This article was originally published Dec. 30.
Building on last year's trend of numerous mergers and acquisitions within the next-generation sequencing market, in 2013, the space was again marked more by business deals and less by sequencing technology breakthroughs.
Sequencing companies sought to gain an edge over the competition through license agreements, mergers, and acquisitions — particularly those that focused on clinical applications — while companies outside of the next-gen space sought to get in on the sequencing game.
The year began with the completion of BGI's acquisition of Complete Genomics and Illumina's purchase of noninvasive prenatal testing firm Verinata Health. And it ended with Roche's $75 million investment in Pacific Biosciences.
Along the way was perhaps the largest deal — Thermo Fisher Scientific's $13.6 billion purchase of Life Technologies — as well as the termination of the relationship between Illumina and Oxford Nanopore Technologies, Roche's decision to shut down its 454 sequencing business, and a number of smaller deals involving nanopore sequencing technology and various startups.
Negotiations for BGI's purchase of Complete Genomics, a process that began near the end of 2012 and included a counteroffer by Illumina, came to a close at the beginning of the year as the firms cleared the last regulatory hurdles.
BGI has been mostly quiet about how it intends to use Complete Genomics' sequencing technology, indicating only that it is focused on integrating it into its own research projects rather than its services business. In particular, BGI previously told In Sequence that it would use Complete Genomics' sequencing technology in its Million Genomes Project, in which it aims to sequence one million each of human, plant and animal, and microbial genomes.
Complete Genomics' CEO Cliff Reid has also said that a longer-term goal is to collaborate with BGI's clinical arm, BGI Health, to provide sequencing services to the clinical market.
Illumina made a number of purchases this year, acquiring San Francisco-based startup Moleculo for an undisclosed amount, noninvasive prenatal testing firm Verinata Health for up to $450 million, and digital microfluidics firm Advanced Liquid Logic for up to $96 million. Illumina also cut ties with Oxford Nanopore Technologies, while licensing other nanopore-based sequencing technology.
Illumina's acquisitions of Moleculo and ALL followed its strategy of acquiring technologies that fit into its existing sequencing workflow or enhance its capabilities in areas outside of its expertise.
The Moleculo technology will enable Illumina to offer longer reads, important for phasing genomes, sequencing through repetitive regions, and identifying structural variations. Meantime, Illumina plans to use ALL's microfluidic technology in its sample prep products.
Additionally, this year Illumina ended its relationship with Oxford Nanopore Technologies.
The two firms had originally struck a commercialization agreement in 2009, whereby Illumina would exclusively market, sell, distribute and service products developed based on Oxford's so-called Base technology, a nanopore sequencing strategy that couples an exonuclease and a protein nanopore. Illumina also invested £11.9 million ($18.5 million) in return for a minority stake in the company.
Since then however, Oxford began focusing more heavily on another nanopore sequencing technology known as strand sequencing, which it said in 2012 it would commercialize without Illumina. This year, the firms said the commercialization agreement would end on June 30, 2016 and Oxford also coordinated the acquisition of Illumina's 13.5 percent stake on behalf of certain shareholders.
Despite the termination of its relationship with Oxford, Illumina is still very much interested in nanopore sequencing technology and in October it licensed nanopore sequencing technology being developed by researchers at the University of Alabama, Birmingham and the University of Washington. That technology involves coupling a protein nanopore based on Mycobacterium smegmatis porin A, or MspA, with an automated system for ratcheting DNA through the pore. The UAB and UW team demonstrated in a study in Nature Biotechnology that the system could read known DNA sequences between 42 and 53 bases long.
Illumina's CEO Jay Flatley has also said that the company is developing its own nanopore sequencing technology.
On the clinical side of its business, Illumina acquired noninvasive prenatal testing company Verinata Health in a deal worth up to $450 million.
Clinical sequencing has taken off in recent years, and nowhere more so than in the noninvasive prenatal diagnostic field. Looking to capitalize on this opportunity, Illumina has said that it intends to take Verinata's Verifi test through US Food and Drug Administration clearance to offer it as an in vitro diagnostic.
