By Monica Heger
Sales of Illumina's HiSeq instruments and consumables are currently driving rapid revenue growth for the company, but there is a significant post-HiSeq opportunity for the firm in the clinical diagnostics market, investment firm William Blair & Company predicted in a recent report.
William Blair analyst Amanda Murphy said in a research note this week that while wide-scale incorporation of sequencing into the clinic is around 10 years away, there are nearer term applications for Illumina in the fields of cancer and pediatrics, as well as for HLA typing.
Sequencing of tumors to identify therapeutics or to monitor patients could become a "clinical reality in the next three to five years," she wrote. Transitioning next-gen sequencing into the diagnostic realm is the "ultimate opportunity," she added in the report, which was based on a recent meeting with Illumina management.
The report cites estimates from Scientia Advisors and Washington G2 reports that peg the diagnostic product market at around $4.6 billion, the diagnostics services market at around $60 billion, and esoteric testing — which "likely represents Illumina’s addressable market as a sequencing-based testing service provider" — at around $15 billion.
Murphy said that Illumina management sees its largest diagnostic opportunity in the cancer space, using its MiSeq for targeted sequencing of oncology markers. To support this application, it plans to pursue 510(k) certification for the MiSeq in 2012, and is also targeting 180 independent anatomic pathology labs in the US.
While there is a large opportunity in the clinical space, significant barriers remain, including regulation, issues around reimbursement, and physician adoption of the technology.
Currently, sequencing-based tests are offered as lab-developed tests in CLIA-certified labs, and it is unclear how the US Food and Drug Administration's plan to regulate LDTs would impact labs that offer sequencing-based diagnostics. The agency has expressed concern about how to assess the risk of sequencing-based diagnostics and how to avoid false positives and incorrect results. Murphy noted that Illumina's position is that sequencing platforms should be given a tool designation similar to MRIs and that the company is in discussions with the FDA regarding the use of next-gen sequencing in clinical diagnostics.
Moving forward, reimbursement will be another issue; however, Illumina is already receiving reimbursement for some whole-genome sequencing of end-stage cancer patients, Murphy wrote.
Despite these challenges, "the overall clinical diagnostics market represents by far the largest potential opportunity in applied markets," she concluded.
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