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Complete Genomics Targets Larger Share of Services Market; Analysts Predict 21K Genomes in 2012


By Monica Heger

This story was originally published June 6.

Complete Genomics is "gaining traction" in the sequencing services business, according to investment firm Jefferies, which resumed coverage of the company today, giving it a 'Buy' rating.

In a research note, analyst Jon Wood projected the company would ship around 4,900 genomes this year, which is on target with Complete Genomics' own predictions, and 21,100 genomes in 2012, generating respective revenues of $36 million and $80 million per year.

Complete Genomics' CEO Clifford Reid said today in a presentation at the Jefferies Global Healthcare Conference in New York, which was webcast, that the company is on track to launch its new sequencing instruments next year, which would enable the sequencing of 10 genomes per day per instrument (IS 5/10/2011).

The new sequencing machines will help drive down costs and increase the amount of business the company can do. Currently, Complete Genomics has 16 sequencers, with plans to install 24 by the end of August. However, Reid said that the Mountain View, Calif., headquarters has space for 50 machines, giving it the potential to sequence 165,000 genomes per year with the new instruments, which would generate $500 million in revenue.

Reid also said that he "envisions having 10 centers worldwide" over the next few years and said he is especially interested in opening a facility in Asia.

Looking ahead, Reid predicted that the future of the complete human genome sequencing market will be outsourced. "As clinical markets emerge, those are already outsourced," he said. "We have both the technology and the business model set up to be the dominant player in the complete human genome sequencing market."

Reid's predictions are in line with the results of a survey that Jefferies recently conducted of 44 users of next-generation sequencing technology, which found that 63 percent of respondents would be willing to outsource human whole-genome sequencing projects — up from 37 percent of respondents who said they'd be willing to do so in a similar survey that the bank conducted in December 2010.

In addition, the survey found that more than 70 percent of respondents were familiar with
Complete Genomics' offering, compared to only 53 percent of respondents who were aware of the company's services in late 2010.

In total, 26 percent of respondents indicated a preference for Complete Genomics' service and 23 percent said they'd be more likely to choose Illumina's offering. Around 45 percent of survey participants were undecided, "which suggests a tremendous opportunity for [Complete Genomics] to continue capturing an increasingly significant share of outsourced demand as its commercial presence grows and operational infrastructure matures," the Jefferies analysts said.

Complete Genomics' main competitors are Illumina and BGI, both of which offer sequencing services. However, Reid said that Complete Genomics is capturing a significant share of that market. Between July 2010 and May 2011 Complete Genomics received orders for more than 3,200 human genomes, while he noted that Illumina took orders for just over 1,000 genomes. He did not know how many orders had been placed with BGI.

Reid did not disclose the source for his estimate of Illumina's orders, but Illumina said in January that it had accumulated an order backlog of about 1,000 genomes since its service was launched last July (IS 1/18/2011).

Reid also reiterated Complete Genomics' plan to launch its "long fragment read" technology to early-access customers in the fourth quarter, with a commercial launch next year (IS 4/19/2010). The technology would allow for whole-genome haplotyping, which Reid said would be especially important for clinical applications.

"As we move into the clinical space, this will be a critical differentiating factor between our technology and other technologies," Reid said.

He added that the cancer diagnostics market will be a key area for the company. With around 5 million new cancer cases in the developed world each year, he estimated the market to be around $20 billion a year. He also sees a small market in pediatric diagnostics, and said that the company is "already running experiments in that market" and that ultimately, "our complete human genome sequencing will be the frontline diagnostic for the entire pediatric market."

The largest market will ultimately be in the sequencing of newborns, with 13 million newborns each year in the developed world, he said.

Have topics you'd like to see covered by In Sequence? Contact the editor at mheger [at] genomeweb [.] com.

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