Babies born too early often depend on extraordinary life-saving measures such as being on a ventilator.

Every year millions of babies worldwide are born too early. Arriving at six months instead of nine, these underdeveloped babies are at high risk for infant death syndrome, deadly infections, respiratory complications, blindness, cerebral palsy, and learning and developmental disabilities. Two companies – one with the brains, the other with the brawn – are partnering to fight preterm delivery by sequencing the genomes of 500 babies and their parents. They hope to discover new gene targets by examining 1,500 total genomes.

The ambitious collaboration is an indication of how far DNA sequencing and analysis technology has come. Personal genetics companies such as 23andMe limit their analysis to single nucleotide polymorphisms (SNPs). But Complete Genomics is no do-it-yourself DNA analysis kit company. To sequence 1,500 entire genomes – not just SNPs – in an economically feasible manner requires a company with vast resources.

Inova Health System is a not-for-profit healthcare system in Virginia. Their numerous hospitals and other health service entities work together to find ways for improving patient care, education and research. Part of this mission is Inova’s Translational Medicine Institute, established recently in 2010, that focuses on turning the latest genomics research findings into everyday patient care. Complete Genomics, headquartered in Googletown Mountain View, California, is a company that has developed its own technology for sequencing DNA. Inova will collect the samples and outsource the sequencing to Complete Genomics.

The overall project goal is to identify genes that will help to diagnose preterm delivery as well as treat it. It’s also possible that they’ll find gene targets that are important in other obstetrics related abnormalities.

Why a baby is born before its time (before 37 weeks) is a complicated question. To answer it we first have to identify the causal factors. So far the list includes: medical condition of the mother or fetus, genetic influences, environment, past infertility treatments, and behavioral and socioeconomic factors. Reading this rather vague list of factors one gets the sense that researchers have their work cut out for them. Thirty percent of preterm births are attributed to the premature rupture of the amniotic sac that surrounds the fetus. Fifteen to 20 percent are intentionally induced. For almost half of all preterm births, however, the causes are unknown.

Tailoring treatment to a person's genetic makeup – so called personalized medicine – draws closer as both sequencing technology and computing power follow Moore's Law, getting faster and cheaper.

Attempts to identify genes that affect preterm delivery has pointed researchers to the immune system. During an infection, certain kinds of hormones are released that trigger the inflammatory process the body uses to fight the infection. Those same hormones affect the labor process. When there is an infection in the amniotic fluid the hormones are released by both the mother and the fetus that set in motion the steps leading to labor. In this scenario, preterm delivery actually has some survival value. Triggering an early labor reduces risk of infection to both the mother and the fetus. It’s estimated that 1 in every 3 preterm deliveries are brought on by an amniotic fluid infection. When labor occurs too early, however, it poses great risk to the baby.

The human genome contains over 3 billion base pairs. Three billion times 1,500 is 4.5 quadrillion. And while the sequencing is one enormous job, analyzing the sequences will be another. Complete Genomics has a supercomputer that will perform this monstrous crunching of numbers.

This kind of high-throughput approach is made possible by advances is both DNA sequencing and computer technology. Keith Raffel, Complete’s Chief Commercial Officer, sees the pilot study as ushering in a new era of genetically-tailored, personalized medicine. “The applications for the genomic information we generate are expanding as the price for genomic sequencing tumbles,” he writes in a Complete Genomics’ blog. “Following Moore’s law, processing power has moved from mainframes to personal computers to smart phones. Whole human genome sequencing is moving along an analogous path. The decreasing price of genomic sequencing is extending its use from large-scale studies of cancer and idiopathic conditions at universities and research institutes to medical care of individuals.”

About 5 to 7 percent of total births in developed countries are preterm. In developing countries the proportion is substantially higher. And, over the last 20 years the incidence of preterm deliveries has been on the rise in developed countries like the US and the UK. In 1990, 10.6 percent of babies born in the US were preterm. In 2008 that number rose to 12.3 percent.

Dr. Clifford Reid, chairman, president and CEO of Complete Genomics hopes to curb the trend and help those for which they can’t. He says in a press release, “We view this as an opportunity for our sequencing service to potentially help create new treatment options for some of the smallest and sickest patients in the hospital.”

[image credits: wikipedia and NY Times]
image 1: premature baby
image 2: pinker

GNOM isn't doing too well on NASDAQ. Is the future of Complete Genomics grim, or just under-valued?

Mo’ genomes, mo’ problems – it’s as true for Complete Genomics as it was for Biggie Smalls. The Silicon Valley startup has a revolutionary approach to sequencing the complete DNA of a human being, lowering costs and raising the potential capacity of the industry considerably. They want to be the first company to sequence a million human genomes…but they may have hit a snag. Complete Genomics (NASDAQ: GNOM) saw an enormous fall in its stock price last week after releasing its earnings report for the second quarter. News of rising costs may have driven investors to flee from the stock lowering it to around $8 a share.
That’s less than two thirds of where GNOM was just a month ago, and less than half of its peak value from early this summer! Complete Genomics’ Q2 earning report was quick to point out the areas in which it was performing well. Despite the disappointing news in costs, almost every other major indicator for the company showed positive results. They’re sequencing more genomes than ever before, they have millions of dollars in orders, and their capacity is increasing steadily. So, has Wall Street panicked itself away from a now under-priced stock, or is Complete Genomics truly facing a crisis point in its development?

