December 14, 2012

How bad a year has 2012 actually been for genomics investments?

In August, I published a post on how, despite a scarcity of biotech venture capital, there seemed to be a fair amount of VC funding specifically for genomics, at least compared to previous years.

I received a number of fair criticisms for this post. The most important one was that VC investments in the first half of the year are not a good predictor of investments in the second half, as VCs prefer to invest in certain months due to tax reasons.

This is why I have updated and re-analysed my data, and it turns out that my linear extrapolation of VC investments until the end of the year is a reasonable fit to the actual investments ($392m until the end of 2012, whilst the extrapolation suggested $412m). For more information on my methodology, please see my previous post on the topic.

Click on the figure to enlarge. Number of investments in genomics companies, average investment value, and total genomics investments, 2006-12.

The implication is that more money has been invested in my panel of 72 genomics companies than at any time since 2006. This is however due to fewer, but larger deals than in previous years. Whilst it is true that the number of investments in genomics companies for 2012 is probably going to be the lowest since 2008, the average amount invested is higher than in any previous year.

For genomics startups this means that it may be harder to get funding, but that once you get it, it will be generous.

By the way: The largest single genomics investment since August, and  one that has bypassed me completely, was $58m for CardioDx, which is a self-described pioneer in the field of cardiovascular genomic diagnostics. The money comes from more than a dozen different backers.

Another criticism was that I don't properly define what a genomics company is, and that this may actually be an arbitrary term. This is something I'm planning to address in one of my next posts.

December 7, 2012

Which Seqonomics posts are the most popular?

It has been a year and 50 blog posts since I started Seqonomics. Some of the posts have been popular, others less so.

Here are the four most read posts from Seqonomics from last year:
  1. New sequencing technologies: Who's next? Which companies are developing next-next generation sequencing technologies, apart from Oxford Nanopore? This is also the second most commented on post.
  2. Who are the sequencing superpowers? Proportional to national Research and Development expenditure, which country has the largest sequencing capacity?
  1. How do genomics companies make money? Who are the customers of genomics companies? This is also the most commented on post.
  2. Is the NGS market a duopoly? In sequencing, do companies other than Illumina and Life Technologies actually matter?

By the way, the probably deservedly least popular Seqonomics post is Who's driving innovation?

November 30, 2012

How is prenatal sequencing selling?

The short answer: Well enough.

The long answer

The other day, I was reading Atul Gawande's excellent book Better: A Surgeon's Notes on Performance. The book examines different aspects of what makes a great physician, but also offers general lessons for the rest of us who are not doctors on how to improve whatever we do.

The book is so well written that I couldn't even put it down during dinner. Big mistake: The chapter on obstetrics and child birth, which describes some of the things that can go wrong during pregnancy and birth, caused me not to finish my meal.

A concern for things going wrong is probably the major reason why prenatal diagnostic tests of foetuses are so popular. These test include ultrasound, chorionic villus sampling, and amniocentesis. And for about a year now, also sequencing-based diagnostics.

I've described these tests before and will not do so again. Companies offering these diagnostics include Verinata, LifeCodexx, Ariosa, Natera, and Beijing Berry Genomics. However, the clear market leader is Sequenom.

When I last covered this topic in January, Sequenom had just started to sell it MateriT21 test. Back then, it wasn't clear whether it would sell well at all.

Now it is. The sales figures are in, and in the third quarter, Sequenom shifted an annualised 90,000 tests. No doubt they'll exceed their previous goal of 50,000 tests until the end of this year.

Initially, Sequenom charged $2,700 per test to insurers, which with 90,000 tests sold would be equivalent to annual revenues of $243 million. The cost of the tests probably has come down in the meantime, although it is not clear by how much, as this information to my knowledge isn't shared by insurers or by Sequenom.

Sequenom's reported quarterly revenues from diagnostic testing are however much lower than this, at $12.5 million (annualised $50 million). This suggests an income of less than $600 per test, which is much lower than I'd have expected.

It's likely that sales will keep rising, as there is still plenty room for expansion: Of the 4 million births in the United States each year, 750,000 are considered high risk, either because of maternal age or a family history of genetic problems. All of these pregnancies could potentially benefit from a prenatal sequencing test.

November 23, 2012

Things used to be better, didn't they?

This is slightly off-topic, but I think it's entertaining enough to warrant a post.

