An academic group ran similar experiments on Ion Torrent PGM, Illumina MiSeq, and 454 GS Jr DNA sequencers. And the winner was……….well, there was no clear winner - performance was differentiated by machine - the PGM was the highest throughput, MiSeq most accurate, and the 454 had the longest reads.
I think this is a problem because currently the incremental customers that represent sequencing moving from a niche to a mainstream activity are unlikely to have a full understanding of their needs. For example, while the team at the Broad Institute knows why they'd prefer machine 'A' over machine 'B', a typical pathology lab does not know enough to decide if they would get the most benefits from hardware producing the greatest accuracy or the longest reads? What's acceptable accuracy? I'd argue that the path lab at the University of Whatever can't answer these questions.
Until the answers here are more obvious, customer demand will be for a slice of a shared sequencing resource (a sequencing core) rather than for their own sequencing hardware, thus limiting the growth of the hardware market. (Though this is good news for Oxford Nanopore and other NGS hardware suppliers - the longer it takes for the market to mature, the more prospects who remain uncommitted to any certain hardware platform.)
Showing posts with label Oxford Nanopore. Show all posts
Showing posts with label Oxford Nanopore. Show all posts
Monday, April 23, 2012
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.
-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.
Sunday, February 26, 2012
NGS & DX?
There's an interesting conversation going on about error rates in DNA sequencing in the Genomics (NGS) group on LinkedIn. Some are wondering if development of DNA sequencing diagnostic applications will be delayed by the experienced error rates (up to 4% on some platforms, including Oxford Nanopore.)
My take: I think the barriers to adoption of sequencing technologies as diagnostics are:
-any error-intolerant application is still likely to rely on RT-PCR for a while to come. (Example: detecting specific BCR-ABL mutations in CML patients.)
If you have a specific gene of interest, or even genes (up to about 10 or 20, depending on who you listen to)
If you have a specific gene of interest, or even genes (up to about 10 or 20, depending on who you listen to)
-PCR still wins the day, because of accuracy, speed, cost, privacy concerns, and the fact that PCR apps have familiar payor and FDA tracks. (Many PCR assays code for reimbursement <$300, so NGS still has a way to go to win on price.)
NGS, on the other hand will be used for broad discovery and in cases where patients are willing to pay out of their own pocket at least until the economics change, and the FDA approves a platform/assay combo such as Foundation Medicine. I'd say that we're at least 2 years away from that, regardless of error rate.
NGS, on the other hand will be used for broad discovery and in cases where patients are willing to pay out of their own pocket at least until the economics change, and the FDA approves a platform/assay combo such as Foundation Medicine. I'd say that we're at least 2 years away from that, regardless of error rate.
Two other NGS points, neither worth a dedicated post for now: now that Oxford Nanopore and LifeTech are both promising ~$1,000 genome from new tech platforms:
-what does the future hold for BGI (Beijing Genomics Institute) that has made a name for itself by buying roomfuls of largely Illumina sequencers? I'd like to be a fly on the wall when someone suggests that they put 10's of millions of dollars of Illumina equipment out to pasture and invest further millions in new GridIon or Ion Torrent equipment.
-will Roche drop their Illumina takeover bid? A ~$6B hostile takeover of the former leader makes less sense now. It will also be interesting to see if ILMN's board changes their mind, and sells now.
Monday, February 20, 2012
Great leap for DNA sequencing. Small step for early stage financing?
Wow. Just wow.
Oxford Nanopore went public last week with details of their DNA sequencing platform. It is a stunning advancement for sequencing in terms of access, cost, and performance, and represents some pretty amazing chemistry and engineering advancements.
(Great coverage of the science involved here and here and general coverage here.)
A decade ago, sequencing a single human genome cost a billion dollars and required a warehouse full of expensive machinery. Oxford Nanopore's new platform uses a handheld unit and about 5 machine-hours, at a total cost of ~$1,000 to generate a genome. Other technologies are may be capable of reaching the performance levels of Oxford Nanopore in one dimension (cost, read length, turnaround time, etc.), but no technology is as complete as what Oxford announced.
We will be sorting through the impact of the technology for a long time, but one business implication needs to be promoted in light of Oxford Nanopore's success: how a tiny financial brokerage company with a tiny amount of scientific expertise launched Oxford Nanopore.
University tech transfer offices have a thankless job - maximizing the return on young, immature IP, with little capital available for research to de-risk emerging technologies. This is especially true in the UK, where good science is abundant, but early capital is not.
In the early part of the last decade, Oxford University's tech transfer group struck an interesting deal: it sold a half-interest in all spin-outs from the chemistry department for a decade or so for £20M cash up front (~$37M).
The investor in this deal was a new entity (IP2IPO) founded by a small financial brokerage in London. IP2IPO (since renamed IP Group, and listed here) was a new fund dedicated to investing in university IP, and went public on the AIM on the basis of the Oxford agreement, and not much else. (Though after the Oxford deal, IP2IPO struck roughly similar deals with other UK universities.) IP Group is effectively a publicly traded VC firm.
In 2005, IP2IPO seeded what became Oxford Nanopore. (It is interesting to read the press release - there's zero mention of DNA sequencing, which means that either they were being coy, or weren't aware of the potential application for the chemistry technology.)
At the founding of Oxford Nanopore, IP2IPO received a ~5% chunk of equity per their agreement with Oxford. They also injected start-up capital boosting their ownership interest. Seven years and a few more financing rounds, including a strategic investment by Illumina IP's share of Oxford Nanopore is still 21.5%.
Today IP Group's market cap is £413M or $654M (US), having jumped 12% (+$70M market cap) following the Oxford Nanopore (ONP) news. (IP Group has ~$30M in cash on hand, so EV= $624M).
