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S.D. Companies Race to Build Gene Machines

Technology contenders in the race to decode a person’s entire genetic makeup for less than $1,000 have been making gains in recent months, signaling that the finish line isn’t far ahead.

Analysts keeping up with all the new advancements say that race could end in San Diego, home to two of the biggest companies involved in the genetic sequencing technology business.

Many of the analysts expect San Diego-based Illumina Inc., a $666.3 million business that began as a genotyping services company in 1998, to reach its goal first. The 1,800-employee company hit a milestone in early January, revealing it had developed a gene machine, dubbed HiSeq 2000, capable of decoding the DNA of two people at a time for less than $10,000.

Analysts, encouraged by a recent order for 128 of the HiSeq 2000 machines to a Beijing genomic center, hailed Illumina as the market leader.

Betting On The Right Technology

Just two weeks later, Carlsbad-based Life Technologies Corporation, founded in 2008 by the $6.7 billion merger of Invitrogen Corp. and Applied Biosystems, upped the ante with its SOLiD 4 system, capable of deciphering even more gigabases of DNA for $6,000. In a single run, the system can generate up to 100 gigabases of sequence data. By year-end, Life Tech will introduce an add-on product that will drop the price to $3,000 to sequence 300 gigabases, or the entire human genome. Humans have three billion chemical base pairs, or gigabases, that make up their DNA.

Less than a year ago, an earlier version of the machine produced far fewer data points and cost $50,000 a run.

Decoding the human DNA sequence holds important clues for genetic predisposition for disease. By comparing large numbers of genomes against one another, researchers can begin to understand the many molecular factors that cause disease. The $1,000 benchmark means research laboratories can more easily afford genetic sequencing, and their findings could one day guide drug makers toward designing more individualized treatments, known as personalized medicine.

“It’ll make my NIH grants go a lot further,” said Jeanne Loring, who leads the stem cell program at The Scripps Research Institute in La Jolla. “I have to sort of stage my research now and then ‘wham,’ the (genome sequencing) costs hit.”

Companies are placing big bets on which technology will get them there the fastest. A year ago, Illumina invested $18 million in Oxford Nanopore, a British company that specializes in nanopore technology, an alternative to fluorescent labels and high-performance optical equipment commonly used in sequencing systems.

“We really see that technology approach as the most likely technology to get to the sub-$1,000 genome,” said Illumina CEO Jay Flatley.

On the other hand, Life Tech says it relies on advanced fluorescence to bring down costs. Mark Stevenson, president and chief operating officer of the 9,500-employee company, said Life Tech plans to incorporate quantum dot technology, a kind of bright, fluorescent tag, to identify multiple biological targets at the same time. The quantum dots serve as a kind of “spotlight” to identifying the chemical base pairs of DNA.

“As we use these improvements in chemistry, the optical parts get simpler and simpler,” he said.

The companies also face competition from others looking to build their own gene machines. Cambridge, Mass.-based Helicos Biosciences and Mountain View-based Complete Genomics, both privately held companies, along with Menlo Park-based startup Pacific Biosciences, have been raising funds to build their own next-generation sequencing platforms.

Isaac Ro, a biotech analyst with Leerink Swan & Co. in New York, said he expects Illumina to dominate the global markets, with a 70 percent sales market share compared with 20 percent for Life Tech.

“No question Illumina has been, and continues to be, the leader in next-generation sequencing,” he said.

Life Tech, he added, could benefit from a growing genetic sequencing business, which accounted for the bulk of its $64.8 million increase in instrument sales for 2008. During the most recent fourth quarter, the company reported its Genetic Systems division grew 16 percent, to $234 million. Overall, the company reported 2009 revenues of $3.3 billion.

Ro said he expects the market to accommodate more than one gene machine, much like Blu-ray players entered the market alongside HD-DVD systems. He said the first to cross the finish line, however, will reap the most rewards.


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