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Illumina Unveils New High-Throughput Sequencing Instrument at JP Morgan

This story has been updated to clarify that the cost of sequencing on the NovaSeq will be less expensive than the HiSeq X by 2018, not at launch.

SAN FRANCISCO (GenomeWeb) – Illumina launched a new high-throughput sequencing instrument, NovaSeq, at the JP Morgan Healthcare Conference here this week, which it will begin shipping in limited quantities by the end of the first quarter.

The platform makes use of nanofabricated flow cells and specially designed optics that CEO Francis deSouza said would in future iterations enable a human genome to be sequenced for $100, although he did not provide a timeline.

"We can see what it would take to get there," deSouza said. "It will be a lot of work but we feel that every component we have in the system has enough head room that there is a path to get there."

DeSouza also said that the firm expects fourth quarter revenues to be up 5 percent to $619 million. He provided an update of the company's Firefly project — a semiconductor-based low-cost sequencing system — and noted that its spinoff Helix planned to have a "major launch" mid year. Also this week, Illumina and Bio-Rad jointly launched a single-cell sequencing workflow, the result of a collaboration between the two firms that began last year.

NovaSeq

Illumina plans to launch two configurations of NovaSeq — the NovaSeq 6000, which will cost $985,000 and begin shipping by the end of the quarter, and the NovaSeq 5000, which will cost $850,000 and begin shipping this summer — as well as four different flow cells.

The S2 flow cell will be the first to launch and will be able to generate up to 2 terabases of data in 40 hours. The S1 flow cell will generate up to 1 terabase of data, similar to the HiSeq 2500 in rapid run mode, deSouza said in a presentation. The S3 and S4 flow cells will generate up to 4 terabases and 6 terabases of data, respectively, in two and a half days. Read lengths for these outputs are 2x150 bases.

Unlike the HiSeq X system, the NovaSeq will not be limited to sequencing human genomes or whole genomes, deSouza said. Users can sequence any species using any application.

"The intent is to push the envelope beyond where we were with HiSeq," he said.

Initially, Illumina plans to target users of its HiSeq platform — around 800 customers who have approximately 1,900 HiSeq instruments, he said. Already, six customers have expressed their intentions to collectively order 49 instruments, which is about double what Illumina will be able to ship in the first quarter, deSouza said. Those customers are Human Longevity, the Broad Institute, Baylor College of Medicine, Regeneron, the Chan Zuckerberg Biohub, and Novogene.

In an interview following deSouza's presentation, Joel Fellis, director of product marketing for sequencing systems at Illumina, highlighted a number of the technology improvements that enabled the NovaSeq. First, he said, the company instituted nanofabrication technology to develop the flow cells. That reduced the feature size and the distance between the wells. That increase in cluster density enables users to "get more data from the same sized footprint," he said. In addition, Illumina has a long-standing partnership with a third party for optical technology development. The company worked with Illumina to redesign its optical bench, optimizing the lenses and developing a customized optics system not found anywhere else.

The NovaSeq will make use of the two-channel chemistry originally launched on the NextSeq, but it has been re-engineered for improved performance. A new surface chemistry makes the clusters brighter, so that flow cells can be scanned four times faster and the signal-to-noise ratio is improved, Fellis said.

Users will have the option of streaming data from the system directly into Illumina's BaseSpace cloud, and unlike with the HiSeq X, users will not need to have sophisticated bioinformatics expertise, Fellis said.

One major advantage of NovaSeq for customers, deSouza said, will be the reduced per-base cost of sequencing. At launch with the S2 flowcell, sequencing will cost 50 percent less compared to the HiSeq 2500 and the instrument will deliver twice the output. With the S3 flow cell, he said, NovaSeq would provide a 45 percent reduction in price per gigabase and 2.5 times more output compared to the HiSeq 4000. By 2018, running the S4 flowcell on the NovaSeq will provide a 20 percent economic advantage compared to the HiSeq X, he said.

Firefly update

At last year's JP Morgan Healthcare conference, Illumina discussed an initiative, dubbed Project Firefly, to develop a new sequencing system that would couple its sequencing-by-synthesis technology with a semiconductor chip.

At the time, the company said that the platform would consist of two modules — one for sequencing and one for library prep — that would be commercialized during the second half of 2017 for less than $30,000.

This week, deSouza said that the company is on track to launch the sequencing module by the end of this year, followed by the library prep box in 2018. Already, the company has 50 instruments up and running in its laboratories and has sequenced over 2,000 samples. Sequencing error rates are already less than 1 percent, deSouza said. The instrument will generate around 1 gigabase of data per run and will be able to analyze between four to eight samples per run for about $100 per sample.

Preliminary earnings

DeSouza said that Illumina expects its fourth quarter 2016 revenues to grow 5 percent over the fourth quarter of 2015 to $619 million, beating analysts' consensus estimate of $610.5 million. Full-year 2016 revenues are an estimated $2.4 billion, an 8 percent increase over 2015.

Sequencing consumables were the main revenue driver in 2016, growing 23 percent to $1.3 billion. MiniSeq had a "solid launch" and opened up new customer segments, deSouza said, while MiSeq exceeded expectations. Although there were lower than expected placements of the HiSeq family of instruments, deSouza said that in total, sales of HiSeq X units have generated more than $750 million in revenue since its launch.

On the array side, the company shipped 9.5 million samples in 2016. The consumer market was particularly strong, with demand doubling during the year.

Reproductive health and oncology continue to be Illumina's major clinical markets, deSouza said. Within reproductive health, he said, the company has expanded its China business, now that the Chinese government has established pricing for noninvasive prenatal testing across all provinces and enabled all qualified laboratories to run NIPT. Typically, NIPT in China costs between $200 to $300, he said. In addition, the firm plans to launch the VeriSeq NIPT in the first quarter as a CE-IVD marked test in Europe, originally a goal for 2016.

In oncology, the company plans to register its TruSight Tumor 170 panel with the US Food and Drug Administration as an investigational-use only product in the fourth quarter, deSouza said. Illumina's oncology business grew 20 percent last year, he said, and oncology represents around 10 percent of its total revenues.

Next year, Illumina expects its revenues to grow between 10 percent and 12 percent to $2.7 billion. GAAP EPS are expected to be between $3.25 and $3.35 and non-GAAP EPS between $3.60 and $3.70.

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