A few days ago, my uncle gave me a present. It's a book to celebrate the 50th birthday of the German pharmaceutical company Madaus, which is nowadays part of Rottapharm-Madaus. There is no publication date in the book, but since Madaus was founded in 1919, it's probably from 1969.

It must have cost Madaus a bundle to publish, as it's printed on very high-quality paper and contains lost of cardboard pop-outs and special effects. To see what I mean by that, have a look at the video below.

What struck me even more is how likable the company comes across. In any case, more likable than pharma companies do in their marketing material today. The most obvious difference is the humour, which is very irreverent for corporate promotional material. So much so that at first I suspected that the book is a spoof, but for that it's way too elaborate.

For example, a pig is dissected next to someone counting piles of money, and the caption reads: "Not only the piggy bank generates money when dissected properly".

Very approximate translation: "He who is a good shepherd, feeds his animals (and turns them into cash)". The green stuff is real fake grass
Translation: "Not only the piggy bank generates money when dissected properly"

Genius at work

Translation: "We live from what we do". And not too badly either, apparently
Lab mice. The squeaky sound effect is built into the book.

November 16, 2012

How do genomics companies make money?

Genomics is a relatively young discipline, and it is also quite fragmented. There are bacterial genomics, cancer genomics, agrigenomics, pharmacogenomics, and so on.

Which leads me to this post's question: Which sub-discipline of genomics spins out the most companies? This is important, because it is related to the question of why we think that genomics is useful.

Main source of income for a panel of 72 genomics companies. More than half of companies generate their income by selling to the research community.

The result is that almost half of all genomics companies exist to support either academic or commercial research. I'm not an economist, but this is hardly what I would have expected from a mature and self-sustaining industry. Selling mainly to researchers should probably not be the long-term goal of the genomics industry as a whole.

The second biggest category is Genomic Diagnostics. This category would be even bigger if I hadn't split out Cancer Genomics separately. The implication is that most people think that the best way to make money in genomics, other than selling to researchers, is to develop diagnostics.

To decide whether this is true, it would be necessary to compare the sales and profit margins of the companies in my sample. This could warrant another blog post, but I'm not confident that I have enough data to make a call.


The panel of genomics companies I used is the same than I used in previous analysis. It consists of 72 companies, all of which are listed on Crunchbase. All of them have received at least some third party funding.
I assigned a label to each company, depending on how they make money and who their customers are. If the customers are research labs or other genomics companies, I assigned the label Research Services and Equipment. To all remaining companies, I assigned one of the other labels, depending on how they claim to make most of their money according to their website.

November 9, 2012

Is the UK really uniquely placed to datamine electronic health records?

The advantages of storing patient information in electronic health records (EHRs) rather than on paper are obvious: Data can easily be accessed from multiple locations and be transferred between doctors, hospitals, and software programs.

There is another, less direct advantage as well: EHRs can be datamined to glean new medical insights. For example, this way the adverse side effects of drugs in specific subpopulations can be detected in a much more sensitive way than would be possible otherwise.
The usefulness of datamining health records is clear. For example, the effects of thalidomide on foetuses were first demonstrated by analysing paper health records. Such analysis could be done much more efficiently with access to electronic records.
Here in the UK, many clinical researchers claim that the UK is uniquely placed to be at the forefront of this type of research because of the unique nature of the way health care system is organised. But is it really?

The National Health Service (NHS), the UK's publicly funded healthcare system, is enough of a source of national pride to have featured in the Olympic opening ceremony in London earlier this year.
The NHS is in the process of opening its EHRs to research via a system called the Clinical Practice Research Datalink (CPRD). This will enable datamining of EHRs, and the results will be shared with scientists once they have been anonymised to protect patients' privacy.
The question remains whether this is particularly revolutionary. Other European countries also have centralised healthcare systems that are often better managed than the NHS, and have made attempts to replace legacy health records with electronic systems. The success of this has been varied. For example in France, like in the UK, adaptation is slow. The Nordic countries are relatively far ahead in this matter. Germany, due to the decentralised nature of its healthcare system and because of privacy concerns, has not even bothered to try.
But as far as I can tell, there is surprisingly little effort to open the EHRs that are up and running to epidemiological research comparable to England's CPRD. Spending a few hours on looking for information on this, I could not find evidence of a system that is comparable in scope to CPRD anywhere else in Europe.
If you know of comparable efforts in Europe or beyond, I'd therefore be very interested to hear about them in the comment section.

October 19, 2012

What is happening to Seqonomics?

Things are going to change around here.

