Los Angeles, CA May 31, 2017 – In Fluidigm’s Q1 2017 earnings call, Chris Linthwaite signaled the company’s deprioritization of single cell genomics; “C1 customers are very important to us. However, after our strategic review, we believe there is more opportunity in other markets, and therefore, we'll continue to shift primary business focus to these areas.” Linthwaite cited a combination of internal issues and competitive dynamics, “eroding our ability to place new [C1] units,” as the reason for the 70% decline in the C1 product line year-over-year.The competitive dynamics Linthwaite refers to include a slew of recent commercial platforms entering the market (e.g., 10X Genomics’ Chromium, Bio-Rad and Illumina’s ddSEQ, WaferGen’s ICELL8) or platforms that are expected to enter the market (e.g., BD’s Resolve, 1CellBio’s inDrop, Dolomite’s Drop-Seq). These platforms address the key gap in Fluidigm’s portfolio, namely throughput. Commercially available platforms allow isolation and preparation of thousands to hundreds of thousands of cells, compared to 800 cells with Fluidigm’s highest throughput microfluidic chip. One interviewee we talked to for our single cell genomics report highlighted: “The market also shifted rapidly away from qPCR to sequencing as the downstream method of analysis, leaving Fluidigm’s Biomark gathering dust – or at least not being used primarily for single-cell purposes – while Illumina likely reaped the benefits.”In addition to the external market dynamics, Fluidigm faced the significant internal challenge of doublets. In late 2015, customers reported that integrated fluidic circuits (IFC) were sometimes capturing two cells instead of one, later calculated at a rate as high as 44% for the high throughput IFC. It’s unclear how many experiments were affected by this issue but some interviewees worry there were many incorrect experimental interpretations as a result. While Fluidigm addressed the issue head on with a 12-page white paper and eventually reduced doublets below 10%, the damage had been done. At this point, customers were looking for alternatives and the market was providing them.Among the competitors, 10X Genomics certainly appears to have come out of the gate strongest, with marketing of consistent product launches and research announcements. 10X has taken an application-centric approach, identifying key single-cell research areas (e.g., immune repertoire profiling) and developing specific solutions (e.g., Single-Cell V(D)J solution), as opposed to Fluidigm, who initially released platforms for customers to find their own single-cell applications (Fluidigm later released a single-cell TCR sequencing application in mid-2016). In our experience, companies with emerging technologies fare best when taking an application-centric approach.The recent release of a single-cell solution from Bio-Rad and Illumina should challenge 10X Genomics for customer placements along with WaferGen’s ICELL8 and BD’s Resolve system, slated to enter the market later this year. How the market will evolve will depend on a variety of factors but we see three key areas that will likely impact company success, all which should allow market penetration beyond SCG experts:

1. Availability of application dependent solutions2. Offering of intuitive analysis software solutions3. Availability of cost-effective solutions

In our view, researchers are still in an exploratory phase, taking an unbiased approach, which has in part fueled the massive increase in single-cell RNA-sequencing. The Human Cell Atlas aims to map every cell type in the human body. This ambitious project may help pave the way for a better understanding of cell heterogeneity. Meanwhile, single-cell transcriptome analyses continue to deliver key insights into cellular heterogeneity. Earlier this year, a study identified new human immune cell subtypes. Another study published this year identified a subset of cell types within human colorectal tumors with distinct transcriptomic signatures, which were originally classified as one subtype with bulk analysis. Interestingly, these two subsets are associated with differing survival probability.Single-Cell Genomics Market Drivers and ModeratorsDrivers include:

• Continued scientific interest across multiple therapeutic areas
• Entry of large LSRT players into the market (e.g., BD via Cellular Research acquisition) with strong commercial capabilities
• New protocols and reagents designed to improve the amplification of single cell DNA/RNA for downstream genomic analysis (e.g., Singulomics’ AccuSomatic amplification method)
• New instruments and protocols that increase throughput capacity (e.g., capable of processing 100’s – 10,000s of cells in parallel)
• Commercial availability of kits aimed at expanding key applications (e.g., 10X Genomics’ Single Cell V(D)J Solution)
• Significant reduction in the per-cell cost of single-cell experiments, driving broader adoption of SCG
• Introduction of (some) analysis and visualization software (e.g., 10X Genomics’ Cell Ranger and Loupe Cell Browser) to facilitate and democratize data analysis
• Increased number of SCG core facilities and service providers

Moderators include:

• Workflow complexity, particularly in isolation. Current commercial methods do not have a high efficiency of capture resulting in loss of cells and waste of reagents
• Continued challenges in amplifying DNA while minimizing the introduction of artefacts, such as amplification bias, genome loss, mutations and chimeras
• Limited availability of computational tools for analyzing large-scale SCS data sets
• Limited short-term clinical applications. The promise of CTCs has not yet materialized

For an in-depth analysis on the SCG market, see DeciBio’s updated Single Cell Genomics report, with detailed information on market size, segmentation, growth, competition and trends. If you are interested in discussing recent events in the single cell genomics field, feel free to send me an email. Also, check out our other blog posts on the field:Illumina, Bio-Rad, and 10X Genomics look to take advantage of the market that Fluidigm builtSingle-Cell Genomics: Researcher Power IndexSingle-Cell Genomics: Are we in the midst of a market slowdown?BD to acquire SCG start-up Cellular ResearchDeciBio will be at ASCO in Chicago as we are also closely following the immuno-oncology biomarker and liquid biopsy landscapes. Feel free to reach out to us if you are interested in discussing this blog post or the industry in general!Disclaimer: Some of the companies listed above may be DeciBio clients or customers.---

Author: Miguel Edwards, Senior Associate at DeciBio Consulting, LLCedwards@decibio.comConnect with Miguel on LinkedIn