Category: Marketing

Since the launch of the first massively parallel sequencer in 2005, the pyrosequencing-based 454 GS20, many approaches have been developed and worked on. Wide adoption of several of these have not happened. In this series a few prominent platforms will be described, the first of which is QIAGEN’s GeneReader.

A brief history of the NGS market: from Zero to $7 Billion in 18 years.

In 2005 the 454 Life Sciences company launched the GS20, the first “next-generation” sequencer (“first generation sequencing” of course is the venerable Sanger method read out via capillary electrophoresis, which was how the Human Genome Project was completed in 2002). The 454 GS20 offered about a million reads per run of about 80 to 100 bases in length in a 10 hour run, or almost 1 million bases, which was a much higher capability than what could be done via Sanger at that time. Only two years later in 2007 Roche Diagnostics acquired 454 for $155 Million, and iterated the platform for an upgraded model called the Roche / 454 GS Flex with increased readlength in 2008, and a smaller unit called the GS Junior in 2009.

Simultaneously, in this backdrop in late 2006 Illumina acquired Solexa for about $600 Million and started selling the first Genome Analyzers in early 2007. The throughput at the beginning was about a full 1,000 times what 454 could do, although the reads were much shorter. In an approximately 2.5d (~60 hour) run, the 1G could produce a gigabase of data, with the first iteration of reads as short as 25 base pairs and then steadily increasing in that first year to 37 and then to 50 base pairs. Of course in the intervening 15 years the industry has seen Illumina scale this technology in a nothing-short-of-spectacular way:

Comparison Feature	Solexa 1G	Illumina NovaSeq X
List Price of the Instrument	$400,000	$1,250,000
Price to run a Single Experiment (“Cost to press GO”)	~$3700	~$19,000
Total Sequencing Yield from a Single Experiment	~800 MB	6 TB (6,000 GB or 6,000,000 MB)
Read Length	Single-end (1x) 25 to 37 bases	Paired-end (2x) 150 bases
Cost per Gigabase	~$4,600	~$2.00*
Fold-reduction in Cost per Gigabase	N/A	2,300-fold
If a luxury car cost this in 2005 what would it cost in 2023	$100,000	$100,000 / 2,300 = $43.48
If a house cost this in 2005 what would it cost in 2023	$500,000	$500,000 / 2,300 = $217.39

It was in 2006 when Agencourt was acquired by Applied Biosystems for $120M, which was then launched as the Life Technologies’ SOLiD next-generation sequencing system in 2008. The sequencing-by-ligation based system went through five iterations from 2008 through 2012, overlapping with Life Technologies purchasing Ion Torrent in 2011 and started selling the Ion Torrent PGM (“Personal Genome Machine”). As a side note, yours truly started at Illumina in 2003 as a product manager first, and then in 2005 started selling Illumina whole-genome microarrays in the Mid-Atlantic area (including the US National Institutes of Health), and sold the first Genome Analyzers through 2009; in 2010 I started selling the SOLiD 4 systems for Life Technologies and then after the Ion Torrent acquisition moved back into a Regional Marketing role.

Of course Complete Genomics launched their service business for whole-genome sequencing in 2009 (acquired by BGI in a $117M merger in 2012), Helicos launched their true Single Molecule Sequencing system in 2008 and closed their business in 2012, and Pacific Biosciences made a splash launching the PacBio RS in 2011. Illumina, Ion Torrent (underneath the Thermo Fisher Scientific company), Pacific Biosciences, BGI / MGI / Complete Genomics are all selling (and supporting) their respective products and services; Helicos was recently written up here if you are interested in that history; and Roche / 454 discontinued that product line in 2013.

QIAGEN’s Investments in NGS

In this Part 1, here we describe the QIAGEN acquisition of Intelligent BioSystems in 2012 (for about $50M). In future posts the Bio-Rad acquisition of GNUbio in in 2014 (for about $40M) and the Roche acquisition of single-molecule sequencing firm Genia in 2014 (for $125M in cash and $225M in contingent payments) will be discussed, along with many other NGS startups in various stages of development.

QIAGEN went the furthest (relative to Bio-Rad and Roche) with their sequencing platform the GeneReader; way back in 2012 I wrote up this post on The Next Generation Technologist blog about the Mini-20 system that Intelligent Biosystems had developed, and their individually-addressable 20-lane system. It was revamped, and took some time in development; understand that QIAGEN had purchased SuperArray Biosciences, also called SABiosciences, in 2009 (for $90M); SABio had pathway- and disease-specific qPCR panels, however they had in development a single-primer enrichment technology, now launched as QIAseq target enrichment panels. QIAGEN also had acquired Ingenuity Systems in 2013 (for $105M), primarily for Ingenuity’s Variant Analysis™ and iReport™ capabilities, now embodied in QIAGEN’s Clinical Insight (QCI) with clinical-grade variant analysis and reporting capability.

Leveraging capabilities of the QIAGEN QIAcube and QIAsymphony sample preparation and liquid handling automation for library preparation, their vision and goal was to implement a user-friendly clinical sequencing platform, following a “From Sample to Insight” mantra. Having the front-end sample preparation, library preparation, NGS sequencing and clinical interpretation and reporting from a single vendor is very attractive from both a customer perspective as well as a business one. (In consultant jargon, this is called increasing the value capture model.)

