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NIPT Developers Surprised by Illumina's Verinata Acquisition, But Say it Validates the Field

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Following last week's announcement that Illumina had acquired Verinata Health in a deal worth up to $450 million, other companies that use Illumina's technology for their own noninvasive prenatal tests said the acquisition, though unexpected, ultimately validates the field.

Over the last year, a number of companies including Verinata, Sequenom, Ariosa, Natera, and LifeCodexx launched or took steps to launch sequencing-based tests for fetal aneuploidies, and all use Illumina sequencing technology for their tests. When Illumina said last week that it planned to acquire Verinata, there was some concern about Illumina competing with its customers in this quickly growing market (CSN 1/9/2013).

Sequenom, the market leader in the space, expressed concern with Illumina's decision. At last week's JP Morgan Healthcare conference meeting in San Francisco, Sequenom CEO Harry Hixson said that the company was "puzzled" by the Verinata deal, particularly in light of the fact that Sequenom is "one of Illumina's best customers."
However, Ariosa and Natera both said that the impact would likely be minimal and could actually be a boon for their businesses because it raises the profile of the field as a whole.

The acquisition is "an encouraging sign," Gautam Kollu, Natera's vice president of marketing and business, told Clinical Sequencing News, because it's a "large company validating the science."

Kollu said that Natera does not have plans to switch to a different technology in the short term and that Illumina has indicated it is still interested in maintaining its relationship with Natera and will honor its supply agreements.

However, he said that Natera's core technology, which is more of a genotyping technology because it is based on SNP detection rather than shotgun sequencing, is platform independent.

"We use the HiSeq now because that's what the market uses," he said. But, he added, the company is not averse to using alternative technology, such as Life Technologies' Proton or Oxford Nanopore's technology when it becomes available, if that is what the market or end-user ultimately wants and if the technology is validated in a clinical setting.

"We've been evaluating platforms for awhile," he said. Aside from Illumina technology, the company also has Life Tech's Ion Torrent PGM and expects to acquire a Proton in the near future.

Sequenom also hinted that it is open to using other technologies if its supply agreement with Illumina — currently slated to run through 2016 — should fall through. At last week's JP Morgan conference, Ron Lindsay, Sequenom's vice president of strategic planning, said that in a worst-case scenario in which Illumina stops supplying Sequenom, "we'd have an alternative method in the same cost range, possibly cheaper."

"When we decided to do sequencing, we didn't stop looking at other approaches," he added, without elaborating.

Ariosa has Life's PGM in house in addition to the Illumina platform and will continue to evaluate sequencing technology, but CEO Ken Song said the company does not intend to switch.

Ariosa's Harmony Prenatal test is currently validated on the HiSeq, and "our plans are to work with Illumina closely to maintain a good supplier/customer relationship," Song said. "But, we'll continue to evaluate other suppliers and technology as they become available," he said.

Ariosa and Illumina currently have a "multi-year" supply agreement, Song said, and "our working assumption is that [Illumina has] been [a] good partner to us and have indicated that they'll continue to be good partners."

Like Kollu, Song said that while the acquisition was unexpected, it was also a "great validation of market value."

"An independent value has been placed on a company that had very limited presence commercially," he said. "It bodes well for us when thinking about company valuation."

Ariosa, which launched its test in June 2012, reported at the JP Morgan conference that it had reached an annualized run rate of 100,000 tests, including around 22,000 tests sold in the fourth quarter of 2012, and that it expects to become profitable this year.

By comparison, Sequenom last week said that it has reached an annualized run rate of more than 120,000 tests. According to the company's preliminary results, more than 60,000 MaterniT21 Plus tests were accessioned in 2012.

Verinata, meantime, is trailing both Ariosa and Sequenom in the market, while Natera has not yet commercially launched its test.

In its acquisition, Illumina will also inherit Verinata's legal disputes. Currently, all the US-based companies are suing each other for patent infringement.

Neither Song nor Kollu thought the acquisition would impact the outcome of the suits, however.

"They're pretty separate issues," Song said.

Additionally, both Song and Kollu said their respective companies' technologies are fundamentally different from the shotgun sequencing technology used by Sequenom and Verinata. Ariosa uses a targeted sequencing strategy based on an internally designed assay to selectively sequence the chromosomes of interest and a bioinformatics pipeline that gives each patient an individual risk prediction score. Natera uses a SNP-based targeted sequencing approach, in which it analyzes 19,500 SNPs in order to call trisomies.

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