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Rebuffing Roche's Offer, Illumina Points to Growing Clinical Adoption of its Sequencing Platforms

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Illumina continued to rebuff Roche's acquisition attempts this week, citing the growing adoption of its sequencing platforms in the clinical market as evidence for growth potential that is not adequately reflected by Roche's current offer.

Roche, meanwhile, argued that Illumina has not provided "any quantifiable evidence or projections" for when or how the predicted growth will be realized.

Roche increased its hostile takeover bid for Illumina last week, from $44.50 to $51 per share (GWDN 3/29/2012).

In a letter to Illumina's shareholders earlier this week, CEO Jay Flatley and chairman William Rastetter said that the execution of Illumina's strategic plan "will create considerably more value than Roche is offering. We will not let Roche capture value at the expense of Illumina's stockholders."

The non-research use of Illumina's sequencing technology in areas such as agricultural biotechnology, veterinary medicine, forensics and "especially" molecular diagnostics will drive Illumina's growing revenue streams, they said.

In total, these new markets have the potential to more than double Illumina's addressable market from $4 billion to over $8 billion, they said, with the molecular diagnostics space alone representing "a $3 billion long-term growth opportunity."

More specifically, the HiSeq and MiSeq platforms are already being adopted by "leading diagnostic reference labs," including Sequenom, Genomic Health, and Partners Healthcare, "and many others," they said.

Long-term, they added, Illumina is partnering with "global leaders" such as Siemens Healthcare, Decode Genetics, and the Fred Hutchinson Cancer Center to develop diagnostic kits for the MiSeq "that we believe will eventually be used in thousands of hospital labs worldwide."

"The numerous companies that have selected Illumina technologies and products as the foundation upon which to build their novel diagnostics businesses further validates our approach and expands the clinical opportunity set for NGS," they said.

Illumina also hinted that future innovations of its sequencing technology will drive the cost of sequencing a human genome below $1,000 and decrease turnaround times, enabling "an entirely new world of sequencing applications."

Assuming a cost of $1,000 per genome and a 1 percent penetration of the estimated future market, the company could see "more than" $600 million of new revenue.

"In the near future, our advancements will make sequencing and genetic information readily available to individuals and physicians, enabling their incorporation into the routine practice of medicine," they said.

In its own letter to Illumina shareholders this week, Roche disputed Illumina's growth predictions, saying that the company "has yet to produce any quantifiable evidence or projections to reassure shareholders when or how this growth will be realized."

Roche also pointed out "the increasing competitive landscape" in sequencing, specifically mentioning Oxford Nanopore Technologies and Life Technologies.

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