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10x Genomics Plans Large Expansion for 2019, Mulls Going Public


NEW YORK – 10x Genomics plans to expand significantly in 2019, including an increase of its workforce by up to 50 percent and the addition of a manufacturing site at its Pleasanton, California headquarters.

In line with those plans, the firm has made several acquisitions this past year. Earlier this week, it announced the purchase of Spatial Transcriptomics, a startup in Sweden that had been developing two-dimensional gene expression technology to analyze tissue sections. This followed the acquisition of Epinomics this past summer, a Stanford University spinout that had developed a chromatin mapping technology called ATAC-seq. Financial terms for both acquisitions remain undisclosed.

"The business is doing really well, and we have lots of products we just launched this past year, and we have a lot more that we want to build," said Serge Saxonov, 10x Genomics' cofounder and CEO.

Over the years, the privately held company has been growing steadily, he said, and now employs approximately 380 people, most of them working in Pleasanton. In the coming month, 10x plans to hire another 150 to 200 employees.

To accommodate this growth, the firm is moving into a larger facility in Pleasanton, quadrupling its space to 200,000 square feet. The new space will include a manufacturing facility for the company's proprietary microfluidic chips, which are currently produced in Germany. The move is expected to be completed in the first quarter of 2019.

While many other companies are outsourcing their manufacturing to other countries, Saxonov said, 10x Genomics decided to bring it closer to home, "partially because a lot of this stuff is pretty new and requires a fair amount of expertise and integration across disciplines." Following the move, the company will build all of its products locally, including instruments, microfluidic chips, and reagents, although the German manufacturing site will remain open.

10x Genomics has also been expanding abroad, opening commercial offices in the Netherlands, Shanghai, and Singapore this year, which it plans to staff further. In addition to its Pleasanton headquarters, it maintains an office in San Francisco.

"Asia in particular has been underpenetrated for us and we're making a much more concerted effort now to build up a direct presence," Saxonov said. Also, earlier this year, 10x announced a partnership with Berry Genomics in China to develop a noninvasive prenatal test that will involve 10x's linked reads.

A good amount of the company's planned growth will go towards beefing up its research and development team. "I think that's our main constraint, just the number of people to be able to develop new things," Saxonov said. "There's not a shortage of ideas, not a shortage of possibilities with the technologies that we have."

The firm's commercial operations will scale with its growing revenues, he said, and will include staff additions in marketing, sales, customer support, and manufacturing. He declined to reveal an estimate of 2018 revenues but said that the company will provide an update early next year. For 2017, 10x reported $71 million in revenues, a 150 percent increase over the previous year.

Over the course of 2018, 10x launched three single-cell analysis products for its Chromium Controller platform, which it had previewed at the Advances in Genome Biology and Technology meeting in early 2018: a single-cell copy number variant assay, a single-cell ATAC-seq (assay for transposase-accessible chromatin using sequencing) assay, and a single-cell feature barcoding assay that allows researchers to measure several cellular features simultaneously.

These new assays, which the company showcased at the American Society of Human Genetics annual meeting this fall, added to its existing products for linked-read DNA sequencing, single-cell gene expression profiling, and single-cell immune profiling of T cells and B cells.

While the company doesn't break out its business by application, it has seen "a huge amount of interest" in its single-cell products, Saxonov said, reflecting the general growth in single-cell biology, which he said is "going through a revolution right now."

Single-cell immune profiling in particular has seen a lot of interest from pharmaceutical companies, he said, and has been "taking off in a huge way." Linked reads, on the other hand, have been growing in line with the general genomics market, at a slower pace than single-cell applications.

Generally speaking, 10x has been mostly targeting academic researchers with its products, starting with early adopters of genomic technology. However, "we definitely have expanded way beyond that," Saxonov said, noting that the Chromium platform is now widely used by cell biologists.

"The other kind of area where we've gotten a fair amount of interest has been in the pharma world," he said, with pharmaceutical and biotech companies purchasing its platform and assays "in pretty large volumes."

Increasingly, the company is seeing its platform being used in clinical and translational research, especially in the area of immuno-oncology. As an example, he cited a recent publication by researchers at the Fred Hutchinson Cancer Research Center, who looked at acquired cancer immunotherapy resistance using 10x's single-cell RNA sequencing assay.

In terms of competitors, Saxonov said that a lot of firms are competing with 10x in the single-cell gene expression market, but no one has challenged it yet in the area of single-cell immune profiling, which is technically more difficult. The single-cell ATAC-seq and single-cell CNV analysis applications have also seen little competition so far, he said. Linked reads compete with long-read sequencing technologies from Pacific Biosciences and Oxford Nanopore Technologies to some extent, though he said the company has found that the types of customers for the two applications differ.

Saxonov declined to comment on plans for future products, other than stating that "we have lots of ideas."

The company is also not ruling out additional acquisitions. "We're certainly on the lookout" for technologies that could be turned into new products by the company's development team, he said. "So, if we see something and it has good potential, then we would certainly consider it and build products around that."

At the moment, all of the company's assays run on the Chromium Controller platform, which comes in two versions — one specific for single-cell assays, the other suitable for both single-cell and linked-read applications. In early 2018, 10x said it had placed more than 600 Chromium instruments worldwide, and Saxonov said he will provide an update on those numbers in early 2019.

For the time being, the Chromium will remain the company's only instrument platform. "The Chromium was designed to be reasonably future-proof, so for what we have in mind so far, it should be fine," Saxonov said. "In the long run, we envision there will be other instruments, potentially."

As the company is growing it has been fighting patent infringement lawsuits on various fronts. Last month, for example, Bio-Rad Laboratories said it had been awarded almost $24 million in damages in a patent suit against 10x concerning three US patents that Bio-Rad exclusively licenses from the University of Chicago. Bio-Rad also said that a judge in a separate action before the International Trade Commission determined that certain microfluidic devices used by 10x infringe Bio-Rad's patents, and that it has a patent enforcement action against 10x in Germany. In addition, Bio-Rad and Lawrence Livermore National Laboratory filed a separate lawsuit against 10x last year involving seven other US patents related to droplet digital PCR.

Further, Becton Dickinson and its subsidiary Cellular Research filed a lawsuit against 10x last month, alleging infringement of seven patents around single-cell analysis.

Saxonov called patent lawsuits "an unfortunate fact of the industry" that companies often face with when commercial success sets in. He said the ongoing suits have not yet affected 10x's business, although he wished he would not have to deal with them. "We've got a great legal team and they've been very busy," he said.

In terms of funding, the company is all set for its current growth plans. "All this expansion is baked in, and that's a great position to be in," Saxonov said. Earlier this year, the company raised $50 million in a Series D financing round, led by Meritech Capital Partners, and obtained a $75 million credit facility from Silicon Valley Bank. However, "I would not rule out potential fundraising because acquisitions may call for that," he added.

He is also considering taking the company public. "Being public makes it easier to do those kinds of transactions and acquire companies, and it also gives you prominence that's more in accord with how the business is doing," he said. The company has been staying largely under the radar so far while its business grew, and going forward, "being public makes sense," he said. "Ultimately, the goal is to build a very large company."

Also, he would prefer for 10x to stay independent rather than become part of a larger entity. "We have really awesome technologies that we've developed internally, and we have a really great team," he said, "and I think the best realization of all the potential we have within the company would be with us being independent."