Until now, this blog has been about the business of genomics. From next week, the scope of Seqonomics will be wider and also include topics associated with personalised medicine other than genomics. Expect posts on electronic health record systems, health IT, pharmacogenomics, and metabolomics. But don't worry if you liked my previous genomics-and-business posts: There'll be plenty more of those as well.

Welcome on board

Why this change? I have come to the conclusion that it is a mistake to consider genomics in isolation without taking into account all the other disruptive changes that are happening in medicine. Working in genomics, it is easy to misjudge how, and how much, genomics impacts medicine compared to other innovations. This is why from now on, Seqonomics will not just be about genomics, but about personalised medicine in general.

The one thing that is not going to change is that I'll keep approaching all topics from a business angle. To reflect this, the tagline of Seqonomics is going to change from The Economics of Genome Sequencing to The Economics of Personalised Medicine.

September 28, 2012

September 21, 2012

Why did the BGI buy Complete Genomics?

Earlier this week, the world's leading sequencing services company BGI announced a takeover bid for its competitor Complete Genomics. That Complete Genomics is being acquired could have been expected, but that the buyer is the BGI may come as a surprise.

Complete Genomics' technology is well regarded, and their business model is unique in the industry. Rather than building sequencing machines and selling them, they offer sequencing as a service. This means that researchers, and potentially clinicians as well, send their samples to the company and receive the sequence data back without ever having to enter a lab.

The reason why Complete Genomics has chosen this path is probably that their technology benefits from economies of scale, which would not be applicable otherwise.

Complete Genomics charges around $5,000 to sequence a human genome, which is a fair price considering that researchers save the capital cost associated with purchasing a sequencing machine, and the hassle of acquiring the expertise to run them.

Nevertheless, Complete Genomics has been struggling financially for some time. They have not been profitable in any period since they were formed, and instead they incurred significant quarterly losses that showed no sign of improvement. This depressed their share price, and as a result made it more likely that they would eventually be taken over.

Why is Complete Genomics doing this?

The advantage for Complete Genomics of being bought by the BGI is that they're not going to go bust. Understandably, the board of Complete Genomics decided against playing hard to get and has accepted BGI's offer of £3.15 per share, which is 18% more than the share's closing price the previous business day. Not all shareholders are happy about this. Some strongly feel that $3.15 is not enough, although most analysts seem to disagree with that.

Why is the BGI doing this?

If Complete Genomics' motivation for this deal is clear, there are at least two potential motivations for the BGI.

The first one is that they are currently dependent on Illumina's sequencing technology. Access to Complete Genomics technology will ease that dependency, and enable them to offer additional value to their current customers.

Secondly, although they are the market leader in research services, their presence in the United States is not as strong as it could be. Access to Complete Genomics' customer list will help them to expand their presence in that crucial market.

Is this good or bad for the market as a whole?

Considering that Complete Genomics in the medium term would have kept struggling, and in the long run may well have gone out of business, this deal is probably beneficial to customers. It means that Complete Genomics technology will still be available, as the company is likely to continue its operations based at its current Silicon Valley headquarters.

Thanks to Joshua Randall at the Sanger Institute for his insights on this.

September 14, 2012

What is going on with China?

State-owned enterprises make up most of the market capitalisation of China’s stock markets and account for some of the country's largest companies, according to the Economist magazine. State capitalism has also been particularly good at producing national champions that can compete globally.

The BGI, formerly known as Beijing Genomics Institute, is a great example of this. It is by far the largest sequencing centre in the world, and it is busy expanding overseas. It is currently establishing subsidiaries in Copenhagen, Sacramento, and Philadelphia, and it has deals with companies and research centres around the world.

One reason for its success is that it can sequence more economically that others. This is probably due to economies of scale, but also because it benefits from government subsidies such as a $1.6bn line of credit  from the China Development Bank.

The BGI dominates Chinese genomics. According to Omics Maps, there  are 201 next generation sequencing machines in the country. 83 percent of those are owned by the BGI.

Which is not to say that there aren't any other genomics companies. Shanghai Biochip, also trading as Shanghai Bio Corporation, is one of them. It offers diagnostic products, research supplies, and research services that include DNA sequencing. Its English website also has a section on personal genetic testing, although this is still under construction.

A second example of a Chinese genomics company is Beijing Berry Genomics, which performs pre-natal diagnosis by sequencing. It is financed by Legend, a Chinese venture capital firm that is also a controlling shareholder of the computer manufacturer Lenovo. The company develops technology that can detect trisomy 21 and other chromosomal abnormalities in foetuses during pregnancy. It seems that it is using a sequencing-based method that is similar to that of market leader Sequenom.

