Illumina’s DNA Supercomputer Heralds the $1,000 Human Genome

The $1,000 human genome is here. For real this time.

Illumina (ILMN), the worlds leading seller of gene sequencing machines, unveiled its HiSeq X (pronounced High Seek 10) on Tuesday. The system is the worlds first DNA-crunching supercomputer designed to process 20,000 genomes per year at a cost of $1,000 each. Currently it costs about $10,000 to sequence a human genome. Jay Flatley, Illuminas chief executive officer, introduced the machine at an investors conference in San Francisco, saying customers will begin receiving the machine this quarter. This will be a blockbuster product, he said in an interview.

The biotech industry has been trying to reach the $1,000 genome mark for years. Its a figure that should make full genome sequencing much more mainstream. As more people get sequenced, researchers get more data to use in their analysis of how DNA variations manifest themselves in diseases. The high-speed, low-cost sequencing system arrives at a crucial time, with a number of biotech companies, research centers, and hospitals starting to show real clinical breakthroughs. To figure out cancer, we need to sequence hundreds of thousands of cancer genomes, and this is the way to do it, Flatley said.

About a decade ago it cost much more than $1 billion to sequence a human genome, and the process took months. Illuminas new machine can knock out dozens of genomes in about a day. The HiSeq X systems, which cost $1 million each, should end up at large research centers and will be sold in groups of 10. Illumina has unveiled a smaller, $250,000 system called the NextSeq 500, which can fit on a laboratory counter and handle one genome at a time. The first customers for the HiSeq X include Macrogen, the Broad Institute in Cambridge, Mass., and the Garvan Institute of Medical Research in Sydney.

If it feels like weve been through this whole $1,000 genome thing before, its because we have. In early 2012, Ion Torrent, which was acquired by Life Technologies (LIFE), declared victory, saying it had a machine capable of the $1,000 genome in hand. The celebration, however, was premature. Glitches have prevented the company from actually selling such a machine. We expect it to be out in 2014, says Ron Andrews, the president of genetic and medical sciences at Life. We still have a team working on it, but it is not the ultimate goal. I think the reality is there are bigger and more urgent business opportunities than the $1,000 genome.

Illumina, based in San Diego, has fended off dozens of startups that were meant to upend the sequencing market and make its machines obsolete. In 2011, for example, Pacific Biosciences (PACB) began selling a machine (that cost $600million to design) with the promise to sequence genomes faster and more accurately than ever before. The system has not lived up to its billing, as its mostly been used for highly specialized botanical sequencing and for some cancer genomes that have repetitive sequences which are tough for other machines to decipher. According to a recent survey by industry trade publication In Sequence, Illumina increased its market share to 71 percent during 2013, followed by Life at 16percent, Roche (RHO:GR) at 10percent, and PacBio at 3percent. Wall Street analysts expect Illumina to report revenue of about $1.6billion this year, according to data compiled by Bloomberg.

Along with holding off startups, Illumina has had to contend with a hostile takeover attempt from Roche and Chinas recent entry into the sequencing-machine market. From late 2011 through the early part of 2012, Roche tried to acquire Illumina, topping out its bids at $51 per share. According to Flatley, Illuminas board was reluctant to sell, knowing it had these new machines and the potential for growth on the way. Illumina went so far as to prepare a roadshow in which it would show off its upcoming systems to convince investors about the possibility of a bright future. It was our responsibility to let the shareholders know what was in the kitchen being cooked, Flatley says. Ultimately, Illumina fended off the bid and kept the systems secret. Its share price has since surged, trading today at $117 per share.

Flatley says Illumina will continue to reduce the cost of sequencing hardware, as well as diversify into services. Last year, for example, it acquired Verinata Health for about $350 million. Verinata performs tests for expecting parents to see if their children have any chromosomal abnormalities; it does so via a blood test rather than the dreaded amniocentesis procedure. Illumina also offers a human genome sequencing service, which comes with a complimentary MyGenome app for the iPad, and has moved into cancer diagnostics.

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Illumina's DNA Supercomputer Heralds the $1,000 Human Genome