It was November 2015 at a conference in Austin Texas (Association for Molecular Pathology or AMP) where QIAGEN announced the launch of the GeneReader, as “the world’s first truly complete NGS workflow”. I happened to attend that conference, and was in the audience when the then-QIAGEN CEO Peer Schatz made the announcement.

While not very public about it, apparently the run capacity was up to four flowcells, and each flowcell could accommodate 10 samples; flowcells could be added mid-run using a turntable inside the instrument. QIAGEN emphasized how flexible the system is to add additional samples while existing samples are currently running.

A year later, in November 2016 QIAGEN announced the ‘relaunch’ of the GeneReader product, with new chemistry. This was in direct response to a lawsuit Illumina pursued in mid-2016, and won a preliminary injunction against QIAGEN of September 2016 for patent infringement. A few years later in 2019, QIAGEN took a $200M charge to exit the development of a clinical version of the GeneReader platform.

One analyst described their clinical effort as a ‘nice niche’, however subsequent agreements with Illumina to develop IVD panels for the MiSeqDx, NextSeq 550Dx and future diagnostic systems is a clear signal that the GeneReader is something of a dead end.

In the meantime, QIAGEN continues to sell (and develop) enrichment on the front-end for NGS, and further refine their clinical reporting capability.

A few lessons from the GeneReader

A few lessons can be drawn from this GeneReader story. (N.B. – I have no financial relationship with QIAGEN, although I know a lot of people there – or who were there – when I started my career in life sciences vendors in 1999 as a Technical Support scientist, and then as a Product Manager.)

One lesson is the importance of a clear value proposition and differentiator. Illumina in 2016 had just launched the MiniSeq and iSeq, tackling the low-end of the market. (The price of a MiniSeq instrument was $49,500, and still sold today.) Right around the corner in March of 2017 the first NovaSeq 6000 system launched. Thermo Fisher Scientific’s Ion Torrent division announced a new system called the GeneStudio S5 and a new higher capacity sequencing chip (called the Ion 550™ Chip), and with their Oncomine combination of cancer-specific multiplex-PCR-based AmpliSeq™ panels as well as their clinical software (also somewhat confusingly called Oncomine), Thermo Fisher has a decent-size footprint in the clinical market.

Where would the GeneReader fit in against this backdrop? The throughput was just too low to be competitive with the existing offerings from Illumina and Thermo Fisher Scientific, thus QIAGEN emphasized the ‘sample to insight’ and have a clinical offering with all-inclusive pricing (sample preparation, enrichment, sequencing, data analysis and clinical reporting).

There was only one problem with this scenario: Thermo Fisher’s Ion Torrent systems were in exactly that same market: clinical oncology with library preparation through clinical reporting, and making a decent business from it. At least decent enough for further automation with the Ion Torrent Genexus system launch in March 2022. QIAGEN could not claim much higher accuracy, or lower cost structure, or superior sophistication of their reporting software, it was what can be called “me too” several years in the making, while Ion Torrent was already there (as well as Illumina clinical users who cobbled together all the requisite clinical parts).

A second lesson is that the clinical market is price sensitive regarding adoption of new technology. There may be high value in a new kind of data-type (whether it’s sequencing data versus real-time PCR point mutations or single CNVs, or structural variation information from optical mapping systems like Bionano Genomics), however price is an objection. And not only the cost to run a single sample, but the costs of training personnel for a complex instrument workflow (thus the need for integrated automation, increasing complexity), the cost of acquiring the instrument in the first place, and lastly the costs of maintaining the instrument(s) needed (roughly 10% of the list price of the instrument each and every year that instrument is in service).

QIAGEN had to be willing to invest many, many years into supporting the GeneReader to grab a slice of a relatively small and highly competitive clinical NGS market. Yes that clinical NGS market is growing (in comparison to the research market which is flat in comparison) but still those cost barriers remain. And there was nothing noteworthy in QIAGEN’s cost structure to their clinical customers; capturing the entire value chain was ultimately too expensive for a limited number of customers, and thus QIAGEN reversed course in 2019.

The last lesson is that there will be new players and new technologies attempting to disrupt both the research and clinical markets, and what is true today in 2023 may not be true in 2025, or even perhaps 2024. Last week I spoke with a person with Element Biosciences, who is talking with many clinical customers about adopting an Element AVITI™ for their Laboratory Developed Tests (LDTs) thanks to their favorable economics. The PacBio Revio has favorable economics, as well as the PromethION 48, however is still too expensive relative to Illumina (and Element and Singular) short reads for wide adoption.

On top of this new companies currently in “stealth” mode are working on cracking a $7 Billion dollar NGS market, the latest of which is Ultima Genomics that publicly announced last May (with a collection of pre-prints and several high-profile presentations) their system will be able to cut the cost of sequencing (in comparison to the Illumina NovaSeq X number above at $2.00/Gb) by a factor of 2, to $1.00/Gb. (Edit: here including a $2.00/Gb NovaSeq X price for a yet-to-launch “25B” NovaSeq X flowcell to achieve these economics; the original version of this post had the existing “10B” flowcell per-Gb pricing at $3.20/Gb.)

Next month (2-6 November 2023) the American Society for Human Genetics will take place in Washington DC, and it will be exciting to see what kinds of advances are in store. I’ll be sure to share what I learn.