Startups Take On DNA Leader Illumina --- Companies look to cut sequencing costs and widen technology's applications

"Startups are challenging market leader Illumina Inc. in the race to lower the cost of DNA sequencing and expand use of the technology throughout research and medicine.

DNA sequencing lets scientists read the individual bases, or letters, of genetic code. It fuels biological research and the hunt for new medicines and diagnostics.

Illumina, whose market capitalization is over $33 billion, has dominated the sector by launching instruments that whittled the cost of sequencing the complete set of genetic material in cells, the genome, to $600. That cost ran around $100 million 20 years ago. Two startups aim to reduce costs further. Element Biosciences Inc., backed with more than $400 million in venture capital, says its instruments can sequence a genome for $200; Ultima Genomics Inc. secured more than $600 million to develop technology to cut the cost to $100.

Competing with Illumina, which is rolling out new, low-cost sequencing technology of its own, will be challenging for the startups, which have begun selling systems to scientists.

Capturing even a small part of the sector would be significant for small companies, said Kyle Mikson, an analyst with investment bank Canaccord Genuity. He projects the global sequencing market to more than double to $110 billion by 2030 as falling costs enable wider use of the technology.

"If you were to look 10 years out, our estimate is that pretty much every person will undergo some test based on genetic sequencing, probably at least once a year," said Yair Schindel, co-founder and managing partner of aMoon Fund, an Ultima investor.

The Human Genome Project, an international effort to sequence a human genome for the first time, ran from 1990 to 2003. Scientists used Sanger sequencing -- developed in the 1970s by Nobel laureate Frederick Sanger -- which uses fluorescent dyes to identify individual genetic letters.

Next-generation systems, including Illumina's, have scaled up DNA sequencing. Instead of reading one fragment at a time, as in Sanger sequencing, next-generation sequencing enables DNA fragments to be sequenced en masse. Illumina's approach involves creating billions of clusters of DNA on a substrate, called a flow cell.

Illumina in 2010 released a machine enabling genome sequencing for about $10,000, said Alex Aravanis, chief technology officer. Subsequent innovations dropped the cost to $1,000 in 2014, and to $600 in 2020. Illumina is rolling out a new instrument series, NovaSeq X, that reduces it to $200, he added.

Several advances enabled this new system, including improvements in chemistry, hardware and optics, according to Illumina.

As DNA sequencing costs declined, venture capitalists sought to capitalize on the growth of the industry. DNA sequencing's use in prenatal and cancer testing exploded in recent years as costs declined, and the $200 genome will drive the technology into routine care, said Jim Tananbaum, chief executive of Element Biosciences investor Foresite Capital.

"We are all unique because we have a unique genetic code," Dr. Tananbaum said. "Reading that code enables individualization of care to be deliverable at scale."

Element, founded in 2017, and Ultima, launched in late 2016, operated quietly until recently as they developed systems they say have reimagined sequencing.

San Diego-based Element says its system reduces background light and makes it easier, and cheaper, to identify individual bases. The difference is like viewing stars at night, with no background light, versus trying to see them during the day, said co-founder and Chief Technology Officer Michael Previte.

Element flow cells have a nonstick surface, so less dye sticks to them, which reduces background light, said co-founder and Chief Executive Molly He.

Ultima CEO Gilad Almogy founded the Newark, Calif.-based company to apply knowledge gained from a career in the semiconductor industry to an effort to lower the cost of DNA sequencing.

Instead of a typical flow cell, Ultima says it has created a 200-millimeter silicon disk that allows DNA to be packed densely across the wafer. Nozzles near the center of the wafer dispense chemicals needed for sequencing in a thin, uniform layer across the surface, according to Ultima.

The silicon wafer is low-cost and the system enables highly efficient use of reagents, which also lowers expenses, Dr. Almogy said, adding that Ultima has about a dozen initial customers and plans a full commercial launch later this year.

"We're in the early innings of decades of growth in genomics data," Dr. Almogy said." [1]

1. Startups Take On DNA Leader Illumina --- Companies look to cut sequencing costs and widen technology's applications
Gormley, Brian.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 17 Feb 2023: B.6.