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Array Survey Predicts Future Demand for Exome Arrays but 'Flat' Overall Sales in 2012


By Justin Petrone

Investment firm William Blair recently conducted a survey of laboratories that sheds light on the future prospects for the microarray market.

Based on the results, William Blair analysts predict that array demand will more or less remain flat over the next few years, but also said that market expectations that array sales will decline are "too pessimistic." In particular, the analysts noted a "great deal of optimism" around exome arrays, despite a general market trend in favor of next-generation sequencing.

"We believe there is still a place for microarrays in the experimental world given the ongoing cost differential between the platforms," wrote William Blair analysts Amanda Murphy and Silvia Chao in their analysis of the findings last week. The company, which covers Illumina, conducted the study to gain insight into Illumina's array business, but the survey's questions related to the broader market for arrays.

In the report, the analysts predicted that "many applications" currently performed on arrays will shift to sequencing. Still, they predicted that the per-base cost decline of sequencing will slow relative to historical levels, and believe a general shift from microarrays to sequencing could be "more protracted than investors currently expect."

Based on a "strong positive reaction" to Illumina's newly launched exome arrays, the analysts concluded that some analysts' expectations that the firm's array business could decline by 5 or more percent in coming years are "too pessimistic," and instead predicted flat array revenues over the next two years.

William Blair conducted the survey via e-mail and followed up with interviews with "thought leaders" to "assess the future trajectory of genome‐wide association studies as well as use of microarray platforms in genetic analysis going forward." The investment firm's survey generated 63 fully completed responses.

More than three-quarters of the respondents were based in the US; one-eighth were based in Europe; and the remainder answered the survey from labs in Canada, China, Taiwan, Singapore, and Mexico. Most of the respondents work in core labs, principal investigator labs, and genome centers.

About half of the respondents were Illumina customers and half were Affymetrix customers. Seventy percent of respondents said they had no plans to make array-related capital equipment purchases in the next year, and 54 percent indicated that they expect usage of arrays to be flat over the same time period, according to the report. The analysts wrote that sales of expression arrays are expected to decline as customers move to sequencing-based applications, while focused and custom content arrays should increase.

While a shift to sequencing is certainly impacting the array market, the funding environment could also be a barrier to array sales, the analysts found. Most survey participants expected a "flat-to-down" public funding scenario in fiscal 2012 and 2013.

Users also pointed to the difficulty in obtaining funding for microarray versus sequencing experiments, according to the report. This funding uncertainty has resulted in "delayed purchasing behavior," as more than half of respondents depend on US government funding to support their research endeavors.

Array users are "more pessimistic" about funding than those using other platforms, such as next-gen sequencing. While about 17 percent of overall respondents expect an increase of government funding allocation in fiscal 2012, only 8 percent of microarray users expect the same, according to the report. Similarly, about 19 percent of overall respondents expect an increase of government funding allocation in fiscal 2013, but only 11 percent of microarray users expect the same.

'Yesterday's Experiment'?

In particular, researchers face "difficulty" in funding future genome-wide association studies, as GWAS has "not succeeded in finding replicable gene associations with large effects for complex human diseases," and because sequencing is viewed as a "more novel platform," that is "better positioned" to obtain funding, the analysts wrote.

Though high-density chips to support rare variant analysis, such as Illumina's Omni2.5 and Omni5 BeadChips, have become available in recent years, the analysts found that most users seem to be in a "wait-and-see" mode. Illumina CEO Jay Flatley has used similar terms to describe the GWAS market (BAN 6/14/2011).

Of those surveyed, 40 percent of respondents have an active GWAS in process and more than half of those are using the new chips that contain rare variants, the analysts found. At the same time, labs are not yet convinced that these chips can identify rare variants associated with human disease. While a third said they believed this hypothesis would be validated, 12 percent said that it would not, and 35 percent were unsure.

