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Illumina CEO Says Firm Has No Plans to Exit Array Market as Chips, NGS Remain 'Highly Complementary'

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NEW YORK (GenomeWeb) — Illumina may be the dominant microarray vendor but that hasn't stopped some from pondering the future of its BeadChip business given the San Diego company's focus on next-generation sequencing.

During a presentation at Bank of America Merrill Lynch's Healthcare Conference in Las Vegas last week, analysts asked CEO Jay Flatley about Illumina's intentions for its array business, which continues to register single-digit quarterly growth even as it has been overshadowed by Illumina's activities in the sequencing market.

"The array business is a great business for us and there is no prospect that we are going to exit that business or sell that business any time soon," said Flatley, whose remarks were webcast. While he acknowledged that Illumina had looked into various options for its array products, Flatley said that it continues to be a "very profitable business" that "still provides significant revenue."

He also maintained that many of Illumina's next-generation sequencing customers also use the firm's microarrays, making it difficult to decouple the two platforms.

"A very large fraction of our customers use both technologies hand in hand, they go back and forth between arrays and sequencing," said Flatley. Though Illumina built its array business on the sale of whole-genome genotyping arrays for use in genome-wide association studies, it has continued to see its revenues grow as sales of chips to consumer genomics firms and agricultural researchers make up for an overall GWAS decline. Many of those arrays are custom iSelect BeadChips, and Flatley predicted that Illumina's custom array business should "remain robust" going forward because of that interest.

"In the long run, arrays are always going to be the best technology if you know exactly what you are looking for and that doesn't change," said Flatley. "They are easier, faster, and cheaper than sequencing," he said. Flatley reiterated that Illumina believes its two core technologies are "highly complementary," and noted that the firm generates "a lot of profit off the array business that helps fuel our R&D engine."

Crediting Affymetrix

During his talk, Flatley was also queried about Illumina's array sales to biorepositories. One analyst noted that the UK Biobank tapped Affymetrix to genotype its 500,000-sample holdings, a deal that the Santa Clara, Calif.-based vendor has touted as one of the largest ever of its kind.

Affymetrix commenced genotyping the samples late last year using a custom designed Axiom array. CEO Frank Witney said on a recent earnings call that Affymetrix delivered the first installment of data to UKBB in Q1, and CFO Gavin Wood said that the company expects to recognize the majority of UKBB-related revenue in 2014.

Affymetrix's arrays will also be used to genotype roughly 200,000 samples as part of the US Department of Veteran Affairs' Million Veterans Program, and Witney said that Affymetrix has been selected as the "platform of choice for other new biobanking projects in China, Brazil, Taiwan, and other countries," though he did not elaborate.

Illumina for its part has launched a number of products designed specifically for such efforts, such as its Infinium HumanCore and HumanCoreExome BeadChips and though it appears that Affymetrix has won a number of contracts with biorepositories recently, Flatley said that biobanks continue to be a "rich opportunity" for his company.

"We credit Affymetrix for the progress they have made there," said Flatley referring to the UKBB deal. "Technologically, the companies are closer than they may have been a few years ago, to be fair, and so in some deals it becomes a price competition," said Flatley. "On some deals we will compete on price and on some we won't," he said. "So they will win some of those on price."

And if Illumina cannot win on price, it will win on platform. Flatley said that the biobanking market should eventually move to sequencing, because it "really is an environment where you want to have the complete sequencing data." He acknowledged that arrays continue to be favored by biobanks "purely for economic reasons," and that Illumina will "selectively pick off the deals we think are good high margin opportunities for us." And along the way, Flatley added, Illumina will try to move its biobank customers toward sequencing.

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