Rynek sekwencerów NGS. Opinia.

Po prezentacji Illuminy na rynku informacji o sekwencerach NGS zrobiło się trochę żwawiej. Zamieszczam tu jeden z wpisów z Twittera opisujących pokrótce rynek producentów I możliwe scenariusze. Autor - Albert Vilella, w swoim profilu zamieszcza link do konfliktu interesu. Pracował wcześniej dla Illuminy, obecnie ma akcje Oxford Nanopore.

Link do wątku na Twitterze: https://twitter.com/AlbertVilella/status/1575916365013450752

Poniżej tłumaczenie krótkiego fragmentu i złożona z wpisów całość, w oryginale. A przy okazji - myślę że w najbliższym czasie zrobimy porównanie specyfikacji sekwencerów NGS (Next-Generation Sequencing) dostępnych na rynku.

-------------OPINIA------------------

Firma llumina zaprezentowała w czwartek swoją nową maszynę NovaSeq X Plus, Jakie są implikacje dla rynku NGS jako całości?

Przede wszystkim warto wspomnieć, że kiedy pierwsza partia instrumentów NovaSeq X Plus zostanie dostarczona do rąk klienta w lutym/marcu 2023, zbiegnie się to z początkiem dostarczania przez MGI Tech, jak i Ultima Genomics maszyn w przedziale kosztów 100-200 USD za cały genom lub 1-2 USD/Gb. Podobna też będzie przepustowość i ekonomiczny koszt maszyny. Może to być pierwszy raz w historii rynku, że nowy instrument Illumina, specyfikacją/kosztami maszyny i ceną odczynników nie będzie wyprzedzać konkurencji. W szczytowym momencie dominacji specyfikacje wysokoprzepustowych instrumentów Illumina były 2-5 razy lepsze niż jakikolwiek konkurencji, podczas gdy teraz będzie one w niektórych punktach opóźnione w stosunku do nowych graczy na rynku NGS.

Powinniśmy dodać do tej listy Oxford Nanopore, które przy największym zaangażowaniu w projekt i najbardziej optymalnej konfiguracji mogą już dostarczyć maszyny z ceną 200 USD/ za cały genom (WGS), ale prawdopodobnie tylko dla projektów genetyki populacyjnej na Bliskim Wschodzie (podpisali tam umowy)

Czy zatem Illumina będzie w stanie utrzymać swój 80-90% udział w rynku przez następne 5 lat z obecnym wachlarzem produktów? Wątpię. Istnieją dwa główne zagrożenia dla ich dominacji .Pierwszym z nich są ich główni klienci - dużych „fabryki” sekwencjonowania, Jak Broad Instiute, Sanger Institute czy Regeneron i podobni , których jest wiele, niektóre komercyjne, takie jak NovoGene i Macrogen, które mają dziesiątki maszyn NovaSeq, aż do podmiotów z pojedyńczymi maszynami. Illumina będzie chciała przenieść tych klientów na NovaSeq X Plus, ale jest to manewr zagrożony zarówno przez MGI Tech, jak i przez Ultima Genomics, na jednym końcu spektrum (większe ilości maszyn), a także przez Oxford Nanopore Promethion, P48/P24 i P2 dla wymiany pojedynczych sztuk. Zatem udział Illumina w rynku może stopniowo spadać z 90% udziałów do 50% w ciągu najbliższych kilku lat, jeśli nie będą mocno naciskać ze sprzedażą.

Biorąc pod uwagę, że NovaSeq X Plus zaczyna się od 2 USD/Gb, zawsze mogą powtórzyć strategię, którą zastosowali w 5-letnim cyklu NovaSeq, gdzie rozpoczęli od 10 USD/Gb, a następnie obniżyli do 6 USD/Gb. Możemy więc oczekiwać, że Illumina obniży ceny z 2 USD/Gb, za 2-3 lata, być może nawet do 1 USD/Gb, czemu będzie towarzyszyć korekta cen w linii NextSeq, wraz z nowymi komorami przepływowymi.

Jakie jest drugie zagrożenie? Linia laboratoryjna*, w przypadku Illuminy głównie NextSeq 1000/2000, ponieważ wydaje się, że nie znajdują sposobu, aby MiniSeq/iSeq100 był wystarczająco opłacalny, aby mogli opłacał się zajmować ulepszaniem tej maszyny. A kto tu będzie zagrożeniem?

