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Illumina Predicts Clinical Business Will Soon Outpace Research

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SAN FRANCISCO (GenomeWeb) – Illumina expects that business from its clinical customers will soon outpace that from research customers. President and CEO Francis deSouza said during a conference call with investors and analysts this week that clinical and translational customers made up 45 percent of the firm's product shipments in 2017, up from 39 percent in 2016.

"We continue to see more business come from the clinical markets," deSouza said, adding that the clinical market is both larger and growing faster than the research market. "Over time, [it] will represent the majority of our business."

DeSouza said that the company's strategy to address that market includes developing clinical-grade instruments and reagents, as well as sample-to-answer solutions in "areas we are uniquely positioned."

In addition, a number of recent regulatory and reimbursement decisions would help grow the market, he said.

Already, Illumina's NovaSeq instrument has appealed to clinical customers. Around one third of the orders for the system were from customers who previously did not have high-throughput sequencing instruments, many of who were "academic and translational labs looking to build out their offerings for clinical tests."

In addition, deSouza said that Illumina plans to launch the S1 flow cell for the NovaSeq platform in the second quarter, which would be attractive for some clinical customers due to its fast turnaround time. The flow cell enables the instrument to generate 500 gigabases of sequence data in just over 24 hours, and the firm expects that the S1 launch would in particular fuel upgrades to NovaSeq from current HiSeq 2500 customers who operate their system in the rapid run mode. Many of those are clinical customers.

A key part of Illumina's  strategy will be to develop products and reagents that it takes through US Food and Drug Administration regulatory clearance. Last November, it launched its FDA-regulated NextSeq 550Dx and expanded the intended use of the existing MiSeqDx platform to include formalin-fixed paraffin-embedded tissues.

DeSouza said that the firm shipped the first NextSeq 550Dx instruments soon after launch to customers that plan to use the system for routine liquid biopsy testing for non-small cell lung cancer patients and additional clinical assay development.

He noted earlier this month that the company had shipped 375 of its FDA-cleared MiSeqDx instruments.

Illumina is also looking to develop sample-to-answer solutions for the clinical market in specific areas. For instance, in the reproductive health space, its noninvasive prenatal test, VeriSeq NIPT, received CE marking last April and is the firm's "first true IVD product," deSouza said, adding that the company expects sales of the test to "double in 2018" over 2017, driven in part by a contract it inked in Q4 2017 with the Netherlands.

In addition, as deSouza discussed at the JP Morgan Healthcare conference earlier this month, the company has begun an immune-oncology program and plans to develop an immune-oncology gene panel based on the TruSight Tumor chemistry it used to develop its TST170 and TST15 panels. That panel will consist of around 500 genes to measure tumor mutational burden and microsatellite instability, and Illumina plans to eventually commercialize it as an IVD. DeSouza added that the TST170 panel is now available as an investigational-use only product.

"Oncology is the largest and fastest-growing area" on the clinical side of Illumina's business, deSouza said, and is driven "primarily by customers focused on therapy selection and liquid biopsy." Oncology testing shipments grew 60 percent in Q4 2017 over Q4 2016 and nearly 40 percent in the full year compared to 2016.

Aside from a surge of interest in liquid biopsy, deSouza said, a number of regulatory and reimbursement trends are driving growth and will likely have an even greater impact in the coming year. He noted that insurance company Cigna recently updated its guidelines for reimbursing multi-gene panels to include coverage of gene panels as long as at least one gene on the panel was considered medically necessary. Previously, Cigna would not reimburse for panels of more than 10 genes. DeSouza noted that the change would be particularly helpful in the oncology field for clinical trial enrollment.

In addition, he noted that the Centers for Medicare and Medicaid Services' decision to reimburse for genomic testing for all solid tumors and not just NSCLC, and the simultaneous FDA approval and national coverage determination by CMS of Foundation Medicine's FoundationOne companion diagnostic test would be a boon for Illumina.

These regulatory and reimbursement decisions were made toward the end of 2017, so did not impact Q4 results, but they "set us up well for future growth in oncology," deSouza said.

Despite the firm's focus on increasing its presence in clinical markets, its research customers remain "very important," he said. On the one hand, "anything that shows up in a clinic started in a research lab," he said. Also, research customers provide an "important source of thought leadership" for the direction in which the technology should evolve, deSouza added.