NEW YORK (GenomeWeb) – Illumina plans to continue to grow its regulatory team as clinical sequencing for oncology and reproductive medicine becomes an ever-larger portion of its business, management said this week during a conference call discussing the firm's second quarter 2016 performance.
In oncology, Illumina is preparing to submit its first pre-market approval application to the US Food and Drug Administration, for a next-generation sequencing based companion diagnostic, while simultaneously continuing to develop a pair of NGS-based cancer gene panels.
Meantime, in reproductive health, the firm is capitalizing on both its non-invasive prenatal testing service as well as the patent pool agreement it established with Sequenom to enable laboratories to license to the technology to develop their own tests.
Although it is seeing revenues from both those businesses grow in advance of positive regulatory and reimbursement decisions, the company said it is looking to expand its team to hire a head of oncology, chief medical officer, and additional employees with expertise in regulatory issues, market access, and reimbursement.
In the second quarter of 2016, Illumina received two regulatory approvals for its MiSeqDx instrument, in Australia and South Korea, "example[s] of our regulatory strategy enabling markets globally," Illumina President and CEO Francis deSouza said during the call.
In addition, Illumina officials said that business in China is booming due to the country's Precision Medicine Initiative.
Oncology
Illumina's first pre-market approval application to the FDA is for a next-generation sequencing-based companion diagnostic test it has been developing with pharmaceutical company Amgen for that company's colorectal cancer drug Vectibix.
Overall, shipments to oncology customers grew by 45 percent in the second quarter, deSouza said. Interestingly, "a lot of the growth we're seeing today is not driven by reimbursement," deSouza said.
Although some companies and university medical centers do seek and get reimbursement for oncology NGS panels, it is still the "early stages" for reimbursement in that market, deSouza said. Foundation Medicine, for instance, most recently reported that it receives an average of $3,100 from payors for its NGS-based panels.
DeSouza said that one reason why reimbursement has been slow to catch up has been the "proliferation" of cancer gene panels in the market. He estimated that more than 1,000 different gene panels are now available. This wide range of options is one reason that Illumina decided to focus on developing its own panels — TST15, which is now available for research use and investigational use, and TST170, which the firm plans to launch later this year for research use only. DeSouza predicted that the "consolidation of panels" would "accelerate reimbursement."
Reproductive health
Illumina has a multi-fold strategy to capture noninvasive prenatal testing market share. It offers its own NIPT as a service and also has a patent pool with Sequenom from which it licenses IP to labs to develop their own tests. In addition, it sells the sequencing technology that labs use to run their tests.
DeSouza said that, as expected, the number of NIPT samples that Illumina runs as a testing service declined in the second quarter to 25,000, from a high of around 45,000 tests per quarter in 2015, since customers are switching to their own tests. However, he said, that drop is being offset by an increase in sequencing consumables sold to those customers as well as an increase in royalties and fees that customers pay to access the patent pool.
In particular, NIPT customers in the US and China have driven demand for Illumina's NextSeq instrument, and revenues associated with the patent pool grew by 90 percent year over year, deSouza said.
Illumina also plans to launch its VeriSeq NIPT assay with CE-IVD marking in Europe this year, which, combined with the recent endorsement by the Dutch Health Council that NIPT should be available to all pregnant women, is expected to drive "further acceleration in that region," deSouza said.
He added that he expects demand for NIPT to remain strong, since the market is still not fully tapped. For instance, in the US, only about 26 percent of covered lives are covered for NIPT, he said, but that number will increase over time.
Furthermore, Illumina has been able maximize revenue from NIPT customers. When customers initially sign up to license the technology from the patent pool, Illumina offers them the option of marketing the NIPT services before the lab has set up its own test. In those cases, he said, Illumina processes the sample in its CLIA lab, charging the customer a test send-out fee, deSouza said. Over time, that service revenue switches to revenue from instruments and consumables purchased and royalty fees, he said.
China
Illumina saw a surge in demand for sequencing instruments and consumables from China, where Q2 revenues grew 70 percent year over year following the announcement of China's Precision Medicine Initiative and funding for 60 projects over the next three to five years, deSouza said.
In particular, the majority of shipments of Illumina's HiSeq X instrument were to customers in China, deSouza said.
"China is emerging as one of our top country markets," and the market there is "primarily clinical,"deSouza said. He added that there is a huge demand for NIPT in China, and that some of the laboratories running NIPT are also starting to move into oncology. In addition, he said, some customers focus solely on oncology. Most of the clinical customers are private companies, he added. The NIPT and oncology customers in China are primarily purchasing NextSeqs, while the organizations involved in the Precision Medicine Initiative are mostly purchasing HiSeq X systems, deSouza noted.