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Seeking Edge in Desktop Market, Illumina Offers MiSeq Discounts for Users Retiring Rival Platforms

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In the fight to gain market share in the competitive desktop sequencing market, at least one vendor is pursuing customers by incentivizing them to retire competitors' instruments.

Customers have told In Sequence that Illumina has been offering steep discounts on the price of a MiSeq desktop sequencer in exchange for retiring Life Technologies' Ion Torrent PGM or Roche's 454 GS FLX.

While Illumina has not been publicizing this program, customers said that it is no secret and has resulted in major savings.

According to a survey conducted earlier this month by investment bank Leerink Swann, eight, or around 15 percent, of 53 lab directors surveyed either had already participated in a trade-in program for a desktop sequencer or plan to participate in a trade-in program.

Of those, 9.4 percent said they have traded or plan to trade a PGM for a MiSeq; 3.8 percent have traded or plan to trade a MiSeq for a PGM; and 1.9 percent have traded or plan to trade a 454 GS Junior for a MiSeq.

Life Technologies told In Sequence that it currently does not offer discounts on its instruments in exchange for a competitor's instrument. "We'd consider it," Andy Felton, senior director of product marketing at Ion Torrent, said, "but there are no firm plans to do that right now.

"We haven't seen the need to do anything that aggressive on the price," Felton added. He noted that only a "very small handful of people" have taken Illumina's offer for a discounted MiSeq.

The only discount program Life Tech offers is its "Friends and Family Program," where owners of the SOLiD or PGM instruments can receive a discount on the purchase of a Proton, Felton said.

Illumina, meantime, declined to provide details of its trade-in program but company officials have acknowledged it. For example, during a conference call last week to discuss the company's second-quarter 2012 earnings, CEO Jay Flatley noted that MiSeq trade-ins had doubled sequentially from the first-quarter 2012 to around 20. Those trades represented not only competitors' instruments, but also some of Illumina's Genome Analyzer instruments, he said (see story, this issue).

"The pipeline, as we look forward for potential additional trade-ins, is pretty rich," he added, with the potential of increasing the number of trades in the third quarter.

Flatley said that as of now, the trade-in program is open-ended without a defined expiration data. "We may put one on there at some point in time, but we don't have one now."

Additionally, during an April conference call discussing the company's first-quarter 2012 earnings, Flatley noted that he expected the number of customers looking to participate in the MiSeq-for-PGM or -454 trade-in program to grow "considerably" over the next couple of quarters (IS 4/24/2012).

A spokesperson for 454 also acknowledged that the company offers incentives for customers to trade the MiSeq or PGM for a GS Junior, but did not provide further details.

Customers Benefit

According to Shrikant Mane, director of Yale University's Center for Genome Analysis, Illumina's trade-in program was a "win-win" for his lab.

Mane traded in a 454 GS FLX for an Illumina MiSeq. The center was operating 10 Illumina HiSeq instruments, the 454 GS FLX, and an Ion Torrent PGM, but demand for 454 sequencing had decreased and the instrument was more expensive to operate than the other platforms, he said.

When the lab was considering purchasing a MiSeq, he asked Illumina for a discount on the machine — "considering our relationship and the number of systems we have." Illumina said that it would give Mane's lab a discount on the MiSeq in return for his 454 instrument.

Prior to Illumina proposing the offer, Mane said he was not aware of any trade-in programs.

Mane said he is using the MiSeq for research and development, to validate sequencing libraries, and for amplicon sequencing in clinical applications.

He said he wanted to purchase the MiSeq instead of another PGM because having the MiSeq for validation purposes has been "very advantageous."

Another customer, who wished to remain anonymous, said that last year he decided to test all three desktop sequencers — the MiSeq, PGM, and the GS Junior — with the goal of identifying a single platform that would suit his company's need for "low overhead clinical sequencing."

He works at a startup focused on developing next-gen sequencing diagnostic assays.