Overall, there is plenty of government investment in genomics and in particular in sequencing in China, and at least for the BGI, the investment seems to pay off for the time being. The ultimate test of this will however be whether the BGI will be able to pay back its $1.6bn loan when it is due in 2020.


On September 17th, the BGI agreed to buy the sequencing company Complete Genomics for $118, affirming its dominance of the sequencing services field.

Other countries, other genomics

This post is a part of a series on genomics in different countries, which has already covered Canada, France, Germany, and Japan.

September 7, 2012

Which is the best 'ome of them all?

The battle of the 'omes is on, and the winner is decided by Google and PubMed, the biomedical publication database:
'Ome sweet 'ome

The victory of the genome is of course a foregone conclusion. Besides that, it's surprising that the reactome gets so many Google hits, although a PubMed search returns less than a hundred publications containing the term.

I might compile the same figure in a year or so to see if the ranking has changed. In the meantime, have a look here for a critique of 'omics that goes a bit deeper.

August 31, 2012

Looking for some autumn reading?

For someone like me it's easy to forget that personalised medicine isn't just about genomics.

Eric Topol's The  Creative Destruction of Medicine is a book for genomicists who want to know what's going on in health care innovation outside of genomics. It's also a book for everyone else working in a health-related field who wants to understand the changes that are happening in medicine right now outside of their specialisation.

The central thesis of the book is that there are several areas of innovation in medicine - genomics, wireless sensors, health IT, social networking, and novel ways of assessing drug efficacy - that could each have a large impact, but that together they could change medicine beyond recognition.

There are many parts of The Creative Destruction of Medicine that are excellent. The section on large clinical trials as an out-dated way of assessing drug efficacy and safety is one of them. Topol thinks that conditional approval would be a better alternative: Drugs that can reasonably be assumed to be safe are initially tested on a small group of patients under strictl regulation. The regulatory agency has the right to withdraw the conditional approval at any time, and only once a reasonably large dataset has been collected does the drug gain full approval.

Topol clearly loves his medical gadgets. I was amazed by some of the ones he describes, like a pocketable ultrasound device that allows imaging the heart in real time and that may soon replace that symbol of the medical profession, the stethoscope. My biggest complaint is that parts of the book are not entirely relevant to its central topic and have probably only been included because they are of interest to the author. For example, Topol is clearly passionate about the dangers posed by the ionising radiation that come with excessive use of medical imaging technology such as CT scans, but two chapters on this are too much.

If you wonder whether The Creative Destruction of Medicine is for you, here are the most important facts:

Areas covered: The convergence of wireless sensors, genomics, information systems, mobile connectivity, internet, social networking, and computing power. Basically anything that has to do with personalised medicine

Who it is for: Doctors and anyone else working in healthcare, including researchers. As someone working in genomics, I felt that the book did an excellent job of putting genomics into perspective

Who it is not for: This book is not a guide for patients to personalised medicine. Some of topics, such as the challenges of compatibility between different proprietary Health IT systems, will be less applicable to Europe than to the United States

How much it costs: The recommended retail price for the hardcover is $27.99, but online the book is available for $15.58. The Kindle edition is a bit more expensive and costs $15.73.

If you think you're going to buy this book, do so sooner rather than later: The rate of progress in medicine means that it'll be out-dated in a year.

Again, thanks to the Sanger Institute Library for ordering this book following my suggestion.

August 23, 2012

Who is the most attractive?

According to a report by Ernst & Young, the professional services firm, and EuropaBio, an industry association, American biotech companies attracted four times as much venture capital than European ones. Does this pattern hold for genomics as well?

Click on the figure to enlarge. Number of investments in genomics companies, average genomics investment, and total genomics investment in California, Massachusetts, the rest of the USA, Europe, and Canada for the period 2005-2012

When I analysed data from Crunchbase, an online database, it became clear that the imbalance in biotech investment between the old and the new world is even more pronounced when it comes to genomics: In the period between 2005 and 2012, the United States attracted $1.7bn in funding, whilst Europe attracted only $213m.

Within the United States, it is striking that the money goes to the two states where most of the research is done: California and Massachusetts. The dominance of California is particularly remarkable: It's not just IT startups that rule in the Golden State.

