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Qiagen Enters NGS Market with IBS Buy; Plans New Platform with Focus on Sequencing Workflow

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Qiagen said this week that it has acquired privately held next-generation sequencing firm Intelligent Bio-Systems for an undisclosed amount as part of a broader strategy to enter the NGS market with a specific focus on clinical sequencing.

Qiagen's CEO Peer Schatz told In Sequence that the company would make use of IBS's existing sequencing platform, the Mini-20, and incorporate that with Qiagen's DNA extraction methods, sample prep, and bioinformatics to create a "complete workflow from A to Z."

Schatz said that IBS's technology was attractive to Qiagen mainly because of a feature that enables continuous loading and random access. The system allows for new samples to be added while the machine is running, and up to 20 samples can be run at one time without having to barcode.

Steven Gordon, founder and CEO of IBS, described the Mini-20 at the Association of Biomolecular Resource Facilities annual conference this spring in Orlando, Fla. (IS 3/27/2012).

The system uses sequencing-by-synthesis chemistry and is based on intellectual property that IBS licensed from Columbia University.

Schatz did not disclose when the new system would launch, but said that it will be substantially different from the Mini-20, with the addition of Qiagen technologies for the front and back ends of the sequencing workflow, such as "reagents, software, instrumentation design, flanking instrumentation, and the bioinformatics."

The new system not only builds on the IBS technology, but also "improves on it dramatically," said Schatz, with features like "superb automation" and parallel processing, which "are not available today in other systems."

Additionally, he said that the bioinformatics and data processing will be integrated with the sequencing workflow, which is critical for the clinical sequencing market. Qiagen is collaborating with SAP to create "ultra fast highly compact systems" for onsite data processing based on SAP's Hana platform, he said.

Schatz said that further details of the sequencing system would be provided early next year.

Competition

The acquisition of IBS marks Qiagen's entrance into a highly competitive market currently dominated by Illumina and Life Technologies.

While Schatz said that the system Qiagen is developing will be especially tailored for the clinical market, both Illumina and Life Tech are also focusing on this area and are already selling systems, such as the Illumina MiSeq and Ion Torrent PGM, to customers in the clinical space. Additionally, both Illumina and Life Tech intend to take their respective systems through US Food and Drug Administration 510(k) clearance.

Nevertheless, Schatz said that Qiagen's system will occupy its own niche.

"We don't see us necessarily competing with the existing next-gen sequencing market players," he said. "They have some great tools, but what we think we can bring to the table … is the superb adaption of our technologies to the clinical world."

Brian Weinstein of William Blair wrote that Qiagen's NGS strategy signals an "intriguing bet" that the market will evolve from one based on technology to one driven by the processes around the sequencing technology.

Today, the next-gen space is being "fiercely contested on technological capabilities," Weinstein added, but Qiagen believes that it can gain ground by emphasizing the front and back ends, "which is what people will eventually want once the technology catches up among the players."

Other companies in the life science tools market are making a similar bet. For example, PerkinElmer last year acquired automation and sample-prep firm Caliper Life Sciences and bioinformatics company Geospiza with the aim of targeting the workflow needs of the sequencing market (IS 9/13/2011). At the time, PerkinElmer's CEO Robert Friel said that the company was not looking to compete with manufacturers of sequencing instruments, but rather was interested in "the workflow around [sequencing] and the informatics at the back end."

However, analyst Vamil Divan, with Credit Suisse, said in a research note this week that NGS technology will continue to be important for the foreseeable future, and noted that while Qiagen's acquisition of IBS makes "strategic sense," the "ultimate payoff will be determined by the strength of their technologies."

Divan added that "preliminary insights into the benchtop sequencing technology that Intelligent Bio-Systems currently offers are not overly encouraging."

While Qiagen did not disclose the acquisition price for IBS, several industry analysts estimated that it was in the neighborhood of $50 million. By comparison, Illumina acquired Solexa in 2007 for $600 million; Roche acquired 454 Life Sciences in 2007 $154.9 million; and Life Technologies acquired Ion Torrent in 2010 in a deal worth up to $725 million.

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