This story has been updated to include additional information from Illumina.
NEW YORK – After a record-setting first quarter, Illumina discussed its participation in new next-generation sequencing initiatives around the world this week that will provide genomic pathogen surveillance and boost population health projects.
"We're seeing investment globally in the creation of a pathogen surveillance infrastructure to manage outbreaks and improve health outcomes, including sequencing capabilities to determine the spread of pathogens, the emergence of variant strains and emerging drug or vaccine resistance," Illumina CEO Francis deSouza said on the firm's quarterly investor call.
NGS-based COVID-19 surveillance brought in instrument revenue of $35 million and consumables revenue of $25 million during the first quarter. And on Wednesday, Illumina announced a $60 million in-kind donation of sequencing instruments, reagents, and training services to establish a global pathogen genomics initiative in partnership with the Bill & Melinda Gates Foundation and other public and private entities.
The revenues from COVID-19 surveillance did not include any of the $1.7 billion in funding for surveillance led by the US Centers for Disease Control and Prevention and provided through the American Rescue Plan Act, which deSouza expects to be disbursed late in the year, and €123 million ($148.9 million) from the European Commission, announced earlier this month, for research on coronavirus variants. Additionally, the Indian SARS-CoV-2 Genomic Consortium plans to sequence 120,000 viral genomes over the next four months, he said.
While Illumina is not officially contracted with the Indian consortium, the firm has "been working closely with key labs that are part of the consortia, an eight facility-based network of labs who are running COVID surveillance for positive samples in India," an Illumina spokesperson said in an email. "Most of these sites have NovaSeq and about half are running Illumina’s COVIDSeq on NovaSeq."
In addition to these efforts, deSouza highlighted several other global initiatives the company will be involved in. In Japan, the Tohoku Medical Megabank Organization chose Illumina sequencing for a 40,000-sample multigenerational study to take place this year. In February, Egypt launched a national genome mapping project, he noted, with technical and operational support from United Arab Emirates-based Agiomix. Illumina sequencing technology and its Dragen pipeline will be used to run 100,000 samples in that project, a company spokesperson said in an email. Also, the All of Us project in the US ramped up sequencing of samples to a level that Illumina expects to continue throughout 2021.
He also reiterated Illumina's commitment to seeing the $8 billion Grail acquisition through regulatory uncertainty. In response to analyst questions about the firm's acquisition strategy going forward, deSouza said the firm would continue to pursue technology tuck-ins as well as scan the market for larger deals.
COVID-19 surveillance was ultimately a small part of Illumina's record $1.09 billion revenues in the quarter, which was driven by clinical sequencing revenues, but Illumina's NGS platforms are a large contributor to the global surveillance effort.
Of the SARS-CoV-2 genome sequences deposited in the GISAID database, nearly 80 percent were generated on a range of Illumina sequencers, deSouza said. "Obviously, NovaSeqs are a very popular instrument in the high-volume shops, but we're seeing a lot of NextSeqs and MiSeqs being used, as well," he said. Overall, the firm saw the highest number of orders for NovaSeq instruments since the initial launch in Q1 2017, he noted.
The $35 million "bolus of instrument buying in Q1" should make up the bulk of purchasing for surveillance efforts this year, deSouza said. "It is possible that more happens, and the things that would drive that are, obviously, the American Rescue Plan that talks about some very big numbers."
But those purchases will contribute to infrastructure that could drive consumables sales for years to come. "This infrastructure, while it'll be very helpful in fighting the pandemic, is really a durable plan by the nations that are rolling it out," he said. "And what they are thinking about is a long-term creation of a genomics-based pathogen surveillance infrastructure to help fight this pandemic and prepare for the next outbreak, whether it's a natural outbreak or bio terrorism or emerging antimicrobial resistance or hospital-acquired infections."
Regarding mergers and acquisitions, deSouza said that "vertical acquisitions are well within bounds, and that's where we're going to go to court on the Grail acquisition." Announced in September 2020, Illumina's plan to buy Grail has been challenged by the US Federal Trade Commission and has drawn scrutiny from the European Commission's Directorate-general for Competition. On April 20, Illumina successfully moved the venue for the case over the FTC's motion for a preliminary injunction to the US District Court for Southern District of California.
"Given the scale we are [at] and given our position in the market, we will have to do more work in terms of educating the regulators about our business and making sure they are up to speed on our business even before we do an acquisition," he said. "So that's another takeaway over the last couple of years."