NEW YORK (GenomeWeb) – The number of samples accessioned for Illumina's non-invasive prenatal test grew 70 percent from the second to the third quarter of this year, resulting in "record revenue," the company said this week.
Overall, sales of products and services to oncology and reproductive health customers accounted for about 40 percent of year-over-year revenue growth in the third quarter, according to CEO Jay Flatley. Total revenue increased to $481 million from $366 million in the third quarter of 2013.
During a conference call to discuss Illumina's third quarter earnings, Flatley provided an update on the company's strategy to expand into clinical markets.
The market for genetic testing in the area of reproductive health "continues to develop on a global scale," Flatley said.
The 70 percent sequential increase in NIPT samples accessioned in the third quarter was largely due to the growth of Illumina's test send-out business, he said, with tests being sold primarily through third parties rather than Illumina's own sales force.
Illumina markets the Verifi test, which it obtained through the acquisition of Verinata Health, both directly and through a number of deals with third parties in the US, he said.
For example, the test is now offered by Progenity, formerly known as aMDx, a CLIA laboratory based in Ann Arbor, Mich., that operates in 32 states and offers genetic carrier screening, non-invasive prenatal testing, and genetic miscarriage testing. Previously, Progenity offered Natera's Panorama test. Neither Illumina nor Progenity formally announced the deal, which reportedly was struck in June.
Illumina's sequencing technology also supports LabCorp's InformaSeq Prenatal Test, which the company announced in August and offers through its Integrated Genetics business. According to Illumina, the test was independently developed and validated, though LabCorp cites a Verifi validation study in its marketing material.
"Both the LabCorp and the Progenity relationships continue very positively," Flatley said. He declined to provide an update on the planned submission of the Verifi test to the US Food and Drug Administration.
Illumina also continues to collaborate with Berry Genomics to develop a cost-effective, easy-to-use NIPT for the Chinese market and expects the Chinese FDA to approve Berry's test "in the coming quarters," he said.
Regarding the use of NIPT for average-risk pregnancies, Flatley said there is already "some leakage" of the Verifi test into average-risk markets in the US, a trend he expects to catch on in China once Berry's test is approved by the CFDA.
He said Illumina and others are working on clinical studies that support the use of NIPT in average-risk populations, which will help the test to be included in practice guidelines and, eventually, be reimbursed for average-risk use.
Most NIPT providers have been using Illumina's sequencing technology, and since the Verinata acquisition, they also have been competing with Illumina. However, Ariosa recently developed a microarray-based NIPT, which runs on the Affymetrix platform, and said that the new test generates more consistent data faster and at lower cost.
Flatley said that Illumina has conducted an internal evaluation of array-based NIPT "and we are convinced that you can't achieve the same quality with arrays that you can get with sequencing."
Illumina's VeriSeq test for preimplantation genetic screening, which the company launched this spring, has been "well received," Flatley said, and triggered the sale of 10 MiSeq systems during the third quarter to customers previously unfamiliar with next-gen sequencing. Illumina still plans to launch VeriSeq on the NextSeq 500 by year's end.
Between $90 million and $100 million of third quarter revenue came from research and clinical applications in oncology, a slight increase over the previous quarter.
Late this summer, Illumina and four US-based cancer centers announced the formation of the so-called Actionable Genome Consortium, which aims to develop a list of actionable genome events and recommendations for best practices.
According to Flatley, the AGC has already developed a set of standards that it plans to publish in early 2015, and Illumina is "hard at work" to develop a gene panel that will meet those standards.
The goal is to bring a first, research-use-only version of the test to market in 2015, which would be used in clinical trials. The length of those trials would determine the timeline for submitting the panel to the FDA, he said.
The content for oncology gene panels tends to increase in size over time, Flatley said, and Illumina is "making sure that we don't get gene-creep" from an ever-growing panel. "Locking down exactly what the content needs to be is a challenge and an opportunity," he added.
In the long run, he said, Illumina believes that whole-genome analyses will replace oncology panels, "but that's going to take some time."
Also this summer, Illumina announced a collaboration with AstraZeneca, Janssen Biotech, and Sanofi to develop an NGS-based multi-gene universal companion diagnostic. The company is seeking additional pharmaceutical partners for the project, who it hopes will join over the next several quarters.
"There are some who are going to take a wait-and-see position, and you might guess who those are, and there are a couple who are not going to work with Illumina, one in particular," Flatley said, referring most likely to Roche, which tried to acquire Illumina a few years ago in a hostile takeover bid. "We've tried to work with some of the subsidiaries of that company, and we're going to try to continue to see if we can have some success there," he added.
Most pharmaceutical companies "will place multiple bets in this area," said Flatley, adding that he would not be surprised to see competitors announce similar collaborations. Thermo Fisher, for example, recently said it is working with Pfizer and GlaxoSmithKline on an NGS-based companion diagnostic test that will run on the Ion Torrent PGM platform.
Getting 'clinically ready'
Overall, Illumina is working on becoming "clinically ready," which Flatley said requires "improvements across much of our infrastructure in order to be able to deliver and support clinical customers to the standards that they are accustomed to."
This includes, for example, fast technical service, fast reagent delivery, and the ability to track single components of reagents through the supply chain. "As a company, we're working on implementing that infrastructure, and at the same time, retaining the nimbleness that we're known for in the research market," he said, adding that Illumina plans to invest "heavily" in these improvements over the next three years or so.
Following the acquisition of regulatory consulting firm Myraqa this summer, Illumina is currently conducting an assessment of its entire regulatory strategy, which will be finished in the next few months, Flatley said. The company plans to share the results of the assessment over the next several quarters.
With regard to the adoption of the FDA-cleared MiSeq Dx platform, Flatley said that sales of the Dx currently account for only a small but growing percentage of overall MiSeq sales, in part because of the $25,000 price differential. But the company has seen a "general uplift" in MiSeq sales, which it attributes to the availability of the Dx version, he said. Some customers, for example, might want to develop a clinical test initially on the MiSeq and then deploy it on the MiSeq Dx.
The FDA is planning to regulate laboratory-developed tests, a development that will affect some Illumina customers more than others, according to Flatley. Labs offering lower-risk sequencing-based tests will have "many years" to adapt their methods, while those with higher-risk tests are currently evaluating how to proceed. For Illumina, the proposed regulation "is probably a somewhat positive development," he said, because the company can help customers take sequencing-based assays through the FDA on its platform.
Illumina is also involved in furthering reimbursement for sequencing-based diagnostic tests. The company is currently undertaking proof-of-principle studies, Flatley said, to demonstrate the efficacy of using sequencing in diagnostics and its potential to reduce healthcare costs.