This article has been updated with additional information to correct that US entities are currently not banned from purchasing or selling securities from BGI Genomics.
BALTIMORE – Following years of legal battles with Illumina, Chinese next-generation sequencing platform maker MGI Tech is poised to establish itself as a significant player in the US market in 2023.
The BGI Group affiliate recently laid out its product roadmap in the US, gearing up to roll out a plethora of platforms targeting various market needs starting in January.
However, with data security allegations being spread and its sibling company, BGI Genomics, recently being blacklisted by the US Department of Defense, the company is facing headwinds on its journey to conquer the US market.
MGI has vowed that its platforms bear “no risk of a data breach” while assuring customers that the sanctions against BGI Genomics have “no impact” on its own operations.
Whether customers find these promises convincing remains to be seen. However, with new NGS players emerging and existing competitors rapidly evolving, it is certain that MGI is not coming back to the same market it had to leave behind two years ago, when it was forced to stop selling sequencers in the US.
Product roadmap
MGI's ambition to break into the US market is a new yet familiar one. The affiliate of BGI Group, which is also the parent group of BGI Genomics, made its first attempt to launch its sequencing technology in the US in 2019, which was quickly squashed by the unfolding IP litigation between BGI Group and Illumina.
In August of this year, following the expiration of certain Illumina patents, MGI swiftly began offering its CoolMPS sequencing chemistry and DNBSeq-G400 sequencer, one of the company’s most popular platforms with low to mid throughput, to US customers.
Capable of delivering various types of sequencing reads and read lengths, the DNBSeq-G400 “is our power horse”, Wenchi Liao, MGI Americas’ associate director of product management, said during a company-sponsored workshop at this year’s American Society of Human Genetics annual meeting in October. Following the G400, Liao said MGI is planning to unveil a new G-series instrument at the Advances in Genome Biology and Technology annual meeting next year.
At ASHG, MGI also announced plans to make two more product lines — the low-throughput E series and the high-throughput T series — available in the US in the new year.
Among them is the DNBSeq-T7, an ultra-high throughput sequencer capable of producing more than 5 billion reads per flow cell in each run, and the DNBSeq-T10x4, the firm’s highest throughput platform with a daily data output of up to 18 Tb. Both instruments will be commercially available in January 2023. Meanwhile, the DNBSeq-E25, a portable and low-throughout sequencer with built-in bioinformatics, will be launched in the second quarter.
“We plan to launch products in phases as the US is a new market for us,” Yongwei Zhang, CEO of MGI Americas, said in an email. “We will announce more product availabilities at the JP Morgan Healthcare Conference and at AGBT.”
In what appears to be a deliberate move, MGI plans to release these instruments through its San Jose, California-based US subsidiary, Complete Genomics, which BGI Group acquired in 2013 after clearing multiple regulatory hurdles. “Complete Genomics has a long history in the US market with great name recognition for its DNBSeq technologies and a pioneering whole-genome sequencing offering since 2010,” Zhang said. “We want to take advantage of and pay tribute to those.”
Explaining the relationship between Complete Genomics and MGI Americas, an MGI spokesperson said in an email that while both companies are MGI subsidiaries, during the past three years, MGI Americas has mostly engaged in commercial activities while Complete Genomics has been focused on research. Due to their “totally different” primary focus, the two companies have “very limited” overlap in terms of resources, other than sharing Zhang as their CEO. MGI also previously mentioned that Complete Genomics serves as the headquarters for MGI Americas.
During an MGI workshop at ASHG, Wanqiu Chen, a researcher from Loma Linda University in California, presented preliminary data from a benchmarking study that compared the MGI and Illumina sequencing platforms using samples from mice that had been on a NASA space flight.
For her study, which was partly supported by MGI through reagent donations, Chen evaluated space flight-induced methylation profiles in different mouse organs by performing reduced representation bisulfite sequencing (RRBS). She further examined 10 mouse brain tissue samples, split between space flight and control groups, and performed single-end sequencing runs side by side on the Illumina NextSeq 550 and the MGI DNBSeq-G400.
Overall, Chen said both platforms had “very consistent” run quality between samples and achieved “very high” Q30 quality scores. Methylation results were also “consistent” between the two platforms.
Additionally, she said the MGI platform detected a higher number of methylated Cs in both the CpG and CHG contexts and showed higher coverage depth both inside and outside CpG island regions.
It appeared that MGI’s technology showcase at ASHG left a favorable impression on at least some potential customers.
