Illumina is continuing its push into the clinical next-generation sequencing space. Customers are validating MiSeq panels for clinical use; HiSeq 2500 purchases are increasing from commercial, translational, and hospital customers; and the firm's recently announced reorganization is aiming to further drive the company into the clinic, President and CEO Jay Flatley said this week during a conference call discussing Illumina's third quarter earnings.
Additionally, the company is still negotiating with BGI on a clinical sequencing contract.
The HiSeq 2500 has been particularly popular in the clinical market. In the third quarter, 80 percent of HiSeq orders were for the 2500 version, and more than half of those were from commercial, translational, and hospital customers, Flatley said.
Additionally, more than 50 percent of MiSeq orders were from non-academic customers, "due to enthusiasm from pharmaceutical, translational, and clinical segments," Flatley said.
In particular, many of the MiSeq customers are interested in using it to run Illumina's TruSight panels, and to date around 200 customers have used those panels, with the tumor, inherited cancer, and exome among the most popular. Those customers are "validating the assays in their laboratory setting, a process that typically takes nine months," Flatley said.
He estimated that gene panels comprise around half of the clinical sequencing being done by its customers, with exome sequencing making up 25 percent to 30 percent and whole genomes around 5 percent to 10 percent.
For customers that are offering clinical sequencing services, Flatley estimated that reimbursement has been mixed.
"For complex panels, it's challenging," he said. Currently, only a small set of genes are routinely reimbursed, and that is typically done through stacked CPT codes, but "that is all changing," Flatley said.
With increased validation of panels, "we'll see increasing levels of reimbursement," he predicted.
Sequencing services and Verinata
Illumina saw a large boost in its services revenues, which were up 60 percent to $38 million. Much of that business was driven by a clinical sequencing project the firm is doing with the Global Genomics Group to provide whole-genome sequencing for the Genetic Loci and the Burden of Atherosclerotic Lesions, or GLOBAL, clinical trial.
This week, Illumina also announced the start of a three-year project with the University of Cambridge and Genomics England to sequence 10,000 whole genomes of children and young adults with rare genetic diseases, as part of the UK's efforts to sequence 100,000 genomes.
Verinata Health, which is also incorporated into the firm's services side, has "bolstered" Illumina's position in the noninvasive prenatal testing market, Flatley said, although he did not elaborate on Verinata's market position relative to the other US competitors Sequenom, Ariosa Diagnostics, and Natera. Illumina supplies all the US providers with sequencing equipment and reagents.
Reorganization will 'catalyze' move in the clinic
Last week, Illumina announced broad organizational changes regrouping the company into five business units, which Flatley said this week would not only help the company continue to grow in existing markets, but also "take the next steps into new markets and catalyze the use of our technologies in the clinic."
Two of the new business units — the Reproductive and Genetic Health business and the Oncology business — are directly focused on the clinical market. Illumina's BlueGnome and Verinata Health acquisitions will fall under the Reproductive and Genetic Health business, which will be led by Tristan Orpin.
"Reproductive health remains a key market, and our new organizational structure and leadership will enable us to create a strategic brand position by delivering a more integrative portfolio to our customers," Flatley said.
During the quarter, Illumina struck a three-year supply agreement with Natera, which will run its noninvasive prenatal test Panorama on Illumina's HiSeq 2500.
Illumina will take a slightly different strategy in the oncology market than it has taken so far in the reproductive health market with its acquisition of Verinata Health. Flatley said that within the oncology market, the firm does not plan to take a "proprietary position in particular tests in the oncology market that we would provide through our own laboratory operations."
Instead, Flatley said the Oncology business unit will focus on aspects of sample prep that need to be optimized specifically for the oncology market and on fine tuning software to better decipher cancer genomes.
"It's really a focus on the customer base for oncology, as well as improving the tool set, that this business unit will be focused on," he said.
Additionally, while Illumina's Chief Medical Officer Rick Klausner will serve as interim head of the unit, Flatley said that the firm will be looking to fill the position permanently with someone with both expertise in cancer genomics, as well as someone with an operational background that can "work on large deal transactions" and "run groups of development teams inside the business unit."