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ABI, Illumina Upgrade Their Sequencers As Sequencing Demand Accelerates

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Applied Biosystems and Illumina last week reported that they have upgraded their respective high-throughput sequencing platforms.
 
Illumina last week said that in February, it began shipping the Genome Analyzer II, an upgrade to the Genome Analyzer that triples output from 1 to 3 gigabases per run. Two months later, the company began selling a paired-end module for the sequencer.
 
Meanwhile, ABI said that next month it plans to start shipping an upgraded version of its SOLiD platform that will double the output from 3 to 6 gigabases per run and reduce the run time.
 
Illumina’s GAII
 
During the first-quarter earnings call last week, Illumina President and CEO Jay Flatley said that the company began shipping the Genome Analyzer II during the middle of the period and in mid-April started selling paired-end modules, which had been in early-access testing since last year.
 
The company had already mentioned the pending updates at a meeting earlier this year (see In Sequence 2/19/2008). As a result of using new optics and camera components that allow the system to image DNA clusters more efficiently over larger areas, the new instrument triples the output per paired-end run from one gigabase to 3 gigabases.
 
According to Abizar Lakdawalla, an Illumina senior product manager who gave a talk at Cambridge Healthtech Institute’s next-generation sequencing meeting in San Diego last week, the GAII uses a 4-megapixel camera to scan 800 images across the eight channels of the newly designed wider flow cells.
 
Lakdawalla said the system generates at least 1.5 gigabases of single-read data per run, at least 3 gigabases of data in a paired-end run, and more than 750 megabases of data per day, recording data from more than 50 million reads per flow cell.
 
Internally, the company has already reached an output of more than 5 gigabases per run, and has decreased the run time for a 36-cycle run to two days for a single-read run and four days for a paired-end run, Lakdawalla said.
 
Illumina currently supports 36 base-pair reads on the system, but the platform enables reads longer than 50 base pairs, he said, adding that the company will support these longer reads when the chemistry has been further optimized.
 
The company has also added a module called Integrated Primary Analysis and Reporting, or IPAR, to the system that enables quality control in real time and will “shortly provide real-time image processing to accelerate data migration and analysis,” Flatley said last week.
 
He added that IPAR will be “of particular interest to small and medium-sized labs with limited data hardware and network resources.” According to Lakdawalla, real-time base calling with IPAR will be available in June or July. 
 
Paired-end sequencing, which a new module enables, will be “critical for the sequencing of model organisms which there is no reference” as well as “for the full characterization of whole human genome sequencing,” Flatley said.
 
Illumina officials told In Sequence this week that customers will have to spend $125,000 to upgrade from the old version of the Genome Analyzer to the GA II, which includes the IPAR system. The upgrade takes about two days, according to the company. The list price for the paired-end module is $45,000.
 
The list price for the GAII, including IPAR, is $450,000, and the old Genome Analyzer is no longer commercially available.
 
Illumina — which did not provide an update on the number of installed sequencers last week — saw its overall revenue for the first quarter increase, partially driven by sales of the Genome Analyzer.
 
Illumina reported $121.9 million in total revenue for the first quarter, up almost 70 percent over the $72.2 million year over year.
 
Total product revenue for the quarter was $110.7 million, about 80 percent better than the year-ago period. Broken down, revenue from consumables increased to $63.2 million from $38.8 million a year ago, while receipts from instrument sales jumped to $44.5 million from $19.6 million during the year-ago quarter.
 
According to chief financial officer and senior vice president Christian Henry, sales of the Genome Analyzer and genotyping consumables contributed about equally to the increase in product revenue.
 
Services and other revenues, a category that includes sequencing services, increased slightly to $11.2 million from $10.9 million year over year.
 
R&D expenses for the first quarter rose to $20.6 million from $16 million during the year-ago quarter. The increase was due to the inclusion of R&D expenses from the former Solexa business, which only contributed costs for part of the first quarter of 2007.
 
SG&A expenses for the quarter increased to $33.8 million from $23.6 million during the same quarter last year.
 
The San Diego-based company reported a profit of $13.4 million for the quarter, compared to a net loss of $298.1 million during the first quarter of 2007. Last year’s loss was primarily due to in-process R&D costs associated with Illumina’s acquisition of Solexa.
 
Illumina ended the year with $118.6 million in cash and cash equivalents and $156.7 million in short-term investments.
 
ABI’s SOLiD 2.0
 
Meanwhile, up the coast in Foster City, Applied Biosystems last week said during its fiscal third-quarter 2008 earnings call that it, too, will begin shipping an updated version of its SOLiD platform in May. The company also recorded its first revenues from sales of the SOLiD system during the quarter.
 

“With the progress we are now making with our SOLiD system, we are confident we are on our way to restoring our sequencing business as an overall contributor to the growth of Applied Biosystems.”

ABI President Mark Stevenson said during the call that the upgrade, called SOLiD 2.0, will double the output of the instrument from 3 to 6 gigabases per run and reduce the run time.
 
Early-access customers have already generated nearly 10 gigabases of data per run on the updated instrument, he said, “while our research team has reported runs with significantly higher throughput.”
 
In addition, he said, “our pipeline is filled with developing methods to automate and further reduce front-end time and to optimize new applications development.”
 
The SOLiD upgrade, which does not involve changes to the hardware of the sequencer, will consist of new chemistry, fine-tuned software, and an improved workflow, according to a company statement accompanying the fiscal third-quarter results. The upgrade incurs no additional costs for customers, a company spokesperson told In Sequence this week.
 
At a conference earlier this year, ABI had mentioned that it would replace the SOLiD’s existing emulsion maker with a smaller device, which would improve the sample prep workflow (see In Sequence 2/19/2008).
 
Combined with an optimized emPCR protocol, this change would also increase the bead load with template, thereby reducing the overall run time on the new system to 4.5 days instead of 8.5 days on the existing machine for a fragment library, and 8 days instead of 12 to15 days for a mate-pair library.
 
ABI also said at the time that it would start using one instead of two sets of oligonucleotide ligation probes, shortening the ligation reactions and decreasing the sequencing error rate by 30 percent.
 
Stevenson also mentioned during last week’s call that ABI recorded its first revenue from the SOLiD platform, derived from an undisclosed number of units it sold during its second fiscal quarter that had passed customer acceptance criteria.
 
In addition, the company recently abandoned a strategy that favored supporting existing customers and improving the system over new customers in (see In Sequence 1/29/2008).
 
“With the progress we are now making with our SOLiD system, we are confident we are on our way to restoring our sequencing business as an overall contributor to the growth of Applied Biosystems,” Stevenson said.
 
During the third fiscal quarter, revenue from the sequencing business increased 4 percent year over year to $146.4 million from $140.7 million, but its relative contribution to overall revenues remained flat at 27 percent.
 
Stevenson said that sales of capillary electrophoresis sequencers to the research market declined “as instrument funding priorities shift towards next-generation sequencing platforms,” while sales of CE instruments to applied markets, such as forensics and quality and safety testing, continued to increase. CE consumables sales also continued to grow.
 
Revenues for the quarter totaled $552.6 million, up 4 percent from $529.9 million during the year-ago period.
 
R&D expenses for the quarter decreased to $48.6 million from $54.4 million during the same quarter last year, primarily due to lower employee-related costs and the termination of a contract with the US Department of Defense last summer.
 
SG&A costs increased to $159.5 million from $150.2 million during the year-ago quarter.
 
ABI recorded a net income of $82.9 million, up from $75.5 million in last year’s third fiscal quarter.
 
At the end of the quarter, ABI had $365 million in cash and short-term investments.

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