up to a quarter of its revenues in the molecular diagnostics market (see BAN 6/17/2008).

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