The deal, however, left other NIPT firms a bit mystified, as it seemed to put Illumina in direct competition with customers. Illumina supplies sequencing systems and reagents to the three other US-based NIPT firms — Ariosa Diagnostics, Natera, and Sequenom. At the time, Sequenom CEO Harry Hixson said he was "puzzled" by the deal, particularly given that Sequenom is "one of Illumina's best customers."
However, Illumina has maintained that it intends to continue to honor its supply agreements. It currently has an agreement with Sequenom that lasts until 2016, and this year it signed a three-year supply contract with Natera.
Thermo and Life
In the largest sequencing-related deal of the year, Thermo Fisher Scientific said in April that it planned to buy Life Technologies for $13.6 billion, an acquisition that is expected to be completed in early 2014.
Officials at Thermo have not provided many details about the firm's plans for Life Tech, but did say that they expect Life's Ion Torrent business to be a main driver. Ion Torrent has fueled Life Tech's growth in recent years, accounting for almost half of its revenue increase in 2011 and 2012.
In with PacBio, out with 454
Following last year's failed attempt to acquire Illumina in a bid it eventually increased to $6.7 billion, this year Roche took a more tentative step when it entered into an agreement with Pacific Biosciences worth up to $75 million to develop assays for clinical diagnostics using PacBio's single-molecule real-time sequencing technology.
The deal was a financial boost for PacBio, which struggled over the past few years and cut 28 percent of its workforce, or 130 employees, in September 2011 due to a slower-than-projected adoption rate of its RS system. PacBio said the payments from Roche — $35 million up front and $40 million tied to development milestones— will sustain it at least into 2016.
Roche too has struggled to compete in the next-gen sequencing market against Illumina and Life Tech's Ion Torrent. Its benchtop sequencer, the 454 GS Junior, has failed to keep up with Illumina's MiSeq and the Ion Torrent PGM. Additionally, Roche's 454 flagship instrument, the GS FLX, has increasingly lost market share to the higher throughput HiSeq system. While the GS FLX was once lauded for having the longest reads, the HiSeq, MiSeq, and more recently Ion's PGM and Proton systems, have been narrowing that gap and come at a lower price point.
Due to its weakening position in the next-gen market and following its investment in PacBio, Roche announced plans in October to shut down its 454 sequencing business all together.
The decision came just months after Roche said it would consolidate its 454 and NimbleGen products into a new sequencing business unit in a broad restructuring that involved cutting around 60 positions, as well as ending a collaboration with DNA Electronics to develop a semiconductor sequencing and one with IBM to develop a solid-state nanopore sequencer.
Looking to 2014
The year ended with Illumina maintaining its dominance in the next-gen sequencing field. That does not appear likely to change in the near term, as the impacts of the deals between BGI and Complete Genomics, Thermo Fisher and Life Tech, and Roche and PacBio will likely not be felt immediately, but may ultimately shake up the field a bit.
Additionally, 2014 may be the year when nanopore sequencing technology is commercialized. Oxford Nanopore Technologies, which experienced delays in launching the two nanopore sequencing instruments it is developing, the GridIon and disposable MinIon, said in December that it had opened registration for early access to its MinIon system.
Genia too has said it plans to commercialize its nanopore sequencing system in late 2014. In 2013, it made data available demonstrating a proof of principle for its tag-based single-molecule nanopore sequencing approach. It also secured a $5.25 million grant from the National Human Genome Research Institute's Advanced DNA Sequencing Technology program.
Other smaller companies are looking to soon launch systems, as well.
Following the end of its collaboration with Roche, DNA Electronics said it intended to pursue development of a semiconductor based sequencing system and this year published a proof of principle in Nature Methods.
Providence, RI-based Nabsys has also been developing a semiconductor-based sequencing system. It said in January that it planned to launch a first iteration of the platform this year, but has yet to do so. The firm is targeting its system initially for genome mapping of microbial organisms with future versions having applications in assembly and validation of larger genomes, structural variation detection, targeted sequencing, and eventually whole-genome sequencing.
GnuBio, meantime, unveiled its $50,000 desktop "picoinjector" system in October at the Consumer Genetics Conference in Boston. It has shipped the system to at least one beta tester this year and is planning for a wider commercial launch in 2014.