Illumina is just waiting for that inflection point

Illumina just reported 21% Q2 revenue growth, with shipments to oncology segments growing at 35%.  What's interesting about the earnings transcript (available at Seeking Alpha) is that while the next big thing being paid attention is currently the growth in NIPT products (>50% year over year), you need to read until almost the end to hear get some insight into where Illumina's heading.

According to Jay Flatley (Illumina's CEO, if you didn't already know):

In the case of NIPT, it became a marketplace that exploded because the clinical data came out and replaced an invasive test. And so in oncology, we're going to see that inflection point happen. Is it going to happen a year from now or two years from now, it's hard to predict. But there will be an inflection point in the oncology market where that market will explode. And that would be around perhaps the time when in-practice guidelines it becomes standard of care to sequence every tumor when it's biopsied, and that will cause the market to grow very, very quickly.

And that's just one of four really gigantic markets out there that the company is aiming to dominate.  With this kind of potential, it seems like ILMN is going to continue it's long upward trend, but it's already a $35 billion behemoth, which makes Roche's abandoned $6.7 billion 2012 bid for the company sound like a steal.

Aside: Correct me if I'm wrong, but it's a shame no Canadian analysts were in on that call.  Where was Canaccord?

Not news: Chickenpox cases plunge after vaccinations

Take that, anti-vaxxers!

In a study that looked at 20 years of data, Public Health Ontario found the number of children who visited a doctor or an emergency room due to chickenpox dropped 71 per cent after the public immunization program began in 2004, compared to two earlier periods. Hospitalizations also fell 59 per cent.

Why people debate the merits of proven vaccinations is beyond me.

AncestryHealth: Another company moves into consumer genomics

Sarah Buhr, at TechCrunch:

Family history site Ancestry launched a new generational health database called AncestryHealth today. The news comes right as AncestryDNA – Ancestry’s genetics site that connects those on the platform with distant relatives – announced it now has genotyped more than a million customers.

Ancestry.com launched in the early 80’s and went public in 2009. It is now the largest genealogical database in the world, holding more than 16 billion family history records from all over the world and more than 70 million user created family trees.

The company saw an opportunity in consumer genetic testing similar to 23andMe three years ago and launched AncestryDNA as a subsidiary of Ancestry.com. Ancestry’s patented algorithm began matching users to relatives as well as DNA matches to ancestors as far back as the 1700’s. 

By applying genotyping chips to geneaology, AncestryDNA has put themselves in a good niche vis a vis 23andMe. Not only is it potentially much easier to link distant relatives using SNP chip data than it would be to, say, predict users' health risks from the same information, it's very likely to be legally safer.  I doubt there are many (any?) regulatory pitfalls in telling people that they're potentially related to someone that's their second cousin once removed.

Despite the health spin, I'm not so sure how valuable correlating health information between really distant individuals in your family tree will be, except in odd cases of familial diseases. like some cancers.  However, where I think AncestryHealth might actually prove very useful is for users that don't have tight relationships with family members and would like to know the health problems of their grandparent's generation, though that would still depend on someone related to you providing information to AncestryHealth.

In terms of information, the data scientists at organizations like AncestryDNA must be thrilled to wade through a treasure trove of a million genotypes, relatively unrestricted by data access rules in the public sector.  This data aggregation model is essentially similar to 23andMe's: Collect your data first, then decide how to monetize it.

When monetization comes into play, it's easy to put a pessimistic spin on big data collection.DNAeXplained points out that they didn't receive much information beyond what was input, and asks: "What did Ancestry get?  Health, ethnicity and lifestyle information for you and your family to sell along with your DNA information, if you signed the informed consent. If you don’t sign the informed consent, your information can still be utilized,  just without your identity attached, per the verbiage in their terms and conditions, privacy statement and informed consent documents."

With feedback like this, I suspect AncestryHealth is going to work very, very, hard to design some kind of user report that avoids leaving people with the impression that they've just given something precious away and received little in return.