Na pierwszym miejscu postawię instrument Element Bio AVITI, ale tak naprawdę wchodzi tu w grę spora grupa graczy, w tym MGI Tech G400, Oxford Nanopore, krótkie odczyty PacBio, Singular Omics, a następnie druga grupa uczestników m.in. z Chin, takich jak GeneMind, QitanTech, AxBio, CygnusBio, a także firmy takie jak Roche czy Thermo Fisher, jeśli naprawdę zależy im na NGS w przyszłości. Prawdopodobnie będą jakieś fuzje i przejęcia wokół tej grupy i większych firm z gotówką i chcących zagrać w NGS, z Agilentem i Perkinem Elmerem, być może Qiagenem.

* Wyjaśnienie od genomik.pl : Chodzi o maszyny mniejsze od tych które stawia się na podłodze. Takie które można umieścić na stole laboratoryjnym. Czyli benchtop sequencers. Np. o rozmiarach 75x95x75cm, waga 155kg, jak maszyna konkurencji.

-------OPINION---Albert Vilella---Twitter-----https://twitter.com/AlbertVilella/status/1575916365013450752

Illumina presented their new high-throughput instrument on Thursday, the NovaSeq X Plus, a a new mark of $200/WGS or $2/Gb in a machine capabale of producing 20,000 WGS per year. What are the implications for the field of NGS as a whole?

First of all, it's worth mentioning that 5 years after the release of the NovaSeq, with the first batch of NovaSeq X Plus instruments being delivered in customer's hands in Feb/March 2023, this release will coincide with both MGI Tech and Ultima Genomics starting to deliver instrument in the $100-200/WGS or $1-2/Gb range with very similar CAPEX and throughput profiles to the new Illumina sequencer. This may be the first new Illumina instrument that will enter the market with the main specs of reagent cost / throughput / instrument cost not being ahead of the competitors. At the peak of the HiSeq X dominance, the specs of the high-throughput Illumina instruments where 2-5x better than any competitor, whereas now they will be behind, in some specs, than the new entrants in the NGS.

We should add Oxford nanopore in this list, which in the largest project commitment and most optimal configuration can already deliver $200/WGS, but presumably only in the Middle East popgen projects that they recently signed.

So will Illumina be able to retain their 80-90% market share for the next 5 years with the current portfolio? I doubt it. There are 2 main threats to their market share dominance, which wasn't normal in the first place and a testament of how well has Illumina been innovating.

What are the two main threats? The first is their main large sequencing factory customers, the Broads, Sangers and Regenerons of this world, of which there are many, some commercial such as NovoGene and Macrogen, which have installation in the 10s of NovaSeqs, down to entities with enough umph to keep one NovaSeq busy. Illumina will want to transition these customers to NovaSeq X Plus, but this is a strategic position under threat from both MGI Tech and Ultima Genomics at one end of the spectrum, and also from Oxford Nanopore Promethion, P48/P24 and P2 instrument installations as a replacement to the single NovaSeq installations out there. So illumina could go from the 90% share progressively down to a 50% share over the next few years if they don't continue pushing for it.

Given that the NovaSeq X Plus starts at $2/Gb, they can always repeat the strategy they applied for the NovaSeq 5-year cycle, where they started at $10/Gb, then lowered to $6/Gb when their deployment and COGS consolidated halfway through.

So we could expect Illumina to lower prices from $2/Gb in 2-3 years time, maybe down to $1/Gb, which will be accompanied by the readjustment of prices in the NextSeq line, with the P4 flowcell coming in line.

What's the second threat? The benchtop line, in the case of Illumina mainly the NextSeq 1000/2000, as they don't seem to find a way to make the MiniSeq/iSeq100 profitable enough for them to care about their update cycles. And who will be the threats here?

I will put Element Bio AVITI instrument first, but really this is a dense group of players including MGI Tech G400, Oxford Nanopore, PacBio short-reads, Singular Omics and then a second group of entrants e.g. from China such as GeneMind, QitanTech, AxBio, CygnusBio as well as the likes of Roche or Thermo Fisher if they truly care about NGS in the future. There will probably be some M&A around this group and larger companies with cash and wanting a play in NGS, with Agilent and Perkin Elmer, maybe Qiagen coming to mind.

