At J.P. Morgan Illumina Reports Record-Breaking Uptake of NovaSeq X, Expanding Sequencing Market
By Allison Proffitt
January 12, 2023 | Illumina President and CEO Francis deSouza kicked off his annual J.P. Morgan Healthcare Conference presentation highlighting the breadth of the genomics market. deSouza sees a $120 billion total addressable market for Illumina comprising oncology testing, genetic disease testing, reproductive health, and research, with oncology testing representing more than half of the opportunity. Currently, he said, the total market is 7% penetrated, leaving ample opportunity for Illumina’s vision of making genomics the standard for clinical care.
And Illumina is uniquely positioned, deSouza argued, touting more than 9,500 customers in 155 countries and an install base of 23,000 sequencing instruments. In 2022, the company is expecting $4.5 billion in revenue (Q4 audited results come in early February), more than 80% of that, deSouza said, comes from recurring sources of consumables and services.
But even with impressive numbers, deSouza was somewhat subdued compared to years past. He did not announce any new instruments or chemistries, no acquisitions or new clinical testing products. Instead he highlighted the impressive order book for NovaSeq X, outlined the customer trends he sees reshaping the market, and touched on GRAIL’s uncertain future.
NovaSeq X’s Big Surprise
Illumina is riding the wave of a better-than-expected response to October’s announcement of new sequencing platforms including the newest high-throughput NovaSeq X platform. The NovaSeq X is the most powerful, sustainable, and cost-effective sequencing platform on the market, deSouza said, delivering, “the most accurate genome, short and long reads, multiomic analysis, in a single flow cell, on a single run, on one instrument.”
Everything is new—from the sequencing platform itself to the consumables, flow cells, reagents, dyes, blockers, and more. The NovaSeq X offers 2.5x higher throughput and is twice as fast as the NovaSeq 6000. Turnaround time for a genome is less than 24 hours. In addition, the NovaSeq X includes bioinformatic analysis, variant calling, and 5x lossless data compression on board the instrument. “Savings from the built-in DRAGEN analysis on board over five years can cover the cost of the NovaSeq X,” deSouza said. The NovaSeq X advancements bring the cost per genome—with analysis—to as low as $200.
NovaSeq X begins shipping this quarter and deSouza reported more than 140 pre-orders and an “advanced pipeline” of more than 200 orders. “This represents the strongest pre-order book we’ve seen with any Illumina instrument launch,” he said. “We’ve been working on this product for five years. We had incredibly high expectations for its launch, as you can imagine. NovaSeq X has exceeded all of them.”
Some of the sources of early interest have been surprising, he reports. More than 35% of orders are from the clinical sector, and about 15% of orders are from new-to-high throughput customers.
Based on past platform launches, Illumina expected earliest customers to be from academic and research organizations. Instead, early orders have come from both those users and clinical users as well, who plan to use the platform for “higher intensity sequencing applications” like liquid biopsy, minimal residual disease, and other multi-omic tests. These are the types of tests that Illumina predicts will be driving the sequencing market in the coming years, but the company didn’t expect to see early orders from this market segment. “That’s been a nice, upside surprise,” deSouza said.
The new-to-high throughput contingent is also a nice surprise. “This is a very powerful machine; we weren’t expecting as many people to use this as their entry point to new-to-high throughput.” deSouza credits the platform’s operational ease-of-use, streamlined workflows, improved economics, and built-in bioinformatics for the broader uptake.
Orders are also coming from around the globe—from more than 25 countries—another divergence from past new product launches. He again credits operational efficiencies and ease-of-use but also touts some of the industry-leading sustainability efforts Illumina has undertaken. The NovaSeq X is “the only high-throughput sequencer to eliminate the need for dry ice for shipping, expanding the market and improving efficiency,” deSouza said. This advance opens markets around the world with, perhaps, less reliable cold chains. “Now they feel they can comfortably bring in sequencing in house rather than sending samples outside the country.”
In fact, Illumina has been so surprised by the demand that deSouza predicted some supply limitations in the coming year. The company had prepared to ship 40-50 instruments in the first quarter and estimated 300 new NovaSeq X shipments in 2023. “There’s no question, now, that demand is going to vastly exceed what we can supply this year,” he said. “This year we’re going to be supply limited.” He does expect to be able to raise that 300 estimate, and says the operations team is already working to scale up. But he also conceded: “We’re effectively sold out not just for Q1 but for most of Q2 too. We feel really good about the demand side of it, but obviously the work you do now is to scale up manufacturing.”