Finally, customer experiences aside, I'll leave you with this thought.  I tend to side with Ken Chahine, SVP at Ancestry.com, on this one:

I began my career in the pharmaceutical and biotechnology industry where it progressed from bench scientist to CEO. During those years I experienced first-hand the inefficiencies and frustration of bringing medicines to market. Simply put, the healthcare industry makes data collection and sharing difficult [Emphasis mine]. The lack of data was one of the two primary reasons that brought me to my current position where I'm helping bring personal genomics to all through direct-to-consumer tests based on the newest breakthroughs in science and technology.

"Evidence that liquid biopsies help patients is missing"

Antonio Regalado, at MIT Technology Review, writes:

So far the accuracy of the blood-based tests is in dispute. Foundation Medicine, a company in Cambridge, Massachusetts, that offers a DNA test for biopsied tissue samples, says they may yield false results and steer patients to the wrong drugs. “We get many calls from doctors with results from [a tissue biopsy] and then totally different results from a liquid biopsy,” says the company’s chief scientific officer, Phil Stephens. “The results are completely discordant and all over the map. That is bad for physicians and bad for patients.” Guardant CEO Helmy Eltoukhy, however, says his company has data from over 3,000 patients indicating that the two test types agree more than 90 percent of the time. “We don’t look at it as experimental,” he says.

Though it might seem that Foundation Medicine sometimes produces results that aren't useful because they're 'discordant', the results between genetic tests from solid tumors and plasma DNA don't have to match at all.  A service provider sequencing a tumour may be able to get over 90% purity of tumour DNA in their samples, which makes it dead easy to call mutations.  Plasma DNA, however, contains a ton of normal unmutated DNA, which dilutes the signal from mutated DNA significantly, making it harder to find anything of potential importance.  In effect, you might be trying to use a liquid biopsy to find rare mutated DNA that's present at only 1% or less.  (Guardant has a vaguely written patent about how they deal with this issue.)

One final note:

Whether DNA tests really help patients when they’re used to guide treatment is also a matter of dispute. Foundation Medicine issued a press release in May describing work by MD Anderson Cancer Center that compared 175 people who got its test, called FoundationOne. It said those who received a therapy matched to one of the mutations it uncovered lived three months longer on average than those who didn’t.

I'd say that's evidence liquid biopsies are helping patients.

NIPT Paves Way For Liquid Biopsy Market

Marty Chilberg, at Seeking Alpha:

Liquid biopsy test providers will likely outperform the market over the next few years given the growth profile and the probability of acquisitions. I'll be watching those providers that are focused on treatment monitoring, high risk early detection and personalized clinical trial diagnostics in the short term as they provide the highest probability of early monetization. All the NIPT providers have indicated an intent to launch liquid biopsy diagnostic products in the future. Illumina has indicated that they are currently in development but has provided minimal detail to date. Natera provided the above S-1 recap but did not guide with respect to launch time frame. Roche has not provided any substance though Ariosa has been hiring oncology and bioinformatics professionals indicating their intent. Sequenom has announced their company goal to launch a research use only test in 2015 that will interrogate over 100 genes for a dozen cancer types.

And on the topic of investments, he offers this insight:

The simplest investment approach would be to focus on short-read sequencing platform providers. Long read is more costly and less appropriate for sequencing fetal DNA

I'm in complete agreement with this.  But it's not only about fetal DNA, it's about the much bigger market for plasma DNA sequencing.

There's an abundance of evidence showing that circulating plasma DNA ranges in size from 140-200bp, as you can see from the graph below (from this paper):

Size distributions of circulating plasma DNA

This inherent property of plasma DNA places short read sequencing providers and users in a dominant position over long read sequencing providers.  While it's true that long reads are better for exploring solid tumors and mapping out chromosomal rearrangements, at this point their application for plasma DNA sequencing is not that compelling.