Buying NextBio is an indication of Illumina's intent to move into the enterprise software market and of its commitment to providing comprehensive analysis solutions for its customers, according to Nick Naclerio, the company's senior vice president of corporate and venture development and general manager of its newly formed enterprise informatics unit.
The purchase fits in with the "strategic priorities" that underlie Illumina's recent reorganization effort, which included the launch of an informatics arm to focus on providing enterprise informatics solutions through the company's BaseSpace cloud environment, he told BioInform.
It's a novel move for Illumina, which has historically offered some software alongside its instruments but has never set up a dedicated business unit for the market, he said. "This is a new strategic focus for us … and this acquisition gives us an opportunity to accelerate our growth in this space" as well as to provide the "kind of end-to-end capability [that] we think the marketplace is looking for."
This particular acquisition makes sense for Illumina because NextBio's products complement the existing applications in its BaseSpace App environment. The cloud-based infrastructure currently has a mix of internally developed and third-party apps from partner companies for things like genome assembly and metagenomics analysis, and it provides space for storing and processing genomic data (BI 7/27/2012).
Hoping to extend the variety of capabilities offered via its platform, Illumina launched a native app development program last week that offers software development toolkits that the general bioinformatics community can use to develop apps for BaseSpace (BI 10/25/2013).
When the NextBio purchase deal goes through, Illumina will own the Santa Clara, Calif.-based company's software-as-a-service analysis platforms, which provide scientists in research and clinical settings with tools to aggregate and analyze large quantities of phenotypic and genotypic data and to look for correlations between molecular and clinical data from patients in public and proprietary studies.
Both companies' products complement each other because while BaseSpace was built primarily to support sequence data analysis, Next Bio's products have more of a systems level approach, according to Naclerio, letting users integrate and analyze multiple sources of information including gene expression, proteomic, and sequence data and incorporate information from things like patient histories.
"Think of the two platforms as coming from opposite directions and meeting in the middle," he said. "We're going to be looking at how to integrate the two platforms to be able to provide ... the best ecosystem for storing, analyzing, and sharing genomic information or sequence information ... with BaseSpace; and then couple that with access to literature, phenotypic information, [and] other types of information that are not related to sequencing."
Furthermore, "if you think about BaseSpace as being sold primarily to people who are operating sequencers and [analyzing] genomes, NextBio is sold more at the enterprise level [since] it’s bringing together lots of different data types and supporting lots of different users who are often not bioinformaticians," he added. "Bringing those two things together enables Illumina provide end-to-end solutions … to the non-specialist."
Illumina isn't disclosing details about its software integration plans nor is it discussing potential new products that could come out of these efforts. Naclerio did say that NextBio will officially become part of Illumina's informatics business unit on January 1 and that teams from both companies will work jointly on the integrated product road map.
The NextBio team will continue to operate out of Santa Clara and will include Co-founder Ilya Kupershmidt and Chief Technology Officer Satnam Alag, who will continue to provide scientific and technical leadership as part of the new business unit. Saeid Akhtari, also a NextBio founder and the company's president and CEO, will transition into a consulting role to Illumina, according to Naclerio.
Illumina will also honor existing licensing agreements with current NextBio customers, which include the Cancer Care Institute (BI 6/29/2012), where researchers are using the NextBio Clinical to analyze oncology patient data for research studies as well as to select appropriate treatments for patients; and Genophen, a Stanford University spinout that is using the clinical tool to analyze genetic variants from whole genome sequence data and combine these with information on things like diet, family history, and exercise to create bespoke disease prevention plans for patients (BI 4/5/2013).
Illumina is also mulling branding options. NextBio's products will have new identities under the Illumina brand but "we have not made a decision about product names," Naclerio said.
The financial details of the acquisition are not being disclosed. According to an analyst's report from William Blair & Company, the transaction isn't expected to impact Illumina's 2013 guidance. Meanwhile, an analyst from Goldman Sachs noted that NextBio has been cash flow-positive for several years and that the company's dataset and high-profile customer base would "enhance Illumina's bioinformatics offerings and support [its] current dominance in the sequencing market."