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Oncology Drives Clinical Sequencing Growth for Illumina as Consumer Genomics Falters

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SAN FRANCISCO (GenomeWeb) – Illumina's clinical sequencing business grew around 30 percent in 2018, driven by the oncology market, Illumina CEO Francis deSouza said this week. Around 40 percent of sequencing consumables shipped in 2018 were for clinical applications, with oncology representing just under 20 percent of clinical sequencing.

During a conference call discussing Illumina's first quarter 2019 performance, deSouza said that he anticipates that progress in the reimbursement and regulatory landscape would continue to fuel growth of the oncology business during the year. In addition, he cited opportunities to grow the reproductive health business in the US and China, as well as continued adoption of noninvasive prenatal testing in countries such as France and the Netherlands.

By contrast, the consumer genomics market, which had driven a resurgence in Illumina's array business, may have hit its peak, as Illumina reported a larger-than-anticipated slowdown in that business. DeSouza noted, however, that the DTC market continues to grow outside of the US, but nonetheless the company is "factoring in even greater caution around the DTC business for the rest of 2019," deSouza said.

Based on discussions with companies such as 23andMe and Ancestry.com, deSouza said that it seems that the consumer genomics market is "in transition." The market is moving from being a "pure genealogy market" to "being more of a health market," which will ultimately be a much bigger market, he said. In addition, he anticipates that there will eventually be more companies emerging in the health DTC space. "That market is going to be a lot less concentrated going forward, both in terms of geography and in terms of customers," he said.

For instance, Illumina has previously cited China as a country where DTC genomics is expected to grow. WeGene, a Shenzhen-based firm, has been scaling up its DTC business and said last year that it was developing a semi-customized array chip with Illumina that will be optimized for the Chinese population and that it also planned to open a lab in Hong Kong.

Mark Massaro, an analyst at Canaccord Genuity, wrote in an analyst note following Illumina's earnings release that "it's entirely possible that the demand for DTC testing for ancestry, genealogy, and traits is either declining or could be reaching a certain level of maturity." Massaro also noted the decision by Illumina to deconsolidate Helix and Helix's intention to refocus on population health —  "possibly de-emphasizing its applications on its app store" — as a potential sign that DTC demand could be stalling. In addition, he wrote, it is also unclear whether companies like 23andMe and Ancestry may be "migrating from arrays to exome plus."

Separately, personalized wellness firm Arivale said this week that it has decided to suspend its DTC business, possibly an additional indication of the slowdown in demand for DTC testing. Arivale's offerings were much more comprehensive than array-based DTC tests, and included genomic, microbiome, and digital health measurements, as well as health coaching service. The company noted that it was shutting down due to the cost of providing such services.

Despite the slowdown of consumer genomics, demand for clinical sequencing continues to be strong. As previously noted, oncology comprised Illumina's largest clinical sequencing market.

"Positive developments in the regulatory and reimbursement landscape are improving patient access to genomics profiling," deSouza said, citing the US Food and Drug Administration's approval of Foundation Medicine's companion diagnostic test and the national coverage decision for reimbursement by the Centers for Medicare and Medicaid Services last year, as well as a local coverage decision for Guardant Health's liquid biopsy test last September for some non-small cell lung cancer patients — "the first finalized Medicare coverage policy for an NGS liquid biopsy assay in oncology."

Illumina's Chinese customers have also been scaling up their oncology offerings, with Berry Genomics, for instance, expanding from reproductive health testing into cancer. The company now offers tumor profiling for lung and breast cancer as well as tumor mutational burden testing, deSouza said.

In addition, deSouza said that Illumina is on track to bring its TruSight Oncology 500 panel through regulatory approval. The firm launched a research-use-only version of the panel during Q1, but aims to bring the assay through FDA approval in order to sell as an in vitro diagnostic. DeSouza reiterated that the goal of the panel is not to compete with its customers like Foundation Medicine, which offers a similar panel as a lab service, but to "complement" those services.

Illumina's second largest clinical business is reproductive health, which is primarily noninvasive prenatal testing but also includes carrier screening and in vitro fertilization applications.

DeSouza said that there is still a large opportunity to grow NIPT in the US. Around half of all pregnancies are now covered for NIPT, he said, including 97 percent of high-risk pregnancies and 47 percent of average-risk pregnancies. Nonetheless, he said, around 1.2 million NIPTs were performed last year out of 2.2 million covered pregnancies.

NIPT is growing the fastest in China, where around 4 million tests were conducted last year. And, NIPT is picking up in Europe as well with increased adoption by national health plans there. France, for instance, now reimburses for trisomy 21 testing and the Netherlands has made NIPT available to all pregnant women as part of its TRIDENT-2 study to evaluate the implementation of such testing. Overall, deSouza said that European revenue from Illumina's VeriSeq NIPT assay increased by more than 50 percent in Q1 2019 compared to Q1 2018 and that the CE-IVD assay was run on more than 100,000 samples in the quarter.

Illumina is also expecting a number of population sequencing projects to kick in during the second half of 2019. DeSouza said the company expects that the National Institutes of Health's All of Us program will begin doing whole-genome sequencing on samples in the latter part of the year and that the UK's National Health Service would scale up its clinical whole-genome sequencing service. Although the UK's 100,000 Genomes Project wrapped up last year, the NHS now offers WGS as standard of care for all children and some adults with rare genetic diseases and efforts such as the UK Biobank's Vanguard Project to initially sequence 50,000 samples, but ultimately all 500,000 samples within the biobank, are getting underway.

 

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