These figures should be taken with a pinch of salt. Crunchbase may be biased towards listing more Silicon Valley and American companies (Genomics companies from outside of North America and Europe don't figure at all). Even so, the average genomics investment figure is still likely to be representative, and that is also much lower in Europe than in the United States or in Canada.

August 16, 2012

Could 2012 be the best year ever for genomics investments?

Funding for biotech startups is hard to get right now. And if biotech funding is down, surely genomics funding must be down as well? After all, genomics is just a subcategory of biotech.

To get a better understanding of this, I downloaded data on investment in genomics firms between 2006 and 2012 from Crunchbase and did some data crunching of my own.

Click on the figure to enlarge. Number of investments in genomics companies, average investment value, and total genomics investments, 2006-12. Bright green in 2012 bars for numbers extrapolated to the end of the year.

Whilst it is true that the number of investments in genomics companies for 2012 is probably going to be the lowest since 2008, the average amount invested is higher than in any previous year. Overall, it seems likely that there will be more than $400m in new genomics investments this year, which would be the highest on record.

For genomics startups this means that it may be harder to get funding, but that once you get it, it will be generous.


I used Crunchbase to compile a list of 73 genomics companies and the funding they have received since 2006. I only included companies that did receive venture capital, private equity funding, or similar. This means that my sample set does not represent all genomics companies, but I am confident that it is representative at least for US companies. Estimates for 2012 totals are based on the assumption that funding will be similar September-December to what it was January-August.

Coming up next week: Funding of genomics companies in Europe versus the United States.

Update (24 August 2012)

As I already mentioned, the possibility that 2012 could be a good year for genomics investment is in contradiction with other reports, which paint a bleaker picture. A good overview and links to further sources are provided by Genomeweb in A Banner Year.

August 10, 2012

Are the stakes too high in genomics?

If you want people to be creative, putting pressure on them is counterproductive. The threat to fire someone unless they have some brilliant ideas is unlikely to motivate them in the desired way.

When it comes to the commercialisation of genomics, there is a lot of pressure to come up with new things. Those working in the field feel that genomics has enormous potential. For those observing genomics from the outside, there is often a vague sense that so far it has failed to deliver.

For both those within the field and outside of it there seems to be a consensus that if genomics is to become an ubiquitous technology, it will be because of its widespread adoption in healthcare.

I would like to suggest that most progress in the commercialisation of genomics may come from somewhere else entirely. Possibly from somewhere unexpected where there is less pressure to deliver and less competition, allowing for more creativity. Besides that, healthcare is one of the most strictly regulated industries, making innovation even less likely.

There are several applications of genomics outside of healthcare that show great promise. One of them, forensics, I reviewed in a blog post two week ago.

An even more harmless area is what could be called the genomics of irrelevance: There are plenty of genetic variants that predict things that no-one cares about. Examples include whether your pee smells differently after you eat asparagus, whether you earwax is runny, or whether you feel the urge to sneeze when looking into the sun. The website of 23andMe lists dozens more.

Could it be that for most people, including potential hobbyists, exploring the genomics of such harmless traits holds more appeal than learning about their risk for Alzheimer's?

August 3, 2012

Looking for some summer reading?

I like reading popular science books, and go through quite a lot of them. However, recently I have become increasingly picky. Due to overconsumption, I now tend to avoid books on cognitive biases, behavioural economics and such like. I am probably victim of an inverse mere exposure effect.

Another area that I avoid due to overexposure is genomics. As I spend my days working in the field, I prefer to spend my nights reading about other things. This means that I have not read a popular science book on genomics since Matt Ridley's fantastic Genome.

For Elizabeth Finkel's The Genome Generation I made an exception, and I do not regret it. Finkel writes beautifully, knows the subject, and is never boring - in other words, she is a good science writer.

Where she really excels is at covering the areas of genomics less explored by others, such as agrigenomics and immunogenomics

Finkel is clearly and unapologetically enthusiastic about genomics. There is not a lot of mention in The Genome Generation of the ethical questions that a lot of science journalists seem to be obsessed with. If this is what you are looking for, then this is not the right book for you. However, if you are interested in the science itself, then it may be.

My only complaint are the figures: Although they are clear and get the message across, they are also ugly and look a lot like clip art.

If you wonder whether The Genome Generation is for you, here are the most important facts:

Areas covered: Epigenetics, Personal Genomics, Immunogenomics (especially AIDS), Agrigenomics, Ancestral Genomes.

Who it is for: If you want a clear primer to genomics and its diverse applications. If you want something more readable than an academic textbook.

