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Illumina Acquires Moleculo, Pre-announces Q4 Revenue Growth of 8 Percent

This article has been updated from a previous version, which had incorrectly transposed the year-over-year and sequential growth percentages for fourth-quarter revenue.

SAN FRANCISCO (GenomeWeb News) - Illumina CEO Jay Flatley today announced at the JP Morgan Healthcare Conference here that the firm has acquired long-read sequencing technology firm Moleculo for an undisclosed amount.

Flatley also announced unaudited fourth-quarter revenues of $309 million, up 24 percent year over year and 8 percent sequentially and beating the consensus Wall Street estimate of $302 million.

Flatley said the quarter will be the first in the firm's history with sales exceeding $300 million and would bring its full-year 2012 revenues to around $1.15 billion. He also noted that Illumina's earnings-per-share growth for the quarter was 21 percent year over year.

Illumina shipped 42 units of the HiSeq 2500 system during the quarter. The firm had launched the new system this past fall, and Flatley noted that 92 percent of its HiSeq 2000 orders included an upgrade. He also said that the reagent pull-through on the 2500 system was $300,000 to $350,000 annually.

Flatley said that there were more than 300 orders for the MiSeq system during Q4. Those systems have a pull-through of around $50,000 annually, he said.

The acquisition of Moleculo is expected to enable Illumina to substantially increase the read length of its sequencing-by-synthesis technology. Flatley said that the firm has improved the read length on the SBS chemistry to between 600 and 700 base pairs, but it believes it will exceed 1,000 base pairs. Such an increase will make the SBS technology viable for HLA genotyping and metagenomics, he said.

Moleculo is a spinout of Steven Quake's lab at Stanford University. The firm is based in San Francisco and has six employees. Flatley said the deal will be accretive to Illumina's earnings in 2013. He added that Illumina will offer services in the second quarter and kits in the fourth quarter for phasing genomes based on the Moleculo technology.

Though Illumina has given up on its pursuit of Complete Genomics, it plans to expand its whole human genome services capacity. Flatley said that the firm currently would have a 30,000 genome capacity in 2013. But it is also re-opening a facility it already owns in Hayward, Calif., to bump up capacity for that part of its business.

Discussing Illumina's diagnostics business, Flatley noted that the company launched five InSight panels in the fourth quarter, recently partnered with Partners Healthcare to launch the GeneInsight program, and has submitted its MiSeq platform for US Food and Drug Administration clearance. That submission is for the platform only and doesn't include an assay.

"The FDA is hungry to get its head around next-generation sequencing," Flatley said. He added that the MiSeq Dx is being submitted with certain claims limitations, and labs can develop assays on the system within those limitations. Illumina can then expand the claims as time goes on and there are improvements to the system and assays developed on it.

The company has filed separately with the FDA for clearance of a cystic fibrosis assay that runs on the MiSeq.

Flatley also noted that even though the firm has entered the non-invasive prenatal testing space with the acquisition yesterday of Verinata, it intends to continue supplying its sequencing tools to customers developing their own prenatal tests. He said Illumina's decision to buy Verinata was based on how fast the market is developing and the company's belief that Verinata has foundational IP underlying its technology. Flatley said he believes Verinata has superior technology and will now have market reach.

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