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Population Sequencing, Consumer Genomics, Clinical Market Poised to Drive Illumina's Growth

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SAN FRANCISCO (GenomeWeb) – Population sequencing and consumer genomics played important roles in Illumina's growth in the second quarter, as it also continues to make inroads into the clinical sequencing market.

During a conference call with investors to discuss the firm's second quarter 2018 earnings, Illumina CEO Francis deSouza said that large-scale population genomics projects and a growing market for consumer genomics are helping to drive both the company's sequencing and microarray businesses.

In addition, he said that the noninvasive prenatal testing market continues to increase in size.  The firm is waiting to see whether the American College of Obstetricians and Gynecologists will issue a revised opinion supporting NIPT for average-risk pregnancies, following the withdrawal of its Committee Opinion 640, which said that NIPT was not the most appropriate first-line screening tool for pregnant women in the general population.

He also noted positive developments in oncology, with the Medicare contractor Palmetto GBA finalizing a local coverage determination for Guardant Health's liquid biopsy assay for non-small cell lung cancer and the growing realization of tumor mutation burden as an important biomarker for immunotherapy.

Late in the second quarter, Illumina began shipping its newest instrument, the semiconductor sequencing-based iSeq system that it unveiled in January. DeSouza said the "early order activity has been robust," with a mix of existing and new customers.

He noted that the iSeq is appealing to three different types of customers. Existing Illumina customers such as large genome centers and others that primarily run high-throughput sequencing instruments have been using the system as a quality control tool before running a larger, much more expensive sequencing library. The second set of customers are those who do not have in-house sequencing capabilities but outsource sequencing. Such customers may not have access to capital or do not have a regular flow of samples, so purchasing a high-throughput instrument does not make economic sense. Finally, there are customers who are completely new to sequencing. Those are the "most exciting" customers, deSouza said, since they represent a new market for the company.

Aside from QC, deSouza said, customers have been looking to use the iSeq for pathogen detection, microbial whole-genome sequencing, and targeted RNA sequencing.

Illumina has long been talking about the opportunities for large-scale population sequencing projects, but following a lag in sequencing instrument sales in 2016, some investors had expressed skepticism that such projects would take off, pointing to what they saw as a saturation in the sequencing market.

Now, however, as Genomics England's 100,000 Genomes Project begins to wind down, analysts appear to be more optimistic. Mark Massaro, an analyst with Canaccord Genuity, wrote in a note to investors this week that such population sequencing initiatives are "picking up steam," with "Illumina tracking and planning to supply 'dozens' of population sequencing projects all over the world."

DeSouza added that Genomics England has now finished sequencing 70,000 genomes and is on track to finish the remainder by the end of the year. Although that project will come to an end, he said, it will really be just the beginning of the UK's foray into population sequencing, since the country plans to transition into diagnostic whole-genome sequencing within the National Health Service for rare diseases and some cancers.

DeSouza added that Illumina is hoping to provide sequencing for large population sequencing initiatives, including the National Institutes of Health's All of Us project, the UK Biobank, a project with Genome Canada, and one with the Australian government. "Governments all over the world are recognizing the value of genomics," he said. Although the projects "typically take several years to ramp, [they] represent exciting multi-year opportunities." In addition, he said, one notable difference from the 100K Genomes Project when it began in 2014 is that "the vast majority of the opportunities now are either directly connected to a healthcare system or driven by it."

In addition, he noted, most of the projects are based on whole-genome sequencing. The All of Us project, which originally planned to start with genotyping arrays, now has "accelerated" its timeline to introduce sequencing and is "talking about doing both simultaneously," deSouza said.

On the consumer genomics side, the launch of Illumina's Asian Screening Array and Global Screening Array have helped drive consumer genomics particularly in China, Korea, and Japan, deSouza said. Chinese direct-to-consumer company WeGene, for instance, plans to use Illumina's microarray technology for ancestry testing, deSouza said. Although direct-to-consumer testing is still at its early stages in China, deSouza said it represents an interesting opportunity.

Illumina has seen a trend of increasing its presence in the clinical market, and deSouza said that Q2 was no exception. One particular bright spot was the oncology market, with companion diagnostic development deals struck with Bristol-Myers Squibb and Loxo Oncology in Q2 starting to generate revenue, and with a growing interest in tumor mutation burden (TMB) as a biomarker to predict immunotherapy response.

Germany's public health insurance is expected to reimburse for TMB testing, deSouza said, which in turn is driving interest in Illumina's NextSeq system and consumables, such as the TruSight Oncology 500 panel, which includes TMB as well as microsatellite instability, and which Illumina is working on bringing through US Food and Drug Administration clearance.

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