He said that after testing all three platforms, the emulsion PCR step in the sample prep for the GS Junior and PGM was not ideal. "The labor that's required to run the instruments is immense and messy," he said, and still "too variable."

In contrast, with "the MiSeq and cluster generation, we can with very high confidence set up a qPCR quantification of the library and set up a run in less than half an hour after the library is generated."

As a result, the company decided to focus on the MiSeq. He became aware of the trade-in program from a thread posted to the SeqAnswers forum, so he called his Illumina sales representative to see what the company would offer.

He said that he traded in the two PGM machines for two MiSeq instruments, and Illumina gave him $50,000 discounts — the purchase price of the PGM — for each MiSeq. Illumina would not give discounts on the MiSeq in exchange for the GS Junior, he said.

He added that Illumina has since offered trades for some of the ancillary equipment that comes with the PGM, such as the One Touch device, bead enrichment module, and the server, but that no deal has been worked out as of yet.

Illumina sent a third-party scientific medical company to pick up the PGM machines, but the customer said he does not know what happened to them afterwards.

Gray Legal Area

The trade-in option isn't a win-win for everyone, however. One customer who works at a small, nonprofit biological research institution and also wished to remain anonymous said that she wanted to participate in the PGM-for-MiSeq trade-in program, but was contacted by a Life Tech representative who said that selling any of the equipment would violate the terms and conditions of the contract the lab had signed with Life Tech.

With regard to instrument purchase contracts, Life Tech's Felton said that the issue of reselling equipment is a "gray area." In general, he said, when customers buy their equipment, they own it and can decide what to do with it. However, there are exceptions. If the instrument is a gift or provided as part of a collaboration, "we retain certain rights," he said.

Aside from the PGM, her lab currently operates an Illumina HiSeq 1000, a 454 GS FLX, and a capillary electrophoresis instrument. The lab focuses most of its work on ribosomal RNA sequencing to analyze microbial community diversity, and also does some microbial and eukaryotic whole-genome sequencing.

According to the customer, she and her coworkers have been trying to use the PGM for 16S rRNA sequencing, but have not been successful in getting it to work.

The data "had errors, but not random errors," she said. The errors were in certain sequencing motifs and would occur in around 90 percent of those motifs, making it difficult to distinguish real calls from errors.

"It didn't seem worth struggling with it anymore," she said.

She also heard about the trade-in program on the SeqAnswers forum, and contacted an Illumina sales representative. The rep offered $50,000 toward the purchase of a MiSeq in exchange for the PGM, and also offered incentives for a lower amount in exchange for the lab's 454 GS FLX or the capillary electrophoresis system, she said.

Before finalizing the trade-in agreement, she had tried to sell the PGM's ancillary equipment online, but was informed by Life Tech that that would violate the terms and conditions of their agreement. She notified Illumina of the problem, who had its lawyers look at the agreement.

They told her that it appeared that if the machine was essentially rendered unusable, by taking away the power supply, for instance, it could be resold. But Felton said that there is no stipulation that an instrument must be disabled before it is resold.

Life Tech offered to sequence her lab's samples to try and get the 16S rRNA protocol working on the PGM in-house — work that is currently underway. She said if Life Tech is successful, she will have the company show her team the protocols, but if it is not successful, she plans to go through with the trade-in for the MiSeq, even if she can't resell the ancillary equipment.

Ideally, she would like to purchase a MiSeq regardless of whether she can get the PGM to work, but said that funding is limited and the trade-in makes it affordable.

According to Jennifer Temple, Illumina's public relations manager, if a customer wishes to trade in or retire an Illumina instrument in exchange for one from a competitor, that would not violate contract terms. "It is not Illumina's practice to use contract terms to prevent a customer from retiring an Illumina instrument they no longer want or need."

However, if a customer does resell an instrument to another user, Illumina recommends that the secondary customer purchase an extended warranty on the instrument, since the original warranty would no longer apply. Additionally, she added that Illumina would "prefer to handle the moving and installation of the instrument to the secondary customer in order to ensure correct installation and operation."

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