Who it is not for: If you have had recent training in biology or biochemistry, you will already be familiar with most of the material. If you are looking mainly for entertainment, and if you are interested only in Personal Genomics, you will be better served with My Beautiful Genome by Lone Frank.

How much it costs: For reasons I do not understand, Finkel chose Melbourne University Press as her publisher, and they are not cheap. They recommended retail price is $32.95, but online the book is available for $21.75.

Thanks to the Sanger Institute Library for ordering this book following my suggestion.

July 27, 2012

How useful is sequencing for forensics?

Between 2007 and 2009 police in Germany were frantically looking for a criminal. Although her identity was not known, it was clear that she was dangerous: DNA evidence from 40 crime scenes, including several murder scenes, could be linked to her.

Despite immense efforts lasting more than two years, they did not succeed. Eventually, they had to admit that the reason why they had found DNA from the same woman in all those crime scenes was that the cotton swabs used in the investigation were all contaminated by the same cotton swab factory worker.

This episode of forensic history illustrates how much law enforcement has come to rely on DNA evidence. The centrepiece of this effort are national DNA databases, which have acronyms like CODIS (USA), NDNAD (UK), or  FNAEG (France). Each of those databases contains millions of unique DNA profiles.

Whilst DNA is central to modern forensics, DNA sequencing is not: The profiles in the databases are obtained using capillary electrophoresis of polymorphic loci called VNTRs. Is this likely to change with the arrival of more affordable sequencers?

Arthur Eisenberg, who established one of the world's first forensics labs, thinks so. In a recent interview published on Genomeweb, he envisages a future where all forensic DNA testing is done using sequencing.

More widespread use of sequencing in forensics could have a number of benefits. Firstly, sequencing would return information on DNA polymorphisms other than just VNTRs. This includes SNPs, which are much more common than VNTRs. SNPs are informative of traits like eye colour, hair colour, and race, and could be used for facial composites (although this would not be legal in some countries, including Germany).

Another advantage of sequencing is that it can be applied to a wider range of forensic samples than VNTR profiling. Shed hair is recovered from a lot of crime scenes, but cannot be analysed using VNTR profiling because it usually does not contain nuclear DNA. It does however contain mitochondrial DNA, which is already used for forensic investigations.

A major challenge for sequencing is backwards compatibility. Existing VNTR-based forensic databases already have millions of entries, which are not easily comparable to the output of most next generation sequencing (NGS) machines. The reason is that NGS sequencers can typically only read 100-200 bases at a time, whilst for gaining reliable information on VNTRs read lengths of 400 bases or more are required. This is likely to become less of a problem in the next few years, as read lengths increase.

Another remaining challenge is that NGS is not sufficiently reproducible to be admitted as evidence in a court of law. The same barrier exists for the widespread adoption of NGS in the clinic, where reproducibility is essential as well, but cannot yet be demonstrated for NGS-based tests either.

In summary, the hurdles for the widespread adoption of DNA sequencing in forensics seem to be technical, and solvable.

If you have a view on whether sequencing has a future in forensics, please do not hesitate to post your comment below.

July 20, 2012

How is commercial sequencing getting on?

For DNA sequencing to fulfil its promise, it has to be become more than a tool of academic research. It has to enter the clinic, and eventually other areas where it can prove its worth, such as forensics or hygiene monitoring. How far along this path is it?

The graph below partly answer this question. It shows the twelve for-profit companies with the largest number of next generation sequencers.

The twelve for-profit companies with the most next generation sequencers. BGI has aspects both of a for-profit business and an academic research centre. Data from Omics Maps

Compared to the large academic sequencing centres like the Broad Institute with its 101 sequencers or the TGI with its 62 devices, the private sector is far behind in terms of sequencing capacity. The only exception is the BGI, which is somewhere in between a for-profit business and an academic sequencing facility.

To me, the encouraging thing in the graph above is the diversity of business models behind the companies. Although businesses providing sequencing services dominate (the BGI, Macrogen, DNAVision, Shanghai Biochip, Beckman Coulter GenomicsGATC, Takara, and Genotypic fall into this category), there are also agribusiness companies (Monsanto and Keygene) and health care providers (the Mayo Clinic and SAIC-Frederick). This indicates that sequencing is well on its way to leave its academic cradle and move on.