Even if the rare variant hypothesis is validated by these first proof-of-principle studies, the William Blair analysts wrote that, based on their discussions with users, array-based GWAS is viewed as "yesterday's experiment," and when price is not an issue, sequencing is viewed as the better approach for identifying rare or causal variants.

The "wait-and-see" approach taken by many array users appears to reinforce the perception that there is a shift to sequencing. Lackluster array sales for both Illumina and Affy in recent quarters have "driven concern in the investor community that the slowdown … represents a secular deterioration of microarray technologies, as researchers began to use other technologies," the analysts wrote.

The analysts estimated that the critical price for users to convert from arrays to sequencing would be about $500 per sample. "Given sequencing provides richer data, we expect the majority of applications to eventually convert to sequencing," they wrote.

While they predicted this switch could occur in two to three years, they did note that the failure of array platforms to identify associations of interest using the new arrays could augment the rate of conversion. "Many users indicated their intention to use RNA‐seq, whole-exome sequencing, or whole-genome sequencing, in case their current GWAS experiment fails to identify anything of interest," the analysts wrote.

Nevertheless, 63 percent of the survey respondents currently use microarray technology, either directly in their labs, or by outsourcing their microarray projects. Survey results indicated that among current microarray users, microarrays are still used as a primary discovery platform, suggesting that they are "still a cost‐effective tool to screen large amounts of samples."

'Array for the Masses'

Even though many respondents are either using sequencing or considering it as an option should their array platforms not deliver, the analysts noted that the need to replicate findings in larger cohorts to validate their association with a particular disease means that arrays, as the lower-cost technology, are likely to maintain a place in experimental designs.

"For complex diseases, arrays provide a cost‐effective means to screen a large number of samples to identify genetic areas of interest while carrying a smaller sample-prep/data burden than sequencing," the analysts wrote.

In particular, they cited Illumina and Affy's new exome arrays as tools that could be used for such validation.

Both Illumina and Affymetrix launched their new exome arrays at the International Congress of Human Genetics/American Society of Human Genetics Meeting in Montreal in October (BAN 10/18/2011).

Illumina's offering includes its 250,000-marker, 12-sample Infinium HumanExome BeadChip, and its 950,000, nine-sample OmniExpressExome BeadChip, both launched last month; plus its 5-million-marker, four-sample HumanOmni5Exome BeadChip, expected to launch in 2012.

Affy's Axiom Exome Array contains about 300,000 functional variants, and customers have the ability to add an additional 50,000 SNPs selected from Affy's Axiom Genomic Database or other sequencing initiatives.

Both array offerings are competitively priced. Affy has been charging early-access customers $45 per sample during its early-access period, set to end on Dec. 30, while Illumina's price for its 12-sample, InfiniumHumanExome BeadChip is $39 per sample. Its early-access period is also scheduled to conclude at the end of the quarter.

Exome arrays "allow researchers to evaluate rare variants in very large sample sizes in a cost-effective manner," the analysts wrote, adding that Illumina may have already amassed a backlog for these arrays, which began shipping in the fourth quarter, of between $30 million and $40 million.

For instance, the analysts noted that if a researcher receives a $500,000 grant, he or she could run between 7,143 and 10,000 samples on exome arrays priced at between $50 and $70 per sample. Meanwhile, the same grant could support the analysis of between 294 and 417 samples using low-pass sequencing priced at $1,200 to $1,700 per sample.

"Our biggest impression from our recent channel checks is a great deal of optimism around Illumina's recent exome array as the array for the masses," the analysts wrote. "While clearly providing different data resolution and answering a different experimental question, the same 1,000-sample experiment using exome sequencing would cost about $1 million, but would cost $80,000 to screen those same samples using Illumina's exome chip," they noted.

The analysts added that while there "continues to be debate as to the future of genome‐wide association studies and the potential use of the Omni 2.5, our follow‐up discussions overwhelmingly pointed to excitement for newly launched exome arrays in the research community."

Have topics you'd like to see covered in BioArray News? Contact the editor a1t jpetrone [at] genomeweb [.] com.