“It looks promising, at least the data that were shown were pretty solid,” said Dariusz Plewczynski, a genomics researcher from the University of Warsaw in Poland who attended one of MGI’s workshops. His lab currently uses Illumina and Oxford Nanopore Technologies platforms and focuses on studying structural variants, Plewczynski said.
“The Q30 scores that they presented looked pretty nice,” said Sangmoon Lee, chief technology officer of Genome Insight, a San Diego-based whole-genome sequencing data curation startup, who also attended the MGI workshop. For Genome Insight, which currently operates two Illumina NovaSeq 6000s, the MGI DNBSeq-T7, which can run four flow cells independently, looks strong in terms of its flexibility, Lee said. Still, to make a formal judgment of the data quality, he would need to see more firsthand data, he added.
Lower cost, more flexibility
Outside the US, existing MGI customers seem to be largely pleased with the technology’s performance.
“We wanted to have more flexibility in how we sequence samples and at what costs,” said Ioannis Ragoussis, head of genome sciences at the McGill Genome Centre in Canada, whose group started using MGI instruments more than three years ago. “One important point for me was that we did not have to disrupt, in any way, our current workflows in the lab; we could convert Illumina libraries to run on the MGI [instrument].”
While Ragoussis still considers his center primarily an Illumina shop, with three NovaSeqs running, he said that MGI’s DNBSeq-G400 enables the center to run smaller-scale studies with more flexibility and affordability.
“For single-cell genomics experiments, in order to get a reasonable price, you have to put many samples together on the NovaSeq, and this can be quite challenging,” he said. Meanwhile, with the G400, it has been possible to run fewer samples while still maintaining cost-effectiveness, he noted.
Besides cost, Ragoussis said another important attribute of MGI’s technology is data quality. “It's fair to say that it [is] at least as good” as Illumina data, Ragoussis said, adding that his group found “no significant difference” in data quality between Illumina and MGI sequencing.
After running two DNBSeq-G400s, the center also recently installed a DNBSeq-T7 for large-scale whole-genome sequencing projects. The decision was largely driven by cost, according to Ragoussis. While it may vary from lab to lab, generally speaking, reagent costs for the T7 are roughly half of the corresponding costs for the Illumina NovaSeq 6000, he said.
However, Ragoussis pointed out that the T7 “does require some groundwork and tweaking” in his group's hands. “This has to do with the library quantification process, which is not as robust as the Illumina library quantification process,” he explained.
Nik Matthews, head of the Imperial BRC Genomics Facility at Imperial College London, said he started evaluating the DNA nanoball sequencing technology even before MGI acquired Complete Genomics.
“When you want to do studies and you're unable to do that because the costs are inhibitive, you have to think about other ways,” he said. “With great respect to Illumina, … they do keep their costs inherently high.”
Attracted by its lower sequencing cost, Matthews’ group purchased a DNBSeq-G400 (then named MGISeq-2000) around 2018, when he worked at the Institute of Cancer Research (ICR). “We were the first in the UK to have [an MGI] system in-house,” he said.
Like Ragoussis, Matthews also attested to MGI’s sequencing quality. “When we have the FASTQs, you can't tell the difference [to Illumina],” he said. “The error rates are equal to or lower than Illumina.” Meanwhile, he said MGI sequencing costs are about a third below Illumina's.
Now at Imperial College, Matthews’ group is operating a DNBSeq-G400, and he said the team is also in talks to purchase a DNBSeq-T7. “The big push to get a T7 is not just to do the standardized projects; the big driver for the T7 is spatial [biology],” he said. Specifically, he has a collaboration with BGI Research in place to develop certain aspects of the Stereo-Seq spatial transcriptomics technology and is an early-access customer of MGI for it. However, he said he has never received any monetary support from MGI or other affiliates of BGI Group.
Scott Coutts, a platform manager at Micromon Genomics, a genomics core facility at Monash University in Australia, wrote in an email that his group began using the DNBSeq-G400 in mid-2018.
“We were attracted primarily by the cost of the sequencing consumables in comparison to Illumina, where prices to operate our sequencing instrument were becoming prohibitive,” he said. “At the time, the MGI instrument also filled a gap in Illumina's product lineup for sequence yield and yield flexibility.”
Coutts said that the MGI platform is performing “generally well” in his lab, although he did find the sequencer “slightly less reliable” than Illumina instruments, which Micromon has been using for almost 15 years. “However, we've only used one MGI machine, compared to six iterations of Illumina machines,” he added.
When it comes to data quality, Coutts said that, for most purposes, MGI’s data is “identical” to that of Illumina. “In our hands, compared to the Illumina machines we used previously, there's a slight quality increase towards the end of read two,” he pointed out.
