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Illumina Grows Clinical Customer Base for Sequencers; Eyes Liquid Biopsy, Average Risk NIPT

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NEW YORK (GenomeWeb) – Illumina said at the close of the market on Tuesday that sales of its HiSeq X Ten and NextSeq 500 instruments helped drive record revenues of $512.4 million in the fourth quarter of 2014.

During a conference call discussing the company's 2014 fourth quarter and full-year results, CEO Jay Flatley provided an update of the company's sequencing and array businesses, discussed a future liquid biopsy oncology product, and gave an update on its noninvasive prenatal testing business and progress with the US Food and Drug Administration on developing a cleared NIPT.

The sequencing business overall was especially strong with revenues growing 48 percent year over year in the fourth quarter "driven by demand across our platforms, record consumables, and continued uptick of our products across market segments, applications, and experimental scales," Flatley said during the call.

Revenues from the array business, on the other hand, were down 11 percent for the quarter. Despite a full-year increase in sales volume of 5 percent, full year revenues were down 6 percent due to "aggressive pricing," Flatley said. Nonetheless, he said that the company is still committed to its array business and plans to increase R&D investments in 2015. Arrays are strong in the agriculture, in vitro fertilization, and biobank markets, Flatley said.

A full recap of Illlumina's Q4 and FY 2014 financial results can be seen here.

NGS instruments

In Q4 2014, the San Diego-based firm took orders for 37 HiSeq X instruments among three customers, bringing its total HiSeq X orders to 201 units from 18 different customers, far outpacing its original estimate of five systems (each comprising 10 units).

NextSeq 500 orders were up 15 percent sequentially. In particular, the oncology market is especially interested in this system, with shipments to that segment growing 50 percent, sequentially, including a multi-unit order to a reference laboratory that has scaled to production level, Flatley said.  

In the first half of the year, v2 chemistry for NextSeq will be available, which "vastly improves error rates," making it consistent with Illumina's "more mature platforms."

MiSeq orders and shipments both exceeded 300 units, driven by new customers   who accounted for 60 percent of orders, Flatley said.

Flatley also outlined the company's expectations for its recently launched systems — the NextSeq 550, HiSeq 3000, HiSeq 4000, and HiSeq X Five.

The NextSeq 550 will serve as a "purely incremental product," Flatley said, designed for customers that need sequencing and arrays together, and will not be a huge part of the market.

The HiSeq X Five is designed to drive the large-scale whole-genome sequencing market faster than the HiSeq X Ten, since it enables customers to perform such projects with a lower capital investment and fewer samples.

The HiSeq 3000 and 4000 represent major technological advancements because they make use of patterned flow cell technology, Flatley said. He anticipated that most future customers would prefer these newer HiSeqs over the 2500, except in cases where the rapid run mode and longer read lengths of the 2500 were needed.

Clinical market

Illumina is increasingly penetrating the clinical market and this quarter was no different, with 30 percent of all instruments shipped to clinical laboratories.

Sales to the oncology market, including both research and clinical customers, grew 40 percent in the quarter. Within its reproductive health business, noninvasive prenatal testing samples increased 31 percent sequentially in the fourth quarter.

Orders for MiSeqDx reached record levels this quarter, especially from customers interested in HLA typing and cystic fibrosis testing, Flatley said. In the first quarter of 2015, the firm plans to enable the v3 chemistry in research-use-only mode on the MiSeqDx as well as update the system's intended use with the FDA to enable formalin-fixed paraffin-embedded samples.

Illumina also plans to submit the NextSeq 500 to the FDA either later this year or early 2016 for "open platform clearance," Flatley said, meaning that the system will not be submitted in conjunction with a specific assay.

Liquid biopsy market

Illumina recently announced that it would get into the liquid biopsy space — sequencing circulating tumor DNA or circulating tumor cells found in the blood as a proxy for analyzing the mutational landscape of a tumor from the actual tumor tissue.

The broad goal is to bring a sequencing-based liquid biopsy test through the FDA, Flatley said.

In order to accomplish this, Illumina will first launch an RUO kit and plans to present clinical utility data on the assay by the end of the year. It plans to run the test in Illumina's Redwood City, Calif.-based CLIA-certified laboratory to "refine the product and develop data for an FDA submission."

Flatley said that the company's strategy is similar to its NIPT strategy, where it will both develop its own assay and support other companies in the field and grow the market as a whole.

"Our strategy here is to provide the best technology into the market, as opposed to offering long-term lab tests or selling to physicians," he said.

Flatley added that the company would run a laboratory-developed test only as necessary to "gather data to build clinical evidence and encourage the overall market to grow with lots of different methods." He added that the intellectual property landscape in the liquid biopsy field is "much more straightforward" than it was in the NIPT space. The "assay methods are pretty standard and there is not a lot of raw invention."

Regulatory strategy for NIPT

As Illumina said earlier this month at the JP Morgan Healthcare conference in San Francisco, it has shifted its regulatory strategy with regards to NIPT. Previously, it had planned to bring a noninvasive prenatal test on the HiSeq 2500 through FDA clearance for the high-risk market, but has decided to suspend those efforts.

Instead, Illumina is focusing on launching VeriSeq NIPT, which will run on the NextSeq 500, as a CE marked IVD in Europe and also intends to gain CE-IVD marking for the HiSeq software in Europe.

Illumina is also in discussion with the FDA about what clinical trials would need to be performed and what datasets would be necessary to bring a test through FDA clearance for the average risk population.

Flatley said there were two main reasons for the company's shift. First, he said, on the technology front, the HiSeq 3000 and 4000, which make use of the patterned flow cell technology, are an important technological advancement over the HiSeq 2500. Flatley said that if the company had submitted the HiSeq 2500 to the FDA for premarket approval, it likely wouldn't have been on the market for another year and a half, at which time the HiSeq 3000/4000 technology would have far surpassed the 2500.

Second, the market opportunity for NIPT is "not so much the high-risk space, but the average risk market." The planned PMA submission on the HiSeq 2500 would have been in the high-risk space, he said, so after reviewing the regulatory strategy with Myraqa — the regulatory and quality consulting firm Illumina purchased last year — the company decided it made more sense to pursue a test that could be brought through approval for the average risk market. "The VeriSeq NIPT assay is a better technical solution to a broader more diverse market," Flatley said.