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Illumina to Buy Avantome for Up to $60M; Long, Cheap Reads Will Target Sanger

Illumina said last week that it plans to acquire Avantome, a privately held company that is developing a low-cost, long-read sequencing technology, for $25 million in up-front cash and up to $35 million in contingent payments.
During the firm’s second-quarter conference call, Illumina President and CEO Jay Flatley said that Avantome’s technology, as a product, will have applications in both the research and diagnostic markets and will be complementary to Illumina’s Genome Analyzer. 
“We now have the ability to address the lower cost part of this market and take sequencing to yet another level beyond [the] high-end segment that we are concentrating on now,” he said.
Avantome’s technology will serve “a different sector of this market, and we think it hits most squarely at the traditional Sanger sequencing [market],” according to Flatley.
Up until now, that end of the market has been served by 454 Life Sciences and its Genome Sequencer FLX platform, which has begun to replace some Sanger applications, for example microbial de novo genome sequencing, and is pushing into eukaryotic de novo genome sequencing and metagenomic sequencing. 454’s pending Titanium update promises read lengths of about 500 bases, approaching Sanger read lengths, and a lower cost per base (see In Sequence 2/19/2008 and 7/8/2008).
Flatley declined to reveal details about the technology Avantome has been working on but said that “what we wind up launching as an ultimate product may or may not include pyrosequencing technology.”
He also did not specify a timeline for commercialization, saying that “we are not far enough along yet to be able to predict with any confidence the date of a product launch.”
Avantome was founded earlier this year by Mostafa Ronaghi, a principal investigator at the Stanford Genome Technology Center, and Helmy Eltoukhy, who worked with Ronaghi as a graduate student and postdoc at Stanford University. Ronaghi is one of the inventors of pyrosequencing and a previous Illumina collaborator.
As part of the acquisition, Ronaghi will join Illumina as senior vice president and chief technical officer and will be leaving Stanford University. Eltoukhy, Avantome’s current president and CEO, will become director of Avantome sequencing development at Illumina.

Avantome’s technology will serve “a different sector of this market, and we think it hits most squarely at the traditional Sanger sequencing [market].”

Ronaghi has previous ties to Illumina. In 2000, he collaborated with the company under a Phase I SBIR grant from the National Human Genome Research Institute to combine pyrosequencing and bead arrays on optical fiber bundles, a project that he said Illumina abandoned after the first phase of the grant in order to focus on genotyping (see In Sequence’s sister publication, GenomeWeb Daily News, 1/2/2007).
At Stanford, Ronaghi and his colleagues have been working towards a miniaturized, high-throughput pyrosequencing platform under a three-year, $1.8 million grant from the NHGRI that he won in 2004.
A year and a half ago, he told In Sequence sister publication GenomeWeb Daily News that the aim was to develop a sequencing platform that would cost as little as a PCR machine in order to “enable any laboratory to do genome sequencing.”
One of the key steps to lower that cost, he said at the time, is to replace the CCD camera that is used in 454’s platform with a low-cost complementary metal oxide semiconductor, or CMOS, sensor.
He also mentioned that his team was working on alternative chemistries to pyrosequencing, which might enable them to get around 454’s exclusive license to pyrosequencing.
In 2003, 454 obtained a five-year exclusive license from Pyrosequencing in Sweden, which Ronaghi co-founded in 1997, to use pyrosequencing for whole-genome applications, and to make and sell instruments and kits as well as provide services for whole-genome sequencing. Pyrosequencing, which has since been renamed Biotage, retained rights to use the technology in other areas. Under the agreement, 454 could maintain its exclusive license beyond the five-year period and throughout the lifetime of the patents through annual maintenance payments. In 2004, 454 amended the license agreement to extend the exclusive field of use for performing different sequencing reactions in one process cycle.
The Stanford researchers’ plan, as of 2007, was to couple more than a dozen 20-megapixel sensors and to miniaturize the sequencing reactions. Their aim was to sequence 400 million DNA strands per run, producing up to 100 gigabases of data, according to Ronaghi.
In March, he said that he and his team had developed a “very scalable” and sensitive detection chip and had integrated several parts of the platform. At the time, he said they were “getting ready for large genome-sequencing applications.” (see In Sequence 3/4/2008).
Microchip Biotechnologies of Dublin, Calif., collaborated with Ronaghi, who is a company director, under the NHGRI grant. MBI was developing an automated microfluidic-based sample-prep front end for the system.
As of last month, a renewal of the grant was pending (see In Sequence 6/3/2008). Ronaghi and MBI CEO Stevan Jovanovich told In Sequence this week that they plan to continue to collaborate under the grant.
Ronaghi said the technology Avantome is working on “is not pyrosequencing,” but did not reveal any details.
He and several friends provided undisclosed funding to start the company, he said, which is based in Redwood City, Calif., and has between five and 10 employees.
According to its now-defunct website, Avantome also offers sequencing services on 454’s FLX platform, although Ronaghi said he was not sure whether the service work will continue following the acquisition by Illumina.
Services included cDNA or amplicon sequencing, shotgun library sequencing, long paired-end library sequencing, and complete genome sequencing.
“Our ultimate vision is to eliminate existing barriers to entry, thereby enabling any scientist, any researcher, any doctor, and ultimately anyone to perform complex genomic analyses for a fraction of the cost,” Avantome’s website read.