Life Technologies Rises Most Since 2009 on New Gene-Sequencing Machine
The race to parse the building blocks of life has accelerated with competing reports from Life Technologies Corp. (LIFE) and Illumina Inc. (ILMN) that they’ve built machines that can sequence a genome in a day, rather than weeks or months.
The announcement boosted Life Technologies 8.3 percent to $46.17 at the close in New York, the biggest single-day jump in almost three years. Illumina rose 3.7 percent to $33.01.
Life Technologies, based in Carlsbad, California, today said it is taking orders for its benchtop Ion Proton Sequencer. The machine, available for $149,000, is designed to provide a full transcript of a person’s DNA in a day for just $1,000. Illumina, of San Diego, said its HiSeq 2500 will be available in the second half of the year. It didn’t reveal the price.
“It’s huge and unexpected,” said Bill Bonello, an analyst at RBC Capital Markets in Minneapolis, in a telephone interview. “The $1,000 genome is the holy grail in DNA sequencing. To be able to deliver that in a single day in a single run will be very meaningful in terms of broadening the potential customer base for next generation sequencing.”
The current Illumina machines can sequence five human genomes in 10 days, Chief Executive Officer Jay Flatley said in an interview today at the J.P. Morgan Healthcare conference in San Francisco. If researchers need something immediately, they have few options, he said.
Illumina’s HiSeq will be competitive with Life Technology’s Ion, Flatley said. Genome sequencing is “an enormous” market, he said. “I don’t think it is ever going to be commoditized in my lifetime.”
It’s difficult to determine how big a financial impact the new machines will have, Bonello said. The market for benchtop sequencers is currently less than $100 million annually, while the bigger, more expensive machines that can run hundreds of samples simultaneously generate more than $500 million, he said.
“As price goes down, there will be both more sequencing done and some cannibalization of the whole genome market,” said Bonello, who doesn’t currently have a forecast for sales of the devices.
The technology will become more revolutionary, or disruptive to the market for the larger, existing machines once the companies further refine the approach, Bonello said in a telephone interview. Already, Life Technologies’ $1,000-genome price will broaden the market for which researchers and facilities can perform gene sequencing, he said.
The Ion Proton uses semiconductor sequencing technology, leap-frogging optical technology that costs $500,000 to $750,000 for machines that may take months to deliver their results, said Life Technologies Chief Executive Officer Gregory Lucier. The Ion Proton will cost a fraction of Illumina’s machine and will sequence a whole genome three to four times faster, he said.
“I don’t think there is any competition for what we have announced,” Lucier said in at the conference in San Francisco. “We have the enviable technology position now.”
Potential applications for the new machines include analyzing the genomes of cancerous tumors to help guide treatment, creating biofuels and designing novel products in agricultural biotechnology, he said.
Baylor College of Medicine in Houston, Yale School of Medicine in New Haven, Connecticut, and the Broad Institute in Cambridge, Massachusetts, each have signed up to get more than one of Life Technologies’ sequencers, according to the company.
“A genome sequence for $1,000 was a pipe dream just a few years ago,” Richard Gibbs, director of the Human Genome Sequencing Center at Baylor, said in a statement. “A $1,000 genome in less than one day was not even on the radar, but will transform the clinical applications of sequencing.”
The Ion Proton machine hasn’t yet completed all its testing and external validation, and it lags Illumina’s technology in accuracy, wrote Nandita Koshal, an analyst at Barclays Capital Inc. in New York, in a note to investors today. Still, Life Technologies has improved its scale and positioned the company as a “viable contender” in the high-throughput sequencing space at a time when funding constraints are rising, Koshal said.
“We are in for a period of heightened competition for share across the throughput spectrum in sequencing,” Koshal wrote. “This battle for share will likely play out as costs decline and profitability for sequencing providers potentially comes under pressure.”
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