Following a year defined by strong sales of its Genome Analyzer sequencer, Illumina kicked off 2008 with a major restructuring.
In the first year that Illumina sold the GA, it shipped more than 200 units, CEO Jay Flatley told investors at a conference this week. He also talked about ways in which the company wants to improve the platform, such as enabling paired-end sequencing.
His remarks followed a disclosure last week that the company would form two business units. The life sciences segment will provide all of Illumina’s products and services related to the research market, including the GA and its BeadArray and BeadXpress product lines.
Illumina has already hired an unnamed general manager for the unit whose appointment starts April 1, and the company is currently looking for two other executives to head product development and operations.
Meantime, the diagnostics business unit will focus on developing diagnostic content for the firm’s BeadXpress platform and, eventually, for its next-generation sequencing platform.
Other changes include the resignation of John West, who was CEO of Solexa before Illumina bought the company last year. At Illumina, he became general manager for sequencing.
It was not immediately clear why Illumina decided to merge its research products into a single business unit, and the company did not comment further on the restructuring by press time. The combination “is targeted to continue to take advantage of the synergies of the personnel and the technologies between sequencing and arrays,” Flatley said during a presentation at the JPMorgan Healthcare Conference in San Francisco this week.
The two new units will accelerate “the integration of our sequencing and genotyping technologies” and “enable us to put more focus on developing our diagnostics business,” Flatley said in a statement last week.
The reorganization will leave intact Illumina’s three manufacturing and R&D locations; its San Diego headquarters, and the former Solexa locations in Hayward, Calif., and Little Chesterford, UK.
Though West will resign Feb.1, he is immediately replaced by CFO Christian Henry, who is taking over as acting general manager of the sequencing business. Henry’s main goal will be to “effectively manage the integration of the sequencing business into the new combined life sciences business unit,” which Illumina expects to achieve before the end of June, according to a company statement.
John Stuelpnagel, general manager for the array business and chief operating officer at Illumina, will move to a part-time position on April 1 to work on “key projects as an Illumina fellow.”
The sequencing market is currently $1 billion in size and is growing, driven by “brand-new applications” for next-gen sequencers that “cannot be done doing traditional sequencing.”
As of May of last year, the company had already merged Solexa’s and Ilumina’s sales and marketing teams into a single sales force and said that the R&D teams in the three locations had begun to use a “common approach.” (see In Sequence 5/1/2007). The timing of the current reorganization was triggered by the management changes, the company said.
Flatley also gave an update on the company’s sequencing business at the conference this week. He said Illumina shipped more than 200 units last year, though it has not yet booked revenue for all of these because of installation requirements and acceptance criteria. For comparison, 454 Life Sciences reported last year that it installed more than 60 units of its Genome Sequencer during almost two years of sales. Applied Biosystems has not said how many SOLiD systems it has shipped since it launched the platform in October.
Each Illumina sequencer, which has a list price of $395,000, generates annual consumable sales in the range of $150,000 to $200,000, Flatley said.
He also mentioned that the company is still beta-testing paired-end sequencing, which is entering its second phase with approximately 10 beta testers. The first phase, which included about five early-access users, started last year. Originally, the company expected to fully commercialize paired-end sequencing, which uses multiple-size inserts, by the end of 2007 (see In Sequence 10/31/2007). A company spec sheet of the system, dated October, implies that paired-end sequencing is already generally available (see In Sequence 1/2/2007), but that is apparently not the case.
The company is also working on increasing the throughput of the system, by increasing the cluster density, the area of the flow cell that is read, and the imaging speed. The platform currently generates “well in excess of” 1 gigabase of sequence data per run in customers’ hands, and over 3 gigabases of data internally in a paired-end sequencing run, Flatley said. For comparison, Applied Biosystems specifies the current output of its SOLiD system is 2 to 4 gigabases per paired-end run.
According to Flatley, the sequencing market is currently $1 billion in size and is growing, driven by “brand-new applications” for next-gen sequencers that “cannot be done doing traditional sequencing.”
Among these are ChIP-sequencing, digital gene expression, and whole-genome methylation analysis. The latter “will be a very important emerging application for the use of next-generation sequencing,” Flatley said. The two largest sequencing market segments are de novo sequencing and resequencing, he said.