Additionally, he said that MGI consumables are generally “significantly less expensive” than Illumina’s. “When we purchased our instrument, we migrated from the NextSeq 500 instrument, and the pricing was less than half [of Illumina’s],” Coutts noted. “The pricing is still lower than most NovaSeq 6000 consumables, except for S4, where the pricing is slightly cheaper.”
Data security
As MGI announced its intention to reenter the US, allegations about data security regarding the company's platforms started to become more pronounced.
The National Consumers League (NCL), a nonprofit consumer advocacy organization based in Washington, D.C., for instance, launched a campaign targeting MGI in September; soon after the company made its first sequencing products available in the US.
On the campaign's website, NCL claims that “BGI’s reentry to the US marketplace through MGI Americas will allow BGI to gain direct access to your patients’ health records and genetic data — posing a major threat to your patients, as well as US national security.”
As such, the organization urged consumers to “reject the use of MGI America’s sequencing technology, including the CoolMPS sequencing chemistry and DNBSeq-G400 for your patients.”
“We urge that consumers have a right to know that the data that they're sharing is respected in the ways that we lay out — for example, the right to ethical use, the right to protect that data from foreign adversaries,” said John Breyault, NCL’s VP of public policy, telecommunications, and fraud. “On top of this, consumers often don't know who their data is being shared with.”
To make its case, NCL cited previous media and governmental reports, which conveyed that patient sequencing data processed by certain BGI Group affiliates — chiefly genomic services provider BGI Genomics — can eventually end up in the Chinese government’s hands.
However, it is unclear whether these reports are applicable to MGI, an instrument maker that presumably does not handle any customer’s samples or data.
Breyault acknowledged that NCL has not found firsthand evidence that MGI’s platforms may lead to data breaches. He also said the organization has not vetted its claims with any genomics experts.
“We're not doing our own independent investigations and research,” Breyault said. “We're relying on what has been reported publicly in the media and by the US government.”
Breyault declined to disclose the funding sources for the campaign. “We work with lots of partners, and certainly we wouldn't exclude partners from the genomic industry as partners on the project,” he said. “If you align with us, we'd love to partner with you.”
According to NCL’s 2021 annual report, Grail, which was acquired by Illumina in 2021, was a donor to the organization. However, Grail denied being part of the campaign. “While we support the overall mission of the National Consumers League and strong patient privacy protections, we are not involved in this campaign,” a company spokesperson wrote in an email. A spokesperson from Illumina said the company “is not an active donor to or a participant with NCL.”
Responding to NCL’s allegations, MGI asserted that it is “a supplier of instruments and consumables for customers to use in their own labs” and does not provide any genomic sequencing services. “MGI does not own, control, handle, or even access samples or genetic data, only MGI’s customers do. There is no risk that MGI will have access to any health records or genetic data from customers,” the company stated.
MGI also contended that its sequencers are designed to be able to run without connections to shared networks. “Customers have 100 percent control of the data generated on the instrument,” the spokesperson said. “Without connecting to networks, there is no risk from the internet of data access by people outside the lab.”
Furthermore, MGI said its sequencers do not have any third-party remote control software, and the remote desktop control setting is disabled by default. Besides these measures, the sequencer’s FASTQ files are stored without user identification information, and the MD5 code, a cryptographic message authentication protocol, is verified before and after data transmission to prevent data tampering.
With existing institutional data security protocols in place, it appears that many researchers are not buying too much into NCL's data security allegations, either.
“Scaremongering and fake news, I'm sorry,” said Imperial BRC’s Matthews. “There's nothing that I can see that would mean that MGI versus, say, Illumina or any of the new technologies that are coming out will be any different.”
“There is always a concern in terms of safety and security, independent of what instrument is being used,” McGill’s Ragoussis pointed out. “If you were to run an instrument produced in the UK, for example, it doesn't mean that one has to be complacent and not worry about data security.”
Coutts, on the other hand, said that when he purchased his MGI instrument in 2018, he perceived MGI’s instruments to be “slightly less secure” in the sense that their default configuration allowed MGI staff to remotely connect to the instrument at any time. However, he said this configuration can be changed, and his lab had updated the instrument to prevent that from occurring. He also made clear that MGI no longer does this and now requires authorization to connect to a customer’s instrument.
Responding to Coutts’ point, an MGI spokesperson said the company “provided customized services [for] equipment fault troubleshooting only, and the whole process was under the customer’s supervision.” Currently, MGI’s instruments are not configured by default to access the internet, the company said.
Blacklisting
Even if data security is not a concern to many potential customers, some industry observers seem to be uncertain about MGI’s long-term prospects in the US because of the regulatory landscape, especially against the backdrop of a somewhat adversarial US-China relationship in recent years.
