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New NGS Systems, Clinical Market Continue to Drive Illumina's Revenue Growth


NEW YORK (GenomeWeb) – Continuing a trend from the end of 2014, Illumina's HiSeq X and NextSeq instruments, as well as increased demand for sequencing from clinical customers, drove a 28 percent jump in the firm's revenues in the first quarter of 2015 to $538.6 million.

During a conference call discussing the first quarter 2015 performance, CEO Jay Flatley provided an update on the firm's sequencing and array businesses, new products in the sample prep space, and its push into the clinical market, including progress on the regulatory front. In Q1, clinical and translational customers accounted for 35 percent of total shipments and nearly half of total instrument shipments, Flatley said.

Illumina's sequencing business was particularly strong, with revenues growing 40 percent year over year, while the revenues from its array business fell 11 percent. The sequencing business was driven by record consumables and NIPT samples, as well as an increase in demand for instruments. A full recap of Illumina's Q1 results can be seen here.

The firm also continues to expand into the sample prep market, with the launch of its NeoPrep system in February and TruSight assays that it markets to clinical research laboratories. Flatley said that the firm is currently receiving feedback from 11 early-access users of NeoPrep who have provided insight on improvements the firm can make around user experience and training, and as such, he said that the company will be "ramping shipments in a controlled way."

Illumina also launched a TruSight HLA kit in the first quarter that runs on the MiSeq, and Flatley said the installed base for that kit is now at 125 units.

HiSeq X, HiSeq 3000/4000

Illumina shipped a record number of HiSeq X units in the first quarter, Flatley said. The firm sells the HiSeq X Ten, which includes 10 individual HiSeq X units for $10 million, and will launch HiSeq X Five in Q2 2015, which includes five individual units for $6 million. It also sells incremental units to customers that purchase a full X Ten or X Five system.

Flatley said that HiSeq X shipments in the first quarter included units to both an existing customer expanding capacity as well as new orders, including one from a European personalized cancer center that is establishing a whole-genome sequencing facility.

The unnamed center is "focused on tumor profiling to direct treatment, clinical trial enrollment, and discovery of new biomarkers with the goal to implement tumor sequencing as standard of care within their country," Flatley said.

Because many of the shipments in the quarter were for orders placed in previous quarters and the firm has now worked through its backlog, Flatley said that he expects to ship fewer HiSeq X units in the second quarter, although the "order funnel remains healthy."

HiSeq 2500, 3000, 4000

Earlier this year, the company launched the HiSeq 3000 and HiSeq 4000, which incorporate the patterned flow cell technology that was originally deployed in the HiSeq X units.

Thus far, the vast majority of sales of those instruments have been to existing customers. In addition, Flatley acknowledged some short-term challenges due to customers assessing their pending purchases, as well as higher than expected orders for the HiSeq 2500 systems, instead of the HiSeq 3000 or 4000. He said that customers choosing the older model over the newer ones are primarily clinical customers that already have validated workflows on the 2500 or customers that use the system for its longer read lengths or in the rapid run mode.

Flatley said that he anticipates the HiSeq 3000 and 4000 systems will appeal to customers with older generations of HiSeq 2000 instruments. For instance, he said, BGI recently purchased multiple HiSeq 4000 instruments to replace some of their older instruments and are assessing the system's potential for use in their services lab, Flatley said.

BGI has the largest installed base of older HiSeq 2000 models, some of which have been "mothballed" because they are no longer economical to run, Flatley said, and although BGI has not expressed an intention to do a wholesale upgrade of all its HiSeq 2000s, Illumina is "cautiously optimistic" that this initial purchase marks the "beginning of a broad upgrade," Flatley said.

MiSeq and NextSeq

The MiSeq and NextSeq instruments are moving rapidly into the clinical market. The company took near-record orders for MiSeqDx this quarter, which has US Food and Drug Administration 510(k) clearance, primarily from customers developing HLA and oncology-based assays, Flatley said. The company also launched v3 chemistry for MiSeqDx in research-use-only mode in the quarter.  Flatley said that even customers who are not running regulated tests are purchasing the MiSeqDx system, either in anticipation of increased regulation by the FDA or because they expect to eventually seek FDA clearance for their tests.

Illumina plans to register a diagnostic version of the NextSeq 550 with the FDA and place CE-IVD marking on it later this year or in early 2016, Flatley said. Already, though, clinical customers made up around half of NextSeq orders in the quarter. In addition, a version of the NextSeq, dubbed NextSeq CN500 and codeveloped with Berry Genomics, last month received premarket clearance from the China FDA along with an NIPT assay.

Customers that are new to sequencing are also choosing the NextSeq, Illumina said, with instrument sales in that segment accounting for 40 percent of the mix.

During the quarter, the company launched the v2 chemistry for NextSeq, which improves error rates to bring performance in line with the firm's more mature systems.

Reproductive health and oncology markets

Oncology and reproductive health continue to be Illumina's main focuses in the clinical market. In the quarter, clinical customers accounted for nearly 35 percent of total shipments and nearly half of all instruments were shipped to clinical and translational labs. The clinical and translational market is also the fastest growing segment, with shipments to that business growing 60 percent year over year, compared to growth in the mid-teens for all other segments.

On the reproductive health side, the firm is on track to launch its CE-IVD-marked VeriSeq NIPT assay this summer. In addition, it performed nearly 50,000 noninvasive prenatal tests in Q1, representing 13 percent sequential growth, although Flatley said he expects that number to decline as an increasing number of labs are opting to develop their own tests through the technology transfer program. For instance, this quarter Illumina signed four technology transfer agreements with laboratories in Europe, he said.

On the oncology side and including both clinical and research customers, sales grew 37 percent year over year, accounting for approximately $100 million in revenue, not counting sales of HiSeq X units.

Illumina estimates that the oncology market as a whole represents a potential $12 billion opportunity.

The firm is developing two different oncology panels — one based on the work by the Actionable Genome Consortium and another that it is developing as a companion diagnostic in collaboration with pharmaceutical companies. In addition, it is working on a liquid biopsy assay that Flatley said it would launch as an RUO kit by the end of the year.

Elaborating on the company's plans for an NGS-based liquid biopsy test, Flatley said the company would likely focus first on cancers for which a diagnostic would yield "clear alternatives in the clinical decision making," for instance, in lung cancer, which is "prevalent, a lot is known about the potential markers, and there are various treatment options." He said that the panel would be expanded over time to make it more universal.