Something worth mentioning from the NovaSeq X Plus announcement is how much emphasis was placed into the Infinity long-reads, which is a method of error-prone long-range barcoded polymerase reaction that Illumina is proposing as a patch to their failed acquisition of Pacbio a few years ago. The fact that Illumina thinks strategically about the final 5% of the genome, where Illumina short-reads aren't enough, is significant. Also, there are detailed descriptions in the public documents of the Grail Bio investigation that make for an interesting read: in summary, Illumina has to posit to customers that people should carry on "as normal" with the short-reads 30x WGS and ignore the remaining 5% of the inaccessible genome, but at the same time tell the regulators that there are competing technologies out there that are already better than Illumina at the remaining 5% of the genome, arguing that this makes the market competitive and that Illumina is not a monopoly. Meanwhile, Illumina has to also convince people that it's worth using Infinity with the added 5x cost to be able to access the last 5% of the genome, but treading carefully about how much difference this will make. The situation is complicated by the fact that Ultima genomics reads can be perceived as lower quality at half the price but the same Infinity argument here plays against Illumina: if Ultima Genomics comes up, maybe with the help of the Broad, with an equivalent error-prone long-range polymerase method to barcode and amplify the long inserts, e.g. with the addition of salts to the buffer then Illumina can't protect itself (the patents won't hold in court) and then the Ultima Infinity-equivalent read out overcomes the perceived problems in low complexity motifs, which disappear with this method. All this is common in markets where a dominant player has created and grown the market with a dominant technology, but other players catch-up and the market is commoditized, finely segmented and the profits go up in vertical integrations.

The vertical integration is apparent with the Grail Bio acquisition attempt, but also by the fact that Ultima has received hundreds of millions in investment from Exact Sciences, Regeneron, and I bet from other undisclosed parties with a similar strategy.

The other market evolution is in the "long tail" of the NGS customer base. Similar to the very long tail of books and media content that Amazon sells to customers, the customer base is turning into a long tail in a similar way.

We come from an NGS market where Illumina made most of their profits from HiSeq/NovaSeq installations, and then there was a small tail of profits in the NextSeq line, and even smaller tail in the MiSeq/MiniSeq/iSeq line. This is now changing: there are many more entities making this tail longer, e.g. many NIPT hospitals as well as fertility clinics widening the mid-throughput customer base, and many new highly deployable mid- to low-throughput setups for fields such as Life Sciences, viral surveillance, and all sorts.

There will be a point where the Illumina NovaSeq X Pluses, as well as the Ultima U100s and the MGI Tech DNBSEQ T10x4 and T7s are just not driving as much of the total accessible market for NGS anymore, and the mid- and low-throughput customer base drives more of the profits.

Illumina is still struggling to monetize this long tail, and competitors to the NextSeq such as the Element Bio AVITI, MGI Tech G400 and others will continue to put pressure on them. Even more so further down this thickening long tail with the Oxford Nanopore product line.

That's not to say that there aren't scenarios where Illumina cannot continue to dominate the market. There are such scenarios. One of them in my opinion is the scenario where the #tech bubble and the macroeconomic environment slow the NGS market growth, people aren't as willing to take risks, the growth of the long tail of NGS slows down, and Illumina can simply continue dominating as they have so far. Another scenario is such where the M&As between cash rich companies and small NGS incumbents creates lots of failures, and there have been several examples of this in NGS in the last 10-15 years of history, and many of the NGS incumbents "fail by acquisition". Say Exact Sciences snatches up Ultima Genomics too early, or they can't support the U100 well enough, they push away Regeneron and others in the process, and end up taking Ultima out of contention. Say Element Bio is acquired and the new owners botch their "Nova-AVITI" product development. All these could help Illumina further their dominance for several years.

A remarkable exception here is Oxford Nanopore, which although is a publicly traded company, in the London stock exchange, had clauses in their IPO and share structure that make it less likely to be gobbled up a cash rich entity and have their business plans disrupted.

I know less of what's public about other companies, such as MGI Tech, which since a few weeks ago is now a publicly traded company in China, or such as Pacbio or Singular Genomics, also publicly traded. Others may know more details of their corporate structure.

So all in all, Illumina is undeniably still the market dominant, and the NovaSeq X Plus is more of the "Illumina is gonna Illumina" strategy, but the NGS market fate is more uncertain than it's ever been in the last 20 years.