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NGS is poised to become a disruptive diagnostic tool
San Francisco, CA – January 9th, 2013: This year’s JP Morgan Conference once again indicated that over the next few years, the most exciting diagnostic development will likely be within the next generation sequencing (NGS) space. DeciBio estimates that while the overall genomics market has been growing in the mid-single digits, NGS is the fastest growing of the large (>$500M) market segments, with consistent year-on-year double digit growth rates.
While there is little debate around the fact that NGS is poised to become a disruptive diagnostic tool, the real outstanding question is: When is this going to happen? A number of issues such as cost and workflow (from sample to answer) need to be addressed before NGS gains widespread adoption. Current cost constraints prevent broad usage for many applications, meaning that qPCR and multiplex tests continue to dominate the MDx market. Furthermore, the timeline of reimbursement from private and public payers (e.g., Medicare) for various MDx tests remains unclear. Despite these challenges, the two main players of interest in this space, Illumina and Life Technologies, are both making aggressive moves into the clinical space.
Shortly after the MiSeq was announced in January 2011, Illumina identified its clear potential in the clinic and declared its interest in developing FDA-approved clinical tests for this platform. Illumina has been developing a clinical version of MiSeq dubbed MiSeqDx, and just submitted the system to the FDA for 510(k) clearance. MiSeqDx is expected to have additional software providing more process control and user traceability.
Illumina is developing some of its clinical testing kits internally for MiSeq. For example, they recently submitted their first two NGS tests to the FDA for clearance: a cystic fibrosis diagnosis and a carrier screening test that is expected to be cleared by H2 2013. In addition, Illumina has bolstered its clinical portfolio through acquisition.
Illumina acquired Verinata Health, a non-invasive prenatal testing company that leverages the MiSeq NGS platform to test for fetal chromosomal aneuploidies in high risk pregnancies. Verinata’s Verifi test is the most comprehensive prenatal screening test on the market, covering: Down syndrome (trisomy 21), Edwards syndrome (trisomy 18), Patau syndrome (trisomy 13), as well as optionally testing for the most common sex chromosome aneuploidies (e.g., Turner syndrome (Monosomy X), Triple X (XXX), Klinefelter syndrome (XXY) and Jacobs syndrome (XYY).
This acquisition helps to consolidate Illumina’s early positioning in reproductive health. There are currently estimated 500k high risk pregnancies in the U.S., resulting in an estimated 1.5M-2M annual tests over the next 5 years. This yields an estimated addressable market of ~$600M per year. Further validating this market, Sequenom, the current market leader announced that it received ~60K samples for its MaterniT21 testing platform in 2012. Illumina plans to enter this market by submitting Verinata Health’s test to the FDA as an IVD in the near future.
One other interesting Illumina tidbit from the JP Morgan Conference didn’t actually come from Illumina. Roche announced that they had no intention of reinvigorating their bid for Illumina after two unsuccessful early 2012 attempts, quelling Wall Street rumors of another takeover attempt. So it looks like Illumina will not be under the Roche umbrella anytime in the foreseeable future, however we don’t think that Roche has given up on NGS all together, look for future Roche efforts to access this growing market.
The second major player in the NGS market, Life Technologies, also continues its push to enter the clinical market. In 2012, they have been busy working toward this goal, with the acquisitions of Navigenics and Pinpoint Genomics, the launch of Prevenio, a lung cancer test service and company’s first LDT, the establishment of a sales force focused on the CLIA lab market, a partnership with Claritas Genomics.
Life Technologies’ partnership with Claritas Genomics to develop diagnostics on its Ion Torrent platforms (PGM and Ion Proton) for inherited pediatric diseases will be a major step to validate the Ion platforms for clinical use. During the 2013 JP Morgan conference, Life Technologies indicated that ~20% of its 2012 Ion Torrent sales were to clinical customers; with this number expected to increase significantly in 2013.
DeciBio expects Life Technologies to double down on its clinical push in 2013, realizing the potential of its recently created CLIA and clinical trials sales forces. These dedicated sales teams will address these critical clinical sales channels by helping clinical lab customers to better understand how to use the broad panel of testing technologies that Life Technologies offers; including NGS, CE sequencing and PCR platforms. Like Illumina, Life Technologies is planning to submit its Ion Torrent PGM machine to FDA for 510(k) clearance in the near future. Life Technologies has indicated that they missed their late 2012 FDA submission goal, because they had several small updates to make to the device before they were comfortable locking in the design with the FDA.
In summary, 2013 looks to be an exciting year for NGS with the possibility of platform approval and clinical uptake of approved kit applications. We look forward to an active year in the NGS space and seeing what exciting developments are sure to come from next year’s JP Morgan conference brings.
Authors: Stephane Budel, Partner at DeciBio, LLC
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