After waiting three years for its promised partner, Applied Biosystems, to finally set a date for their joint genotyping product release, Illumina decided last week that it had waited long enough, and publicly announced it was striking out on its own to launch its own genotyping system. The product, which includes a confocal laser scanner named Sherlock, along with a bioinformatics network that runs Illumina’s fiber optic-based beads through the paces of genotyping, can also be adapted for gene expresson and proteomics.
This bold gesture could serve as an object lesson for young companies anxious to use their sexy technology to win the attentions of a well-heeled, established player, especially when that player is Applied Biosystems. The message: Don’t count on the collaboration as a sure thing.
While Applied Biosystems has certainly come through for many collaborators, such as MDS/Sciex, the company has also disappointed a substantial number of partners, such as Hyseq, Aclara, and now Illumina. The Hyseq collaboration, which Applied Biosystems signed onto in 1998 to build a sequencing microarray, went nowhere, and some analysts think Applied Biosystems was deliberately sitting on the technology. Hyseq eventually started its own chip subsidiary, Callida, last year, using funding from a patent settlement with Affymetrix. Aclara also had a partnership with Applied Biosystems to develop its GeneMate genotyping systems, but that partnership also died on the way to the market.
“ABI has followed a strategy of licensing in or forming joint ventures or making deals with a lot of different technologies ... In that type of scenario you are not going to see all of those technologies come to market,” said Laurence Neibor, of Robert W. Baird & Company. “But it would certainly indicate to younger, smaller companies with promising but either not commercially proven or not technologically proven technology that ABI may not be the best partner.”
Illumina’s Backup Plan
Illumina teamed up with ABI in 1999 in a partnership where ABI would develop CCD camera-based instruments to read Illumina’s BeadArrays. The BeadArrays, which consist of bundles of fiber optic stalks with wells at the ends that hold fluorescent beads, would be combined with ABI’s reagents and assays, and would be launched through the company’s extensive distribution network.
As late as this March, both companies were still promising a target launch in the middle of this year. ABI seemed to be fully on board when vice president of DNA platform business John West mentioned the system in a presentation to the Tri-Genome Conference.
But unlike other ABI collaborators, who sat at the metaphorical telephone waiting for ABI to call and say it was ready to launch the product, Illumina was busy preparing its backup plan.
An alternative option, said Illumina CEO Jay Flatley, “was built into our initial strategy.”
The company had planned to develop its own scanning instrument for its gene expression applications, which could easily be adapted to genotyping. “At the start we had all the pieces in place to do this,” he said. “We’re obviously very motivated to get our technology widely used.”
Flatley, however, is refusing to say “it’s over” with ABI even though it does not appear likely that the partnership will go forward as it was conceived. “We continue to be in discussions with ABI,” he said, about “whether they want to launch the system and take advantage of their distribution networks, or it could be that they will decide not to launch the assay system and want to do something different.”
ABI has also refused to say it is pulling the plug on Illumina: The project is “being reevaluated based on various technical and commercial considerations,” according to ABI spokeswoman Lori Murray.
ABI Picks Tubes over Beads
Analysts say ABI’s “considerations” for reevaluation of the system are mostly commercial. The day after Illumina announced it was launching its genotyping system on its own, ABI issued a press release saying it was launching SNP and gene expression assays on demand. These assays, in tube format, are designed to be used with ABI’s existing sequence detection instruments. They include primers with the sequence of the target gene or SNP, one of 77,000 SNPs and 3,400 gene expression asays in the company’s online catalog, and are designed to be ready-to-use like a ready-to-cook pizza.
This seeming coincidental confluence of Illumina’s and ABI’s product announcements, is probably a purposeful signal that ABI has decided it is more lucrative to market assays rather than instruments for the genotyping market. ABI president Michael Hunkapiller indicated even a year ago in the company’s 2001 annual report that it saw assays as an answer to a stagnating instrument business. “Creation of genome-wide assay sets — which will be used on our sequence detection systems platform under the new Applera SNP discovery, gene expression, and gene association program — could represent a potential business opportunity that may be larger than any Applied Biosystems has addressed in the past,” Hunkapiller wrote in the report.
ABI is pricing its tube assays at $150 to $210 and trying to sell them to everyone in the market. Illumina, however, is focusing its marketing strategy on the high-end users of instrumentation within the genotyping spectrum, large genome centers and pharma. The target price of the system, which Illumina has not released, is high, but “significantly cheaper” than the $6 million pricetag for Sequenom’s competing ultra high-throughput genotyping system, said Bill Craumer, Illumina director of marketing and communications.
“The idea is to go after the high-throughput customers right away, then develop scaled-down versions with lower price points,” Flatley said.
To develop its genotyping platform, Illumina has basically “cloned” its in-house genotyping system, which can do a million genotypes per day, said Craumer. This system is organized on the principle of “bioinformatics integration” vs. “robotic integration” said Flatley, with computers and a LIMS system that controsl robots and order them to do sample preparation on the microtiter plates of fiber optic bundle beads, then sends the plates to the Sherlock scanner to read them. The PCR stage of sample prep is multiplexed to the level of 1,000 simultaneous reactions, and the sample reading is highly parallel as well, so as to speed up the process at all stages.
The advantage of this system, according to Illumina, is that it can be scaled up to do even more than a million genotypes per day by simply replacing the slowest piece with a larger, more powerful component.
For smaller customers, the system can be scaled down. Since the scanner was initially designed for gene expression assays, the systems can be easily upgraded to be enabled for high-throughput gene expression assays. Illumina’s stalks of beads can be adapted to look at 1000 to 1,500 genes over several thousand samples.
While Flatley could not give an estimated time of launch for this expression application, the company plans be ready to install it by the fourth quarter.
Illumina at a Glance
• Founded April 1998 by John Stuelpnagel and Affymetrix scientist Mark Chee.
• Raised $103 million in 2000 IPO.
• Core technology is fiber optics with a concave well at the end holding fluorescent beads to which a probe is attached.
• Genotyping system can deliver up to 1,152 SNP loci per sample, a million genotypes per day.
• 13 genotyping services customers include GlaxoSmithKline, Placer (Biotech), UNC, UCSD; Boston University Medical Center, Johns Hopkins.