At J.P. Morgan Conference, Illumina CEO Talks $100 Genome, Tariffs, and NovaSeq

Alex Philippidis

January 7, 2019

SAN FRANCISCO—Addressing analysts at the J.P. Morgan 37th Healthcare Conference on Monday, Illumina CEO Francis deSouza said the sequencing giant is continuing development work toward the $100 genome it first discussed two years ago, without saying when the company will bring the technology to market.

“From our perspective, seeing as we’ll be driving the price down, we will be watching for when we think the time is right in the market to enable that so that it leads into the elasticity of the market, and expands the overall market,” deSouza said during a question-and-answer “breakout” session following his formal presentation at the conference, being held here through Thursday.

deSouza added that Illumina views the development of a $100 genome as a multi-year process combining engineering work—which he said was now in progress—with customer demand.

“You have to make sure the market is ready,” deSouza said. “So we’re spending a lot of time, as you can imagine, talking to our customers, so that they can think about what they would do with the $100 genome.”

Those customers and the broader sequencing industry, he added, had more than a decade to think about and plan for the $1,000 genome—which Illumina and deSouza’s predecessor Jay Flatley introduced at the 2014 J.P. Morgan conference: “We knew the demand was there. People had written business plans over the years.”

So when Illumina disclosed its intent to develop a $100 genome at the 2017 J.P. Morgan conference, deSouza said, “what we wanted to do with the $100 genome announcement was spark that same level of thinking around what you would do with a $100 genome.”

Other topics covered during Illumina’s JP Morgan presentation and breakout session:

  • PacBio Acquisition—deSouza said Illumina remains on track to complete its $1.2 billion acquisition of Pacific Biosciences (PacBio) by mid-2019. The deal, announced November 4, is designed to create a sequencing powerhouse that combines Illumina’s short-read technologies with PacBio’s long-read sequencing offerings.
  • NovaSeq—Illumina’s current top-of-the-line sequencer reached $1 billion in revenues in 2018 in its second year on the market, making it Illumina’s fastest revenue ramp-up of any product, deSouza said. NovaSeqs have sequenced more than 600,000 whole genomes, he added, with some 30% of NovaSeq customers being new to Illumina or converting from benchtop sequencers, and about 25% being HiSeq customers
  • Tariffs—The company saw spikes in orders ahead of potential tariffs in the second and third quarters of 2018, but that seemed to have abated in Q4, deSouza said. Among options publicly discussed have been a 5% tariff on hardware, “which wouldn’t be too big,” SVP and CFO Sam Samad told analysts, and possibly a larger tariff on consumables: “We’ll see how the measures play out.”
  • 2018 Results—Illumina generated $3.330 billion in revenue, deSouza said, up 21% from $2.752 billion in 2017.
  • 2019 Guidance—Illumina projects between $3.76 and $3.80 billion in 2019 revenue up 13% to 14% from 2018, for GAAP earnings per share of between $6.07 and $6.17.