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Complete Views Inova Contract as First of Many Healthcare Deals, Expects CLIA Certification in 2012


By Bernadette Toner

This story was originally published Aug. 4.

A new sequencing contract with the Inova Translational Medicine Institute is a sign of things to come for Complete Genomics, according to CEO Cliff Reid.

In a conference call to discuss the company's second-quarter financial results last week, Reid said that the agreement is a "game-changer" because it marks "the first contract that has been signed with a healthcare provider to do complete human genome sequencing."

Under the terms of the contract with the institute, which is part of the Inova Health System, a large hospital network based in Virginia, Complete Genomics will sequence the genomes of 500 premature newborns and their parents.

The Inova contract was one of two that the company disclosed this week along with its second-quarter results. The other, a contract with the National Cancer Institute, is an extension of a pilot study that Complete Genomics conducted for NCI last year in which it sequenced 50 pediatric tumor/normal pairs for NCI's Therapeutically Applicable Research to Generate Effective Treatments, or TARGET, study (IS 9/7/2010).

The company did not disclose financial details for either project individually, but said that the two together are worth $14 million and call for the delivery of 2,700 genomes over the next year.

Reid called the Inova agreement a "landmark" transaction. "This is not a case of an NIH-funded organization doing basic research," he said. "This is a healthcare provider beginning to sequence their patients as part of a longitudinal study and we think that this is the first of what will be many such studies and contracts over the coming years."

He added that it’s "the beginning of the transition of complete human genome sequencing from being a basic research project to being an integral part of the healthcare system in the US and the world."

Reid acknowledged during the call that Inova is "quite small" in terms of volume, representing "less than one half of one percent of the hospital beds currently in healthcare networks in the US." Nevertheless, he noted that the healthcare system has "taken a leadership position in applying genomics technology to healthcare earlier then others" and represents an emerging trend in the industry.

"There will be other leaders that jump into this market soon, and then a large number of followers that come in over the coming years," Reid said.

The work that Complete is doing for Inova does not require a CLIA-certified facility, but Reid said that the company intends to gain CLIA certification as it looks to secure more healthcare customers.

"We are committed to becoming a CLIA-certified service," he said, noting that the company has "hired a CLIA consultant" and expects to be certified by the middle of 2012.

Several of Complete Genomics' competitors in the sequencing services market, such as Expression Analysis, SeqWright, and Illumina, are already CLIA certified.

CLIA certification is "going to be very important for our business because up until now it has been all a basic research business and [National Institutes of Health]-funded, and we're really seeing the first major strategic moves on the part of the healthcare providers," Reid said. "We think that by being a CLIA-certified facility next year, it's going to open up a variety of new projects from healthcare providers that we're not able to undertake today, so we see it as an increase to our total available market."

In response to an analyst's question regarding the company's previously stated plan to open sequencing facilities worldwide, Reid noted that Complete Genomics' current facility in Mountain View, Calif., is "wholly adequate" to meet the needs of its research sequencing business for the foreseeable future.

However, the company does see an opportunity to set up international sequencing centers for clinical sequencing. "We expect governments to want to set up their own sequencing centers that are part of their national healthcare infrastructure as they get ready to sequence all of the citizens in the country as part of … a single payor system," Reid said.

"We think that is really going to be the driver of setting up remote facilities in other countries — not a need to expand our research capacity," he said, though he did not provide a timeline for when the company plans to being expanding internationally.

While Reid believes that clinical sequencing is a promising growth market for the company, he does not see this growth coming from the pharmaceutical sector.

In response to an analyst question on interest from pharma, Reid said that drugmakers "continue to be followers, not leaders, in sequencing."

While the company has signed some agreements with pharmaceutical firms, he noted that these are outliers. The use of sequencing in clinical trials by "mainstream pharma" is still "a few years away," he said.

Have topics you'd like to see covered in Clinical Sequencing News? Contact the editor at btoner [at] genomeweb [.] com.

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