The graph above is based on Omics Maps data from January and the figures have changed since then. Specifically, Source Bioscience (UK) and Fasteris (Switzerland) also have four sequencers and should therefore be shown alongside Genotypic. Expression Analysis (USA), which is owned by Quintiles, may have 12 NGS devices, and DNAVision may have sold two of their sequencers (see comments below).

July 13, 2012

What is going on with Canada?

Of the 8 million inhabitants of the Canadian province of Quebec, 6 million can trace their ancestry back to a founder population of only a few thousand settlers who arrived from France in the 17th century. This means that Quebec has a relatively homogeneous population, making it an exciting place for anyone trying to find genes associated with disease.

However, the only commercial attempt to capitalise on this founder population was by a company called Genizon, which failed last year. Genizon's approach resembled that of DeCODE, whose discovery of a variant apparently protecting against Alzheimer's disease made headlines this week. Whether this success is enough to rekindle interest in Quebec's founder population is questionable.

So what about the state of genomics in Canada as a whole?

In other countries, they paint their flag on pickup trucks and airplanes

Academic research in the field is relatively well financed. A lot of the funding comes from Genome Canada, a federal organisation that was established in 2000. It pays for numerous large-scale sequencing projects carried out in Canada, often via one of its regional centres such as the the McGill University and Génome Québec Center in Montreal.

Around half of the funding of Genome Canada comes from the federal government. The other half comes from the provincial governments, international funding bodies, and other sources. Since its inception, Genome Canada has received around C$1bn in federal funding, which is equivalent to C$90m per year. According to the recently announced federal budget, it will have to make do with much less soon: For the next two years, it will only receive annualised funding of C$30m.

How about the private sector? According to Omics Maps, there are currently no businesses running next generation sequencers in Canada. This means that despite large investments in genomics, no large for-profit sequencing service providers have emerged yet.

This does not mean Canada is a desert when it comes to genomics businesses: For example, GenoLogics produces laboratory information management systems (LIMS) specifically for sequencing and genomics, SQI develops diagnostics based on microarrays, and DNA LandMarks supplies genomics research services to the agricultural industry.

There will be more

This post is a part of a series on genomics in different countries, which has already covered France, Germany, and Japan. In the next few months, I will also cover Britain, China, and, if I am brave enough, the United States.

July 6, 2012

Is the NGS market a duopoly?

There are plenty of examples of two organisations dominating a market: Airbus and Boeing in passenger aircraft, Pepsi and Coca Cola in soft drinks, Microsoft and Apple in operating systems, Democrats and Republicans in American politics.

In this post, I ask how close the next generation sequencing (NGS) market is to being dominated by the Illumina and Life Technologies duopoly.

The size of the NGS market in 2011 was around $1bn, according to several industry sources. There are six companies that are currently active in the market. In decreasing order of NGS revenues, these are Illumina, Life Technologies, Roche, Complete Genomics, Pacific Biosciences, and Intelligent Bio-Systems/Qiagen.

Three of those companies - Complete Genomics, Pacific Biosciences, and Intelligent Bio-Systems - have revenues that are negligible compared to the size of the overall NGS market. Their combined sales amount to less than 3% of the total, and current trends do not indicate rapid growth for any of them.

Estimating the market share of the other three companies is trickier, as they also have business outside of sequencing. Neither of them breaks out its NGS revenues in its financial statements.

Based on the financial information that is available, Roche probably earned revenues of less than $100m from its 454 sequencing technology in 2011. This would be equivalent to 10% of the market or less, and is set to decline even more if recent trends are anything to go by.

This leaves Illumina and Life Technologies commanding at least 87% of the market together. Illumina is the clear leader with a market share of around 60%, which leaves around 27% for Life Technologies.

Nevertheless, the dominance of Illumina and Life Technologies looks precarious. As I mentioned two weeks ago, there are a dozen companies scrambling to enter the market, and some of them are working on rather disruptive technology.

June 29, 2012

Europe, a regulatory nightmare for direct-to-consumer genetic testing?

Lawyers seem to like direct-to-consumer (DCT) genetic testing. On the Genomics Law Report blog, which I highly recommend, there were no fewer than 23 entries that mentioned or were relevant to DTC in 2011.

Although my interests rarely overlap with those of lawyers, this is an exception.

DTC genetic testing comes in many forms, such as carrier tests for genetic disease, ancestry tests, and nutrigenomic tests. At first glance it appears that consumers should be able to purchase these tests and gain information about themselves and their genomes in any way they like.

