Friday, March 9, 2012

So you need some DNA sequencing? (pt 3 conclusion.)

I've stretched this topic out farther than intended, so I'll conclude directly:

-from looking at the map, there seems to be 4 types of sequencing centers, each with different strategies and hardware needs:

1) medium-large installations (Broad, BGI)
2) fee for service centers
3) genomic (academic) centers with a commitment to genomic research (5-10 sequencers.)
4) academic centers with a small exposure to genomics (1 or 2 sequencers.)

Each of these will have different rates of adoption of NGS technologies. Here's how I'd characterize each of these centers future behaviors:

#1) medium-large centers: all about throughput and cost, with less regard for specialized instruments or needs, these centers also already have a substantial investment in hardware and informatics, so the winning hardware providers will be the ones that plug in best into the existing hardware and informatics. It will be a whole lot easier to integrate the latest generation of Illumina technology than to pivot 90 degrees to integrate a novel technology.

I expect that the number of medium-to-large centers rises, as the cost/sequencer falls and the start-up cost of a new sequencing center falls. I don't know if research demand for such centers is here yet, but I think several institutions will launch ~$10M fundraising efforts for a new genomic research center, as much for their economic development/headline value as their scientific value. (Example: the former Ignite Institute, which landed at Fox Chase.)

2) fee for service centers: I selected the first 5 US service providers that I could think of (Asuragen, Beckman Coulter, Cofactor, Expression Analysis, Seqwright), and was surprised to see their total capacity was 26 sequencers among them. The absolute number could be outdated or inaccurate for a number of reasons, but the point is that the service centers aren't big consumers of technology. (I'd guess, though, that they run at higher capacity utilization than most academic sequencers.)

The fee-for-service centers also tend to have more than one technology platform in-house.  As demand grows, the fee-for-service centers will add capacity in a nimble, savvy, but serial fashion, spread among whichever technologies are requested by their customers, and which provider has the best performance/value proposition at any given time.

3) academic genomic research centers. much of the research at the genomic centers will be tied to clinical trials, so this group will be very sensitive to FDA approval of a sequencing device, and not very sensitive to throughput/performance though turnaround time may matter if the clinical trials are looking for the sequencing data to guide treatment. I'd expect this group to hang with the Illumina technology for the foreseeable future. They're the most likely platform to receive FDA approval. (Unfortunately, this isn't likely to happen soon, if the FDA approval of microarray platforms is any indication. As a forerunner to sequencing, Affy got their microarray platform approved by the FDA (in 2009?) for clinical diagnostic use, but I've heard that it wasn't easy, and the approval is not too broad.)

#4) small-time centers: the largest market in number but smallest in $$$. This market won't grow significantly until clinical adoption of DNA sequencing becomes widespread, and even then the biggest customer may be the pathology labs, not the bench researchers. In this case, I'd expect this category to largely adopt either the nanopore or Ion Torrent technology, as much for simplicity as for throughput and cost.

After this analysis, I am surprised that the opportunities for new platforms such as Oxford Nanopore are not as obvious. The newcomers may still be a success, but I think we're still a few years away from the inflection point in the growth of sequencing hardware.

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