Los Angeles, CA October 7th 2014 – Recent discussions that we have held with key opinion leaders have confirmed what many have observed in the last couple of years: Illumina has won. One typical next question on the lips of outsiders observing this industry is whether anybody out there can displace Illumina as the NGS leader.From a technological perspective, a number of challenges still exist with current technologies, and as a result, the door is clearly still open for new entrants. In addition, interestingly, in the last couple of years, we’ve starting to increasingly get wind from a few disgruntled customers and NGS service providers using Illumina’s technology. “The market is ripe for a new entrant to come in and give Illumina a run for its money” said one of our interviewees.In this blog entry, we wanted to briefly share thoughts from informal discussions we’ve held in the last 3 months with 5 experts about potential market entrants.

Introduction:

Current commercial NGS technologies can be split into two categories, amplification based and single molecule technologies, with amplification based approaches currently dominating the market.Illumina, Ion Torrent, and 454 each rely on amplifying DNA molecules in isolation and then assaying the amplified set one base at a time. While each approach uses a different signal (fluorescence, pH, and photon emission, respectively), they are each limited in read length because individual molecules become out of phase resulting in signal degradation.PacBio is currently the only major commercial single molecule technology, though Oxford Nanopore has made some attempts at market entry. Single molecule approaches do not rely on PCR amplification of a captured DNA molecule, but rather directly read the sequence from a single strand of DNA. Single molecule approaches can generate very long reads as there is no decay in signal with increased sequence length.Below, we paraphrase some quotes from current platform users and industry observers by company discussed.

Illumina:

“Illumina’s X Ten system for whole genome analysis takes advantage of several innovations and improves the already considerable yield of Illumina’s technology. ”

Life Technologies:

“Ion Torrent are finally about to release their P II chips. It seems like they perform to spec. It was a real technical challenge to get this chip together, but luckily they made it work. The chip opens up a number of applications that are less economical to conduct using a P I chip.”“As more companies / technologies address the large opportunity presented by the clinical NGS market, one additional key component to consider is coverage depth and targeted sequencing. Ion Torrent can deliver on that. They intended to democratize sequencing such that every research, R&D and clinical lab could afford a PGM. These platforms could run quickly (hours or days, not weeks), be inexpensive to operate (a few hundred dollars per run with small run sizes), and generate sufficient data to answer specific questions (e.g., targeted genes / assays, low depth RNAseq) as opposed to whole genome sequencing (WGS). As a result, Ion Torrent successfully competes against Illumina in this space. Illumina seems to be able to increase yield easily, but not to make runs much cheaper. In contrast, others have a harder time with yield, but can successfully manage cost per sample on a run-by-run basis. Illumina has gotten around this by multiplexing, which drives cost per sample down. However, multiplexing is ineffective if you only have one sample and need the results soon, which is typical in a clinical setting.”

Roche:

"It’s regrettable to see a company like 454 exit the market. There are areas in the genomes that no other technologies can reach. “

PacBio:

“The phoenix! That’s a good title of a blog entry […] 2 years ago, people were writing off PacBio, but they’ve been resilient and found a niche for themselves. I think we’ll hear more from them in the years to come.”

Oxford Nanopore:

“The feedback from Oxford Nanopore users is finally coming in. The very long reads are attractive, but there are still major concerns, as accuracy needs to be improved dramatically”

Qiagen (Intelligent Bio):

“I haven’t heard anything about the pre-commercial version of the GeneReader at this point. I am not even sure about the specs, as they may have changed. I am assuming that Qiagen is still planning on a launch in 2015, but they pushed it back in the past, so let’s hope for the sake of competition that they can deliver on this deadline. You only get one chance to make a good first impression, so I’d rather have them enter the race when they are ready.”

GnuBio:

“I find it fascinating that Bio-Rad was willing to purchase an early stage company like GnuBio for potentially more than $100 million. I’m not saying it’s a bad investment, but it gives you a sense of the potential that people see in [clinical] NGS. When taking into consideration development risks, especially for nanopore technologies, it’s a lot of money for a product that is not expected to be commercialized until 2016.”

Genapsys:

“You’re not supposed to create hype and then underdeliver. I’m afraid Genapsys didn’t get the memo. But I might be impressed when I get my hands on one of their systems”

Genia Technology:

“Between its Stratos Genomics and Genia investment, Roche appears committed to compete in the NGS space. It’s too early to tell how this will turn out.”

Stratos Genomics:

“The Xpandomers appear to be an interesting trick. It seems to me like these molecules could get pretty large, so we’ll see if this generates an issue with nanopores processivity.”

Other companies:

A long list of other companies and technologies are participating in this market, some focusing on instruments (e.g., 10Xtechnologies, Lasergen), bioinformatics solutions (e.g., BioTeam) or clinical services (e.g., Courtagen, Centogene). As we highlighted in the past, it is not necessary for vendors to commercialize a platform in order to successfully compete in this space.

Concluding remarks:

SBS has dominated the last few years, and will likely remain dominant for the next 3 years. Disruption is likely to come from technologies leapfrogging the currently broadly available technologies, to focus on single molecules. Place your bets.Disclaimer: Some of the companies listed above are DeciBio clients or customers---

Author: Stephane Budel, Partner at DeciBio, LLCConnect with Stephane Budel on Google+https://plus.google.com/+StephaneBudelNote: This article was edited on 10/21/2014 following a comment from a reader that correctly highlighted that the P II chip was not currently commercially available, and that the X-ten did not use 2-color chemistry (the NextSeq 500 does)