In October, merely months after MGI initiated its second attempt to enter the country’s market, the US Department of Defense added MGI’s sibling company, BGI Genomics, along with 12 other firms, to a list of “Chinese military companies operating directly or indirectly in the United States.”
The original DOD list, issued in June of last year, has substantial overlap with a separate Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC List) maintained by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). Also in June 2021, President Joe Biden signed an executive order that bans US entities from engaging in the purchase or sale of any publicly traded securities of a number of the companies on the OFAC's list.
In a statement in October, BGI Genomics said its inclusion in the DOD list “does not directly impact business transactions.” The company also stated that it “is not owned, controlled or affiliated with the Chinese military” and insisted that “its work is not undertaken for military purposes and its tests were not developed in collaboration with the military.”
Additionally, the firm said it is “in full compliance with all relevant laws and regulations in the jurisdictions in which it operates.”
Distancing itself from BGI Genomics, MGI said it is run independently, and “all resources included but not limited to producing, R&D, sales, marketing, supplying, after-sale services, human resources, are not shared” between the two companies, which are both publicly traded.
Therefore, BGI Genomics’ designation by the US DOD will have “no impact” on its operations, according to MGI. Additionally, the firm asserted that it “has never collaborated with the Chinese military and does not engage in any activities defined as List of Chinese Military Companies in Accordance with Section 1260H of the National Defense Authorization Act for Fiscal Year 2021.”
Whether US customers or the US government find these vows convincing remains to be seen. Nonetheless, MGI’s image to some as a Chinese company with close ties to the Chinese government is undoubtedly something the company has to contend with.
When considering purchasing an MGI instrument, Matthews said he received “pushback” from Illumina representatives, for example. “Illumina said to me, ‘Nik, are you sure you want to do this? Because you're working with a Chinese company, which is funded by the Chinese government,’” he said.
An Illumina spokesperson said the company “can’t speak to that specific conversation because none of us were involved in it.” However, she noted that Illumina continues to “welcome competitors in the sequencing technology space," adding that "we believe it’s a testament to the great opportunity out there, and that it’s in the best interest of customers and the advancement of the industry.”
“I think [there are] always questions against other foreign companies, especially Chinese companies,” said Genome Insight’s Lee.
As Genome Insight provides human whole-genome sequencing and interpretation services, Lee said he has some concerns over how MGI’s technology will be perceived by its customers if the company were to purchase an MGI instrument. “Maybe customers only want their samples to be run on the Illumina platforms,” he said. “It's not our job to convince [them], but we also need to educate the customers.”
Meanwhile, regardless of how the political debate about China will pan out, Ragoussis still considers MGI’s DNBSeq a “respectable technology.”
“I think we should not forget that this is not a technology that just came from China out of the blue,” Ragoussis said. “The origins, up to quite a substantial extent, are in the US.”
“Because we are a genome center, we are obliged to evaluate and have as many technologies as we possibly can available for users,” he added. “The idea is also to give the user a choice, not us dictating what the users use.”
Sequencing ecosystem
Perceptions aside, it is certain that MGI has returned to a vastly changed competitive landscape in the US. During the ASHG meeting, where MGI showcased its platforms, both Oxford Nanopore and Pacific Biosciences released new instruments, generating much excitement and fanfare. In addition, new players such as Element Biosciences, Ultima Genomics, and Singular Genomics are also making competition in the NGS market fiercer than ever.
According to some customers, MGI still has some catch-up to do when it comes to establishing a sophisticated sequencing ecosystem.
“We have found that dealing with MGI has been slightly more difficult than dealing with Illumina,” Coutts pointed out. “Generally, the sequencing ecosystem (documentation, software, updates, communication, etc.) is slightly less polished and communications are somewhat less organized and efficient, compared to Illumina and Oxford Nanopore.”
Similarly, Matthews said customer service is one of the areas that the company still needs to build on. “It’s not as slick as Illumina, but they have only been out for a number of months,” he said. “It will take a bit of time for them to get there.”
To that end, MGI said it is “working with a number of partners to establish an ecosystem around DNBSeq technology,” highlighting a series of partnerships it has recently forged, including with New England Biolabs, Qiagen, and Roche.
While it remains to be seen how MGI will fare in the US this time around, if it can deliver its promise — of a competitive edge in quality and cost — it may stand a chance of grabbing a slice of a market that has been long dominated by Illumina.
“I think time will tell,” Genome Insight’s Lee said. “If the quality is comparable, why don't we just use this cheaper sequencing instrument?”