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WaferGen Acquires IntegenX's NGS Library Prep Tech to Bolster Revenues, Complement Target Enrichment

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This article has been updated with comments from AltheaDx.

WaferGen Biosystems' acquisition of IntegenX's next-gen sequencing library preparation business, announced last week, provides the company with a stable revenue stream and a technology that complements its own target enrichment platform.

As part of the acquisition, WaferGen has gained IntegenX NGS library prep products − the Apollo 324 instrument and PrepX reagents. In return, it paid InteGenX $2 million in cash, a $1.25 million secured promissory note that is due in early 2017, up to three earn-out payments in the next three years that are contingent on certain revenue thresholds, and it took over liabilities related to the business.

"The Apollo acquisition is very critical to us. It puts us on the map in a completely different way," WaferGen President and CEO Ivan Trifunovich told In Sequence.

IntegenX decided to sell its NGS library prep business to be able to focus on its RapidHIThuman DNA identification business, which it said has a very different customer base.

According to Trifunovich, IntegenX's NGS library prep products are a "great fit" for WaferGen's SmartChip TE system for NGS target enrichment as the two product lines complement each other and target the same types of customers.

Trifunovich added that Integen X already has "a solid customer base" for the Apollo instrument, which generates a steady stream of revenue and is "a more mature business than our SmartChip TE," which WaferGen launched last year and sells along with its more-established SmartChip real-time PCR products.

He did not disclose the number of Apollo customers but said that "it's not five, it's not 10, it's not 20, it's a pretty good number." Right now, there is little overlap between Apollo and SmartChip TE customers, he said, though at least one customer has both platforms.

Additional revenue will be a welcome shot in the arm for WaferGen, which has been reporting net losses while waiting for the SmartChip TE to take off. During the third quarter of 2013, for example, the company took in about $390,000 in revenue but had a net loss of $11 million. During the same quarter, it raised $13.4 million from a private placement, bolstering its cash position to $14.5 million in cash and cash equivalents.

Besides IntegenX's products, Wafergen is taking over several of the firm's sales representatives and a small R&D group, for a total of about 10 employees.

IntegenX first launched the Apollo 324 for automated NGS library prep in 2010. The system allows users to prepare DNA, RNA, and ChIP-seq libraries and is currently compatible with sequencers from Illumina, Life Tech's Ion Torrent, and Roche's 454.

Using a series of PrepX reagent kits, the Apollo automates the end repair, A-tailing, adapter ligation, and bead-based size selection steps of library prep and can handle up to 32 samples per run for DNA libraries, up to 48 samples per run for RNA libraries, and up to eight samples per run for ChIP-seq libraries.

WaferGen will continue to sell the Apollo 324 and the PrepX reagent kits for the time being while thinking about how to integrate them more closely with its existing products. "Our first priority is to make sure to have the trains run on time, that we transition successfully," Trifunovich said, including reagent manufacturing and the integration of IntegenX staff.

Longer term, WaferGen plans to integrate the Apollo more closely with the SmartChip TE, for example by providing protocols that work with both systems. "They are addressing discrete steps in the whole sample prep workflow," he said.

WaferGen's SmartChip TE system, which the company launched last spring, allows users to perform more than five thousand individual PCR reactions in parallel in less than three hours, on a chip that can take one or several samples.

It consists of a SmartChip with close to 5,200 100-nanoliter wells; a SmartChip TE single-sample or multi-sample nanodispenser, which loads the samples, primers, and reagents onto the chip; and a SmartChip Cycler, a thermocycler that has been modified to run one or two chips. The chip comes in different versions, including a four quadrant SmartChip with almost 3,400 nanowells.

Following the amplification, PCR products are extracted from the chip, followed by library preparation and sequencing. At the moment, the system is optimized for use with Illumina or Ion Torrent sequencers.

The list price for the entire SmartChip TE system with a single-sample nanodispenser is about $15,000. Prices for the chips, which are single-use, start at around $100, depending on the size of the panel and the number of samples they take. The multi-sample nanodispenser costs less than $100,000.

According to Trifunovich, the main advantages of the SmartChip TE technology are its uniformity of coverage and high percentage of targets covered, which he said are especially attractive for clinical applications.

In a white paper — no peer-reviewed studies using the SmartChip TE have been published yet — company researchers reported amplifying more than 97 percent of 376 targets with at least 10-fold coverage; more than 93 percent of targets had a 10-fold or less difference in coverage.

The system competes primarily with Illumina's TruSeq, Life Tech's AmpliSeq and Agilent's HaloPlex technologies for target enrichment, Trifunovich said, but he claimed that SmartChip TE exceeds them in terms of percentage of targets covered. The overall cost is "comparable" with these competitors, he said, noting that "we're going to win on the quality of the data."

WaferGen is not disclosing how many customers have adopted the SmartChip TE so far but Trifunovich said it is "doing quite well" with placements and has several ongoing pilot projects with "well-known clinical labs." Early-access collaborators have included the University of Ghent in Belgium, BGI in China, and Ambry Genetics.

Next month at the Advances in Genome Biology and Technology conference, WaferGen plans to launch an updated version of the technology that integrates the enrichment and the addition of barcodes and adaptors into a single step, allowing users to load up to 384 samples onto each chip. Also this quarter, it plans to launch an assay to enrich the BRCA1 and 2 genes, consisting of SmartChips pre-loaded with reagents.

Xun Xu, deputy director of BGI Research and an early user of the SmartChip TE, has used the system in two projects, one to capture 36 amplicons in a total of 800 samples, another to capture 72 amplicons in 200 samples.

Xu told In Sequence via e-mail that compared to other approaches, both hybridization-based and PCR-based, the SmartChip TE achieves "better coverage and evenness for the regions of interest."

Using the multi-sample nanodispenser, he and his colleagues can now design different combinations of amplicons and samples on one chip according to their needs, "which can save time and increase the throughput," he said. The total number of reactions that can be run in parallel, though, is limited by the number of wells on the chip, he said.

Xu said his team is collaborating with WaferGen to develop a "sequencer-ready target enrichment approach" that reduces the total time required from one day to three hours. "In the future, we will adopt this approach for both the MiSeq and Proton sequencer, which might be applied to clinical tests in a time- and labor-saving manner," he said.

Genomics testing services AltheaDx has brought the SmartChip TE system in house after evaluating it for use in next-gen sequencing assay development.

"The observed superior uniformity of coverage, in comparison to older multiplexed amplicon approaches, enables complete coverage of difficult target regions," Mark Landers, the company's associate director and head of research, told In Sequence by e-mail. In addition, he and his colleagues found the assay design to be easy, the cost per reaction more affordable, and the turnaround time to be shorter than for probe hybridization-based methods.

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