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Interest Spikes for Illumina's New NGS Systems; Firm Sells Record Numbers of HiSeq 2500, Sample Prep

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This article was originally published Jan. 30.

Illumina said last week that it sold record numbers of its HiSeq 2500 system, sequencing consumables, sample prep kits, and Fast Track whole genomes in the fourth quarter of 2013, all of which contributed to a 25 percent increase in revenue to $387.3 million from $309.3 million in the year-ago fourth quarter.

During a conference call discussing its Q4 2013 results, CEO Jay Flatley also said that the firm has seen customer interest in the two new next-gen sequencing systems it unveiled at the JP Morgan Healthcare Conference in San Francisco last month — indicated both by the number of HiSeq X Ten systems sold as well as a record-setting 20,000 visits to the NextSeq 500 overview page on Illumina's website. Flatley did not disclose whether any orders had been placed for the NextSeq 500.

HiSeq and MiSeq

In the fourth quarter, Illumina's sequencing business grew 32 percent over Q4 2012, driven by sales of the HiSeq, consumables, and sample prep shipments. Illumina took orders for 100 HiSeq systems, 90 of which were for the 2500 version, and nearly 300 MiSeqs. Total shipments were lower than orders, however, as demand exceeded production capacity, Flatley said.

Around 60 percent of HiSeq orders were from existing customers who are "capacity constrained," Flatley said.

Realizing its goal of diversifying its customer base, Illumina said that around 50 percent of its total product shipments were to non-traditional market segments. Around 40 percent of new HiSeq customer orders were to commercial entities and hospitals.

Flatley also said that the demand for MiSeq continues to increase, and during the fourth quarter the company continued to gain ground in the desktop sequencing market and had an especially successful quarter for its trade-in program, under which the company offers discounts to customers wanting to purchase a MiSeq in exchange for a competitor's platform.

The trade-in was especially successful due to Roche's decision to shut down its 454 next-gen sequencing business, Flatley said.

HiSeq X Ten and NextSeq 500 demand

Last week, Decode Genetics became the fifth customer to commit to purchasing the newly launched $10 million HiSeq X Ten system, which is composed of 10 units, each of which will have the capability to sequence five human genomes in one day. According to the company, the system will also enable a whole human genome to be sequenced for $1,000.

At the JP Morgan Healthcare Conference, Flatley said that due to manufacturing constraints, the firm expects to not install more than around five systems in 2014. However, given that the company has already sold five systems and that it has "spoken with many additional customers who are interested in purchasing the system," Flatley said the company is "evaluating the extent to which we can ramp our supply chain to provide more systems this year."

He said that there are two constraining factors to the system — the supply of cameras and the internal production of the patterned flow cells. He said that the company will be monitoring those factors and will know in the second half of the year whether it would be able to install more than five systems.

Flatley added that he was surprised by how quickly customers were able to come up with $10 million to purchase the system.

"The demand we've seen for the $1,000 genome reinforces our view that there is, as far out as we can see, insatiable demand for whole-genome sequencing," he said.

Although five customers have already ordered the system, Flatley said that the company would continue accepting orders unless it reached "such a huge backlog that we couldn't tell a customer when they'd get a unit."

Additionally, Flatley said that initial customers of the HiSeq X Ten will have to demonstrate proficiency in dealing with next-gen sequencing data, particularly on the bioinformatics side, including the ability to handle, store, and analyze the data. Initial customers will also have to have the sample collection needed to make use of such a high-throughput system.

"We're not at the point where this is a turnkey installation," he said. "At some point we may get to that, where we can train people from scratch, but that's not where we want to install the initial systems."

He said that for the most part the HiSeq X Ten would not cannibalize Illumina's HiSeq 2000 and 2500 systems, since today customers are only doing whole-genome sequencing on 10 percent to 15 percent of their samples.

Rather, he said, the HiSeq X Ten will "push people toward whole human genome sequencing," freeing up space on the HiSeq 2000 and 2500 for other applications. "Most of the capacity of the 2500s are used for other applications and that will continue to be the case," he said.

Eventually, though, Flatley expects that the HiSeq X Ten will impact Illumina's own sequencing service business as customers will theoretically be able to offer whole-genome sequencing on that system at a lower price point than Illumina will charge.

Interest is also high for the firm's new NextSeq 500, Flatley said, indicated by the 20,000 visits to the overview page of the website in the first two days after launching.

The NextSeq 500 "hits a white space in our product line between the HiSeq and the MiSeq," he said.

The system uses a newer sequencing-by-synthesis chemistry than that utilized by either the MiSeq or HiSeq. Rather than the four-channel system used by those instruments, the NextSeq 500 has a two-channel version that includes a dark state for the base guanine, single dyes for both adenine and cytosine, and two dyes for thymine.

This two-channel model enables the system to have the capability to sequence whole genomes, but to remain in a benchtop-sized box. It will also have both a mid-output and high-output run mode.

Flatley said that ensuring the two-channel chemistry had equivalent performance to the four-channel chemistry was critical in the company's development. "We don't expect any pushback on [the two-channel chemistry] as long as the data stands up to what we've demonstrated in R&D," he said.

Flatley also indicated that the company plans to launch a trade-in program similar to the one it offers for the MiSeq that would give customers a discount on the $250,000 NextSeq 500 in exchange for a competitor's system.

Sample prep hits record highs

While Illumina's main products continue to be its sequencing systems and consumables, the firm also realized record orders of sample prep products in Q4 2013, with shipments growing 50 percent year over year.

The Nextera line of products did especially well, in particular the Nextera XT kit for small genomes, Flatley said.

The company's TruSight panels, which are targeted toward clinical and translational customers, were also successful, with over 200 customers ordering kits.

Additionally, as part of its strategy to provide "sample to answer workflows," this summer it plans to launch NeoPrep, a sample prep system based on digital microfluidic technology from its Advanced Liquid Logic acquisition that will cost just under $50,000.

Initially the system will launch with three to four sample prep protocols, and will include six by the end of the year, Flatley said, which will "hit 80 to 90 percent of all the sample prep protocols our customers use."

He said that the system would likely compete with more general purpose sample prep instruments that "have to be more complicated because they have to do a lot of things to support different types of sample prep from other types of companies."

By contrast, NeoPrep will be a push-button, easy-to-use device compatible with Illumina sequencers and integrated with the firm's BaseSpace cloud-based informatics.

Flatley indicated that the company will continue to push into the sample prep space, saying that NeoPrep is "just the beginning of what we're going to do overall in terms of integrating full sample-to-answer solutions."

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