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Life Tech to Acquire Ion Torrent for up to $725M; Will Market PGM System for 'Mid-Scale' Sequencing


By Bernadette Toner

This article, originally posted Aug. 17, has been updated to include additional information from Life Technologies and from a Macquarie Research analyst's note.

Life Technologies said last week that it plans to acquire privately held Ion Torrent for $375 million in cash and additional considerations of up to $350 million.

The company said that Ion Torrent's benchtop Personal Genome Machine, which is scheduled for commercial release later this year, is "highly complementary" to its capillary electrophoresis and SOLiD sequencing platforms and is "optimal for mid-scale sequencing projects, such as targeted and microbial sequencing."

A Life Technologies spokesperson explained that "mid-scale" for human studies would mean targeted resequencing across hundreds to thousands of samples — as opposed to whole-genome or whole-exome sequencing with hundreds to thousands of samples.

The PGM relies on the same polymerase-based sequencing-by-synthesis chemistry as many existing second-generation sequencers, but does not require the lasers, cameras, or labels that these other systems do. Instead, it reads DNA on a semiconductor chip by measuring the release of hydrogen ions as nucleotides get incorporated by DNA polymerase.

As a result, the instrument is smaller than other platforms and less costly. At the Advances in Genome Biology and Technology conference in February, Ion Torrent CEO Jonathan Rothberg said that the instrument would cost less than $50,000 and that each run — comprising "hundreds of millions of bases" — would take about an hour and cost less than $500 (IS 3/2/2010).

The PGM is currently available through an early-access program and has already been installed at the Broad Institute and at least one other laboratory. Life Tech said it plans to launch the system later this year at an entry cost of less than $100,000. This comprises approximately $50,000 for the instrument and an additional $50,000 related to the sample prep system, presumably the same EZ Bead emulsion PCR system used for the SOLiD.

The company noted that future products developed with Ion Torrent's so-called PostLight technology "will benefit from cutting edge semiconductor fabrication technologies that can expand throughput at an accelerated pace, thereby dramatically lowering the cost to sequence a genome."

Under the terms of the acquisition, expected to close in the fourth quarter, Life Tech will provide $375 million in cash and an additional $350 million in cash and stock upon the achievement of certain technical and other milestones through 2012.

Greg Lucier, chairman and CEO of Life Technologies, said in a statement that the Ion Torrent technology "will represent a profound change for the life sciences industry, as fundamental as the one we saw with the introduction of qPCR."

The spokesperson said that Life Technologies envisions a "broad user base" for the PGM system, including genome centers, core facilities, and individual labs.

Rothberg — who founded Curagen, 454 Life Sciences, and RainDance prior to Ion Torrent — will continue to lead Ion Torrent and Life Tech will maintain the company's facilities in Guilford, Conn., and South San Francisco, Calif.

In a research note analyzing the acquisition, Jon Groberg of Macquarie Research said that even though Ion Torrent has no "meaningful revenues," Macquarie approves of the acquisition "as we think the technology has the potential to be more disruptive than any other technology near nearing the market."

Groberg estimated that Ion Torrent could contribute more than $150 million in sales to Life Technologies' top line "in the next couple of years," or approximately 4 percentage points of organic growth, based on an estimate of approximately 1,000 molecular biology labs purchasing the system.

As far as the $725 million purchase price for a firm with no revenues, Groberg noted that Illumina paid approximately $600 million in stock for Solexa in 2006, "prior to that firm having significant revenues," and it is "not unreasonable" to estimate that Illumina's sequencing business is currently valued at around $5 billion.

He added in his note that Life Technologies scientists "extensively tested" the Ion Torrent technology "and found it to deliver over 99 percent raw read accuracy and read lengths of 100-200 base pairs," with possible read lengths of "at least" 500 base pairs.

In addition, Groberg said that Life Tech plans to scale the system up from a current throughput of 2 gigabases per four-hour run to 4 gigabases per four-hour run in the next year by increasing the number of features on the chip from a current level of 7.3 million features to 12.9 million features.

Neither Life Technologies nor Ion Torrent would confirm these technical specifications for this article, which the companies have not yet disclosed publicly.

Competition Heats Up

The announcement follows a flurry of recent activity in the market for emerging sequencing technologies as new players look to gain a foothold and established vendors race to expand their portfolios beyond second-gen systems.

Also last week, Pacific Biosciences filed for an initial public offering worth up to $200 million. It plans to use the proceeds to develop and commercialize its Single Molecule Real Time sequencing technology, which it plans to launch in early 2011, following an early access program that is ongoing (see story, this issue).

Complete Genomics also recently filed for an IPO, in which it plans to raise up to $86.25 million (IS 8/3/2010). The company is using its proprietary sequencing technology to offer human genome sequencing services. By the end of 2010, it expects to be able to sequence and analyze more than 400 complete human genomes per month.

Roche, which acquired Rothberg's 454 in 2007, the first company to market a second-generation sequencing platform, has also taken steps to expand its product line. The company announced last month that it is partnering with IBM to co-develop a nanopore sequencer based on IBM's DNA transistor technology. As part of the agreement, Roche has the exclusive right to market products based on the technology, though commercialization is not expected for another five years (IS 7/6/2010).

Illumina, meantime, has staked its own claim in future sequencing technologies with its acquisition in 2008 of Avantome, a company developing a low-cost, long-read sequencing technology (IS 7/29/2008). Illumina has also taken an $18 million equity stake in Oxford Nanopore Technologies, which is developing a real-time single-molecule platform that combines an exonuclease with nanopore detection (IS 1/13/2009).

Life Technologies has also been developing its own third-generation sequencing technology — a single-molecule system dubbed "Starlight" that uses a quantum dot tethered to a DNA polymerase and measures fluorescence in real time as bases get incorporated by the polymerase.

At AGBT, Joseph Beechem, chief technology officer and head of single-molecule sequencing research at Life Tech, said that the company expected to begin early-access collaborations for the Starlight technology in the fourth quarter.

The Life Tech spokesperson said that the company will "continue to invest" in the single-molecule system, "as we believe there is still a need for long-read-length sequencing technology."

However, she added, "our primary focus right now will be on the PGM and the Ion Torrent acquisition."