An Illumina competitor with a less-expensive price point unveiled new technology at a recent genome biology conference.
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Genetic information is driving most of today’s medical breakthroughs, and the industry that develops genetic decoders had its annual gathering last week.
The most interesting news at the Advances in Genome Biology & Technology conference came from the little firms that are tilting at gene-sequencing giant
Illumina
(ticker: ILMN).
After introducing a wave of new products last fall, Illumina had little news to bring to the AGBT meeting—apart from sharing disappointing guidance for 2023 earnings.
There was an eye-catching update from a rival, however. Complete Genomics, the U.S. unit of China’s MGI Tech Co., announced a high throughput sequencing system that it says will bring the cost of reading a person’s genome below $100. Illumina and other sequencing suppliers had proudly shown products last year that they said would bring costs down to $200 a genome, from current levels of about $600.
MGI is itself owned by Shanghai-listed
BGI Genomics
(300676. China). It avoided U.S. markets until this year because of patent issue with Illumina, but MGI has strong sales abroad.
“Although geopolitical sensitivity clouds the prospect of U.S. uptake,” writes J.P. Morgan analyst Julia Qin in a Tuesday note, “MGI could be a formidable competitor to [Illumina] in [international] markets, especially for high-throughput applications.”
Price competition from MGI and others is one reason why Qin has had a Neutral rating on Illumina.
Other new products shown off at the AGBT meeting included systems for reading the whole genome—especially some stretches of highly repetitive DNA code that’s significant for certain diseases, yet hard to read with Illumina’s established technology.
Pacific Biosciences of California
(PACB) pioneered whole genome sequencing, and will ship a system in 2023’s first quarter that reduces the cost of using this approach.
Canaccord Genuity
‘s Kyle Mikson is a fan of PacBio’s new system, and rates the stock at Buy. He believes the shares can rise to $14 from current levels of $9.90. J.P. Morgan’s Qin also thinks the use of whole genome sequencing will expand, but points out that the shares of the unprofitable PacBio are already priced at a premium level of 15 times sales.
Among the novel sequencing technologies at AGBT are products that allow researchers to read genetic information from individual cells obtained at mapped locations across a tumor or organ. Many recent scientific papers exploit these technologies to reveal the spatial biology of a tumor’s environment, in hopes of finding new lines of attack.
The market for spatial biology is nascent, and a number of start-ups are battling for sales.
NanoString Technologies
(NSTG),
10X Genomics
(TXG), and
Akoya Biosciences
(AKYA) all hope that their crowded market will grow as costs come down. J.P. Morgan analyst Qin likes these companies and rates each at Overweight, but spatial biology is still a young science.
“[P]rice elasticity is at the crux of reaccelerating growth for single-cell analysis,” writes Qin.
Write to Bill Alpert at william.alpert@barrons.com
Credit: marketwatch.com