Noninvasive prenatal testing and cancer were the two main drivers of Illumina's clinical business during the first quarter, officials said this week during a conference call discussing the company's first quarter earnings.
Illumina is in the early stages of building a diagnostics business and currently is in discussions with the US Food and Drug Administration about the requirements for developing a noninvasive prenatal in vitro diagnostic, even while it supplies other NIPT makers with its sequencing platform as a base for their tests. In addition, the firm's MiSeqDx system and cystic fibrosis sequencing assay are currently under review by the FDA for 510(k) clearance, the company said.
While Illumina did not break out revenues directly related to its clinical business, the company's total revenues were up 21 percent over the year ago quarter to $331 million from $272.8 million.
Illumina President and CEO Jay Flatley said during the call that in the first quarter of 2013 "close to half" of HiSeq orders were from commercial, clinical, and translational customers.
Around 40 percent of HiSeq shipments were to first-time customers
"More than any quarter in recent memory, the HiSeq mix was a higher fraction outside of academic centers, and I think provided a large portion of the upside we saw for HiSeqs this quarter," Flatley said.
Many of those systems went to companies in the noninvasive prenatal testing space as well as companies developing cancer diagnostics, he said.
Additionally, of the 50 percent of non-academic MiSeq users, between one-half to two-thirds are clinical customers, Flatley said.
The noninvasive prenatal testing market was a major driver for Illumina in the quarter. Currently, all companies with fetal aneuploidy tests on the market run them on Illumina's systems.
However, earlier this year, Illumina acquired one of those firms, Verinata Health, putting itself in the tricky position of now also competing with its customers (CSN 1/9/2013).
During this week's call, Flatley said that the company has completed an "in-depth study of alternative scenarios for working with our existing NIPT customers," although he did not elaborate on what those strategies might be. Illumina currently has supply agreements with the various companies, which it has previously said it would honor. Its agreement with Sequenom, the market leader in the field, runs through 2016.
"This is inherently delicate, will take some time to implement, and of course may take a number of different paths, but we believe that our strategy remains sound and actionable," Flatley said.
Currently, Illumina supplies systems to Ariosa Diagnostics, Natera, and Sequenom, which all market tests in the US, as well as Germany-based Life Codexx, and BGI, which is marketing its test in Asia.
Illumina plans to eventually develop the Verifi test as an IVD, which Flatley said will "significantly expand the global market and enable all test providers to be successful in the field." He said that there is room for both an IVD test as well as laboratory-developed tests, since some of the indications that can be tested for are so rare that it may be difficult to find enough samples that would satisfy FDA requirements for an IVD, and those would instead continue as LDTs.
Flatley said that the acquisition of Verinata has so far served the company well, and along with products from BlueGnome, which it bought last year (CSN 9/19/2012), those acquisitions are "bolstering our efforts in carrier screening and cytogenetics."
Flatley added that while it is still early, the company has seen "significant growth and demand" for Verinata's Verifi test, "assisted in part by our distribution agreement with PerkinElmer." He declined to disclose details on testing run-rate, but said that "volumes have met or even slightly exceeded our expectations."
Additionally, the Verifi test is now available to the approximately 20 million lives covered by Aetna, and "through our distribution agreement with PerkinElmer, we're in active discussions with other payors to expand Verifi coverage," he said.
Cancer sequencing was another large driver of Illumina's clinical business, which impacted sales and usage of both the HiSeq and MiSeq systems.
For instance, one customer, Foundation Medicine, runs a large panel of 236 genes on the HiSeq. However, other customers run smaller panels, Flatley said — "the 10 to 12 genes that are now reimbursed up to panels of 20 to 40 genes." Those are typically run on the MiSeq.
The company has also been working on its own line of customized panels, including a recently launched TruSight Tumor panel, which detects somatic mutations in 26 genes. The panel has already been adopted by GE's Clarient business and Ambry Genetics (CSN 4/17/2013).
Pharma and CDx
Flatley said there is an emerging opportunity to work with pharmaceutical companies, and there are three facets to that market.
The first is selling instruments to the companies to support their research activities, such as "helping to sort through drug targets or identify how to enrich patients into clinical trials," he said. This is likely a smaller market because pharmaceutical companies "don't tend to buy 5, 10, 20 units to do that type of work."
The second aspect is large-scale whole-genome sequencing of hundreds to thousands of individuals, which pharmaceutical companies will likely outsource, Flatley said. These projects are "often cancer related," and sometimes include RNA sequencing.
And the third aspect is the companion diagnostic market, which Flatley predicted will move toward sequencing panels of up to around 20 genes.
"That will become a very important emerging opportunity, and we're in discussions with a large number of pharmaceutical companies about working with them on companion diagnostic programs to accomplish that goal," he said.