Unpacking this for a second: Ion Torrent - a DNA sequencing firm with a very cool platform - was sold last year to Life Technologies for $725M. Given this comparable, plus inflation and ONP's advantages, ONP is probably worth $1B today, making IP Group's interest worth $215M, and suggesting that the OTHER 59 companies in IP Group's portfolio are worth $409M in aggregate.)
I am happy to see that such long-term investing has paid off for IP Group, but I would be curious to know today if IP2IPO, its' investors, or the universities would redo the arrangements if given the opportunity. I think if you could reliably find investors with 10+ year time horizons that the IP2IPO model would work on a greater scale, but a look at IP Group's stock chart (with a stock price about even since its' 2003 debut) suggests that the market is not a fan of the IP Group model, even with the Oxford Nanopore development.
(You also need access to stellar tech centers. It is a low risk bet that Oxford's chemistry department will invent something world-changing over the 10-12 years covered by the IP & Oxford agreement. But how many schools and departments can you say that about?)
For the IP2IPO model to work, the investors' value of the university technology should roughly match the university's determination of the value of cash in the present. But there is an inherent disconnect between the high-beta present value of a long term technology and the certain value of short term cash. Blanket agreements like IP2IPO's reduces risk slightly by spreading the risk across multiple spin-outs across multiple sectors.
Still, there seems to be an oversupply of high-risk capital, at least in the US, when including IT/internet investments. Perhaps the IP Group "product" will take off now that there is an obvious big win in ONP to sell to investors.
One other thought on Oxford Nanopore's news: if the disposable USB MinIon unit really does sell for $900, I can see myself buying one this year just to try it out AT HOME. I can't say that about a MiSeq.
Oxford Nanopore went public last week with details of their DNA sequencing platform. It is a stunning advancement for sequencing in terms of access, cost, and performance, and represents some pretty amazing chemistry and engineering advancements.
(Great coverage of the science involved here and here and general coverage here.)
A decade ago, sequencing a single human genome cost a billion dollars and required a warehouse full of expensive machinery. Oxford Nanopore's new platform uses a handheld unit and about 5 machine-hours, at a total cost of ~$1,000 to generate a genome. Other technologies are may be capable of reaching the performance levels of Oxford Nanopore in one dimension (cost, read length, turnaround time, etc.), but no technology is as complete as what Oxford announced.
We will be sorting through the impact of the technology for a long time, but one business implication needs to be promoted in light of Oxford Nanopore's success: how a tiny financial brokerage company with a tiny amount of scientific expertise launched Oxford Nanopore.
University tech transfer offices have a thankless job - maximizing the return on young, immature IP, with little capital available for research to de-risk emerging technologies. This is especially true in the UK, where good science is abundant, but early capital is not.
In the early part of the last decade, Oxford University's tech transfer group struck an interesting deal: it sold a half-interest in all spin-outs from the chemistry department for a decade or so for £20M cash up front (~$37M).
The investor in this deal was a new entity (IP2IPO) founded by a small financial brokerage in London. IP2IPO (since renamed IP Group, and listed here) was a new fund dedicated to investing in university IP, and went public on the AIM on the basis of the Oxford agreement, and not much else. (Though after the Oxford deal, IP2IPO struck roughly similar deals with other UK universities.) IP Group is effectively a publicly traded VC firm.
In 2005, IP2IPO seeded what became Oxford Nanopore. (It is interesting to read the press release - there's zero mention of DNA sequencing, which means that either they were being coy, or weren't aware of the potential application for the chemistry technology.)
At the founding of Oxford Nanopore, IP2IPO received a ~5% chunk of equity per their agreement with Oxford. They also injected start-up capital boosting their ownership interest. Seven years and a few more financing rounds, including a strategic investment by Illumina IP's share of Oxford Nanopore is still 21.5%.
Today IP Group's market cap is £413M or $654M (US), having jumped 12% (+$70M market cap) following the Oxford Nanopore (ONP) news. (IP Group has ~$30M in cash on hand, so EV= $624M).
Unpacking this for a second: Ion Torrent - a DNA sequencing firm with a very cool platform - was sold last year to Life Technologies for $725M. Given this comparable, plus inflation and ONP's advantages, ONP is probably worth $1B today, making IP Group's interest worth $215M, and suggesting that the OTHER 59 companies in IP Group's portfolio are worth $409M in aggregate.)
I am happy to see that such long-term investing has paid off for IP Group, but I would be curious to know today if IP2IPO, its' investors, or the universities would redo the arrangements if given the opportunity. I think if you could reliably find investors with 10+ year time horizons that the IP2IPO model would work on a greater scale, but a look at IP Group's stock chart (with a stock price about even since its' 2003 debut) suggests that the market is not a fan of the IP Group model, even with the Oxford Nanopore development.
(You also need access to stellar tech centers. It is a low risk bet that Oxford's chemistry department will invent something world-changing over the 10-12 years covered by the IP & Oxford agreement. But how many schools and departments can you say that about?)
For the IP2IPO model to work, the investors' value of the university technology should roughly match the university's determination of the value of cash in the present. But there is an inherent disconnect between the high-beta present value of a long term technology and the certain value of short term cash. Blanket agreements like IP2IPO's reduces risk slightly by spreading the risk across multiple spin-outs across multiple sectors.
Still, there seems to be an oversupply of high-risk capital, at least in the US, when including IT/internet investments. Perhaps the IP Group "product" will take off now that there is an obvious big win in ONP to sell to investors.
One other thought on Oxford Nanopore's news: if the disposable USB MinIon unit really does sell for $900, I can see myself buying one this year just to try it out AT HOME. I can't say that about a MiSeq.
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