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Though Illumina Relishes Position in Genotyping Market, Its Diagnostic Play Gets Stronger, Too

Rapidly growing adoption of whole-genome genotyping instruments and services helped drive Illumina's second-quarter revenue 163 percent year over year and turn a loss into a profit, the company said last week [see sidebar].
Illumina also said it predicts the high-throughput genotyping sector to continue expanding as more academic researchers perform large-scale disease-association studies and pharmas become more comfortable using the technology in clinical development, as well as early research.
But recent deals with ReaMetrix and DeCode Genetics underscore the fact that, though Illumina relishes its position in the genotyping market, it continues to lay the groundwork for a foray into diagnostics.
This outlook was also brought to the forefront during the company’s second-quarter conference call when Illumina said it will begin selling regulatory-approved versions of its BeadXpress system to CLIA labs next year and file its own assays for molecular diagnostic applications in 2008.
According to Illumina, total receipts for the three months ended July 2 increased to $41.6 million from $15.8 million in the same quarter one year ago. The company also upgraded its full-year revenue projections to between $160 million and $170 million, which is $30 million more than the firm's original forecast, released at the end of the first quarter. This represents year-over-year growth of between 118 percent and 131 percent.
Third-quarter revenue is expected to increase to between $44 million and $48 million, or between 126 percent and 146 percent, Illumina said.
Illumina attributed the upswell in revenues to increasing demand for the firm’s whole-genome genotyping technology. CEO Jay Flatley said that there is an "enormous desire in the academic research groups to do large-scale disease-association studies." He added that the market for custom genotyping and whole-genome genotyping is "probably growing in excess of 50 percent a year” as pharma and biotech companies “adopt whole-genome genotyping in all aspects of their research and clinical development programs."
To address the increase in demand, Illumina has expanded its San Diego manufacturing facility. According to Flatley, the company recently doubled its capacity from its April levels and has the “infrastructure in place to efficiently add additional manufacturing capacity as required to support [its] anticipated chip volumes.”
Flatley also said that Illumina sees a trend among pharmaceutical companies buying instruments and running their own genotyping assays rather than outsourcing the research.
"Previously big pharma largely outsourced genotyping because … [because] it was not clear which SNPs to use," Flatley said. "I think with the advent of whole-genome technologies [and] the ability to put a high percentage of SNPs that offer great genomic coverage on a chip that the technology question is being resolved, and many more companies are looking at bringing the technology in house."
Flatley’s comments came three weeks after a Merck official told BioArray News that the Merck Research Laboratories would be bringing array-based whole-genome genotyping technology in house. Although Merck declined to name its vendor, it did mention it had worked with both Affymetrix and Illumina in the past (see BAN 7/5/2006).
BeadXpress and ReaMatrix
While Illumina’s main second-quarter growth driver was its diversifying genotyping business, Flatley said the company is on track to roll out its BeadXpress system by the end of this year, with an ultimate goal of being able to sell diagnostic tests on BeadXpress by 2008.
Flatley said last week that the company intends to begin selling the system, which uses glass particle microbead technology for low- to mid-multiplex applications, into the clinical environment in 2007.
“Our intent is to get the factory that produces the system, Illumina East in Connecticut, and the system itself through the regulatory process by the end of the year,” Flatley said.

Illumina recently doubled its capacity from its April levels and has the “infrastructure in place to efficiently add additional manufacturing capacity as required to support [its] anticipated chip volumes.”

Illumina will then market BeadXpress to CLIA-approved labs and encourage them to build their own tests on it. The company also plans sell BeadXpress to partners that will develop their own content and market the system on their own.

According to Flatley, Illumina hopes to deploy its own content on the platform in 2008, which will be a product of a diagnostic-development deal it struck with DeCode Genetics in May.
Then, last week, Illumina said it will work with ReaMatrix to discover and develop diagnostic panels for certain undisclosed diseases. Under the terms of the agreement, the firms will develop tests using the BeadXpress platform, and ReaMatrix, whose R&D operation is based in Bangalore, India, will have a non-exclusive license to sell the tests in the Indian market.
Sheri Miraglia, ReaMatrix’s vice president of business development and chief scientific officer, told BioArray News this week that the firm currently sells products for T-cell enumeration that are approved for diagnostics in India.  The products are used primarily to evaluate the immune status of persons infected with HIV and one of the firm’s goals is to “make these tests more affordable and thus more available to people within India and the developing world,” Miraglia said.  
She added that ReaMetrix is interested in “addressing problems in India that have likely evolved due to an expanding Western influence – diseases such as Type II diabetes and cardiovascular disease.”  
“We are particularly interested in developing screening or ‘wellness panels’ that will allow patients and doctors to really focus on preventative medicine,” she said. Miraglia said that the company chose to use the BeadXpress as a diagnostic platform over rival platforms, including those sold by Affymetrix, because the majority of its tests will be based on proteins, not DNA.
Illumina spokesperson Bill Craumer said in May that the company anticipates it will ink at least one more diagnostic pact similar to the DeCode and ReaMatrix deals by the end of this year.

He told BioArray News this week that there is “significant interest” in the BeadXpress platform “not just for disease-specific diagnostics, but also for predictive diagnostics.” The company has yet to release any revenue predictions related to BeadXpress.

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