However, many DTC tests have not been validated by medical professionals. This means that in the best case quality cannot be assured, and in the worst case, that they could be bogus. Wrong test results could have a large impact, and therefore most experts call for more regulatory oversight of how and by whom these tests can be provided.

In the United States, although the regulatory position of DTC genetic testing varies between states, there is also relevant federal legislation, such as the Genetic Information Nondiscrimination Act.

Regulation of genetic testing in Europe. Source: Borry et al. 2012, European Journal of Human Genetics

Less so in Europe. In a recent publication in the European Journal of Human Genetics, Pascal Borry and coworkers discuss the regulatory framework in seven European countries.

DTC genetic testing is not an area that is directly legislated by EU. Instead, each country draws up its own laws, and there is hardly any harmonisation between them. The result is that in some countries, such as Belgium or the United Kingdom, there is hardly any regulation of DTC genetic testing, whilst in others, it is strongly regulated - sometimes to the extent that non-medical and non-research genetic testing is explicitly banned.

The result is that European companies providing DTC genetic testing would have a hard time taking advantage of the EU's common market.

Could this be a reason why there are no large European DTC genetic testing companies that I am aware of?

June 22, 2012

New sequencing technologies: Who's next?

There are at least a dozen companies that claim to develop new DNA sequencing technology. How many of them will actually release commercially viable products in the next few years?

Oxford Nanopore Technologies clearly leads the pack and has announced that it will release its sequencing devices later this year.

The company that seems to be second closest in terms of releasing a sequencer is Genia, whose technology is also nanopore-based. It has attracted more than $10m in funding, and is expected to market its technology in 2013.

Companies that have not yet made a public announcement on a potential release date but have attracted substantial investment are Nabsys ($17m funding), GnuBio ($8m funding),  Stratos ($7m funding), and possibly LaserGen ($5m funding).

Companies that are thought to develop sequencing technology but that have attracted less investment, or whose finances are unknown, are Noblegen, Base 4 Innovation, Electron Optica, Halcyon, Lightspeed Genomics, and ZS Genetics. Of these, clear signs of activity only come from Noblegen, with a rumoured 2014 release data, and Base 4, which has recently started a recruitment drive.

Whether Base 4 is actually developing sequencing technology is not entirely clear. Their website only hints at single-molecule detection platforms, whilst at least one third-party website also mentions solid-state DNA sequencing.

If only half of these companies are successful in developing a commercially viable product and join the six companies that are already sell next generation sequencers (Illumina, Life Technologies, Roche, Complete Genomics, Pacific Biosciences, Intelligent BioSystems), it is going to be a crowded marketplace.

The really interesting question will be whether there is demand for that many different technologies. Will they all be able to find their own niche?

June 14, 2012

What are the lessons from the case of DeCODE Genetics?

It has gone quiet around DeCODE Genetics, once a poster child for the commercialisation of genomics. Until around five years ago, the Icelandic company was once one of the hottest firms in the field. Then, in 2009, it made headlines by spectacularly going bust. Nowadays, a company with the same name still exists, but not very much is being said or written about it.

DeCODE was founded in 1996 to find the genetic causes of diseases. Soon it started publishing its results in high-profile papers, and its future looked bright enough for an IPO on the NASDAQ stock exchange in 2000. However, it never made a profit, and after some years DeCode was delisted from the NASDAQ again. A few months after that, in November 2009, it declared bankruptcy.

What went wrong? One examplanation is that DeCODE was a victim of the financial crisis that started in 2008. It did not help that $33m of DeCODE's money was managed by Lehman Brothers, and that the company was headquartered in Iceland, which was particularly hard hit by the crisis.

However, DeCODE had already struggled financially before the crisis. The bigger contributor to DeCODE's downfall was probably that is has turned out harder than expected to monetarise the company’s excellent science. It developed a few drug leads, but the most promising lead was suspended in 2006 due to manufacturing problems.

What is DeCODE currently up to? In January 2010, it was purchased by a consortium that includes Polaris Ventures and ARCH Venture Partners, two investors specialising in the life sciences.

The company now focuses exclusively on research. Their website sporadically announces the discovery of variants linked to disease, often in collaboration with other organisations. One such collaboration is with Pfizer, which seems to provide DeCODE with some income. Other sources of income are grants from the NIH and the European Union.

The morale? First-class science is not enough to make a genomics company successful.


As always, please note that everything I write on this blog is my personal opinion and is not endorsed by the Sanger Institute or the Wellcome Trust. Please also note that I will be away until the 19th of July and cannot answer to your comments until then.