DeSouza predicts that the record-breaking NovaSeq X demand will catalyze a “multi-year upgrade cycle” as users upgrade their NovaSeq 6000 to NovaSeq X systems. He expects most users to upgrade as they can and says the NovaSeq X will be the primary instrument customers will want moving forward.
He does expect some residual demand for NovaSeq 6000 platforms and consumables. There are customers who are using the 6000 at scale, midway through large cohort studies, he pointed out, or who have validated workflows on the NovaSeq 6000. But he expects those users to upgrade when they can.
“We do believe that not only will you see every customer who has a NovaSeq 6000 ultimately upgrade to the X—it’s so far better in terms of performance than anything out there—but we also see a significant expansion in the market.”
New Capabilities, New Questions
The sequencing market is expanding, deSouza says, driven by new types of demand and new scientific capabilities. New technologies—especially the NovaSeq X, of course—are enabling researchers to ask new questions. This is an area to watch in 2023, he said.
For instance, customers want to sequence 1.5x to 2x more samples. He highlighted the goals of several population genomics projects in which Illumina is involved including All of Us, the Amgen and Nashville Biosciences partnership to sequencing 35,000 Black individuals, and the Precision Health Research Singapore (PRECISE) partnership to sequence 100,000 Southeast Asian individuals.
In addition to just more sequencing, researchers will want to do more multi-omic analysis of each sample for more comprehensive understanding, he said. NGS can enable this complex analysis at scale. “For instance, researchers are increasingly conducting whole transcriptome analysis at scale to get complete mRNA information in addition to DNA,” deSouza said. He also highlighted the ability to run proteomic and genomic analyses together. NovaSeq X can analyze thousands of proteins from hundreds of samples at once, he said, and with multiple flow cell lanes, can conduct genomics and proteomics simultaneously.
Finally, customers are increasing the intensity of their sequencing, looking for more sensitivity and specificity in their work, deSouza reported. Cancer testing, for example, is moving from small panels to more comprehensive tests, he observed, and even to whole genome tests. Liquid biopsies are also playing a role. “The expansion of liquid biopsies due to lack of available tumor tissue, reduced cost, and better patient compliance, translates to 12-15x more sequencing than solid tumor testing,” he said. “NovaSeq X’s higher output per analysis enables customers to rethink analyses for their projects in ways that they weren’t even considering before,” he added.
Leading the charge in the liquid biopsy space is GRAIL, Illumina’s own liquid biopsy subsidiary. GRAIL’s Galleri test is the only commercially available multi-cancer early detection test in the early screening market, using machine learning and cell-free DNA to search for abnormal patterns of DNA methylation. It can detect over 50 types of cancer, 45 of which have no other screens, deSouza emphasized. “It’s the only test which pinpoints cancer location with 89% signal-of-origin accuracy,” he said. “With its breadth and precision, GRAIL is predicted to avert one in three cancer deaths over a five-year time frame.”
GRAIL had a very strong year in 2022, and deSouza expects GRAIL revenue to grow 80% in 2023. Customer demand for the Galleri test is exceeding expectations, he reported. “Galleri had the fastest first year revenue round in cancer screening test history,” he said. GRAIL has established more than 60 partnerships with health systems, delivered more than 60,000 tests, and has more than 300,000 participants currently in clinical studies as the test makes its way toward reimbursement. And next steps are coming. In 2023, GRAIL plans to launch a multi-cancer minimal residual disease (MRD) test, able to identify relapse via blood test two to three times sooner than customized tissue biopsies.
The hiccup, of course, is the European Commission’s (EC) recent call for the swift restoration of GRAIL to independence after its August 2021 acquisition by Illumina. Illumina is appealing that decision, arguing that within Illumina, GRAIL’s tests are more available, more affordable, and more accessible–saving lives and lowering healthcare costs.
“Illumina would accelerate GRAIL's commercial entry into the EU at scale by at least five years, saving tens of thousands of lives in the EU and billions of euros in healthcare costs,” the company said in a statement announcing its planned appeal to the EC decision. “The GRAIL merger would not only accelerate multicancer early detection in the EU but would also reduce inequity in cancer care by making early diagnosis affordable and widespread.”
deSouza did not have any updates on the appeal from the J.P. Morgan stage, but highlighted three guiding principles as Illumina proceeds: first, a swift resolution; second, continued success for GRAIL and Galleri; and finally, protection of Illumina’s own interests. “Obviously from our perspective, too, is to make sure we’re doing the right thing for Illumina shareholders,” he said.