Let’s take a look at the main figures from Complete Genomics’ 2011 Q2 report:

• The company recognized revenue for over 900 human genomes
• Revenue of $5.9 million compared to $1.1 million in the second quarter of 2010
• Costs and operating expenses were $20.8 million compared to $12.9 million in the second quarter of 2010
• Net loss was $16.0 million compared to $12.6 million in the second quarter of 2010

Clearly the rising costs and net loss are disappointing, but were things so bad as to warrant more than a 33% drop in stock price? Well, comparing to Q2 2010 is only half the problem, it’s the difference between Q1 and Q2 of this year that may be more concerning. As we discussed in May, the first quarter of 2011 was very good to Complete Genomics. They sequenced 600 genomes, had $6.8 million in revenue, and a net loss of only $12.5 million. You can see the issue. Despite sequencing 900 genomes in Q2, Complete Genomics wasn’t able to increase its revenue according to investor expectations.

GNOM soared to more than twice its IPO after Q1 earnings were reported. Now Q2 reports have brought it all the way back down.

What’s the cause of Complete Genomics’ clipped revenue? Spit and blood. Companies that order whole genome sequencing must provide Complete Genomics with the DNA samples they want examined. If they don’t send those samples promptly, then the revenue stream gets stymied. In a conference call following the release of the Q2 report, CEO Cliff Reid pointed to delays associated with the Institute for Systems Biology as a major cause of the drop in revenue. ISB has ordered 600+ genomes from Complete Genomics, but apparently is running into trouble collecting the samples they want. They have the money, they’ll be able to pay Complete Genomics when its time, and Complete Genomics will be able to sequence those samples when they arrive. Until that happens though, things may look worse than they are.

As a young company with relatively few customers (over 80), our quarterly revenue is quite variable. It was higher than analysts expected in the first quarter and lower than analysts expected in the second quarter. We expect this variability to continue until we see a smoothing effect from having many more customers.
—Complete Genomics CEO Cliff Reid

Complete Genomics is painting the irregularity in sample delivery as just one more hurdle they have to clear as they build their new position in the sequencing industry. They still aim on delivering 4000 genomes to customers by year’s end, they’ll just have to clump things up towards the second half of 2011. According to their outlook from the report:

The company shipped approximately 1,600 genomes to its customers in the first half of 2011. In the second half of 2011, the Company expects to ship over 2,400 genomes to its customers including over 600 genomes in the third quarter of 2011. The variability in genomes shipped each quarter reflects the timing of sample arrivals from a few large orders. We expect this variability to decline as order volume grows and provides a smoothing effect on sample arrivals.

So you’re going to drop to 600 genomes in Q3, then jump up to 1800 genomes in Q4? That’s not the kind of steady growth that investors like to see – it’s really no surprise they dropped GNOM.

But I think Wall Street may have moved in error. Complete Genomics may not have properly anticipated (or prepared its investors) for fluctuations in sample delivery, but they are still at the top of their game. Their current capacity for genomes is 600 month, and they look to push that to 800-1200 per month by the end of the year. Of the $20.8 million in costs, $8 million was spent in R&D, representing the biggest single rise in expenditures for the company (up from $4.9 M from Q2 2010 and $6.8 M Q1 2011). In other words, Complete Genomics is still in high growth mode.

Besides, it looks like the research community (those that actually buy bulk whole genome sequencing) are very interested. Complete Genomics pulled in $30M in orders this year (as of July 30th) for some 5700 genomes. A large chunk of those will be for the National Cancer Institute/SAIC-Frederick and the Inova Translational Medicine Institute, representing approximately $14 million in services and 2700 genomes. Complete Genomics’ backlog alone is worth $12 M (2200 genomes), and turn around time is now down to less than 70 days.

What I’m trying to say is, I still believe in Complete Genomics. Or, at the very least, the economic pressure that is pushing Complete Genomics to succeed. Whole genome sequencing is the key to unlocking some of the vast potential of genetic research, and the market for scientific breakthroughs in this field is going to be worth billions of dollars in the years ahead. The company that can cheaply, reliably, and quickly sequence a human’s complete DNA is going to be a billion dollar company, no doubt. Complete Genomics looks like it can win that race. Its capacity is growing steadily, its customer base is growing along with it, and the price per genome is falling – just $4000 for bulk orders of 50 genomes or more. Unfortunately, that decline may be partially responsible for driving some investors away as well, but if so it was likely a shortsighted reasoning:

Prices of complete human genome sequencing has fallen faster than analysts expected, but this price drop is what enabled us to land the Inova deal – a landmark event in personal medicine.
—Complete Genomics CEO Cliff Reid

Maybe Wall Street investors see a different story, but I think GNOM’s recent stock woes are simply a sign that the genomics industry is too new, and too volatile for the mainstream. I hope that Q2 2011 was just a hiccup, but even if I’m right, there’s going to be further hiccups in the next few years. If you’re looking for a sure thing, Complete Genomics probably isn’t the way to go. But if you’re looking for a company and an industry that has an absurdly vast potential…well, then it’s your lucky day. There’s a sale going on, and you can snag some GNOM stock for the same price as the IPO (give or take). If that doesn’t seem like a smart decision to you, keep your eye out for other companies in this field. Even if Complete Genomics crashes and burns, someone else is going to fill this space. The world wants millions of genomes at $1000 or less a piece, and I think that future is nearer than we imagine.

[image credits: Complete Genomics, Google Finance]
[source: Complete Genomics]

Q1 2011 was a good time for Complete Genomics as they continue to expand their human genome sequencing services.

The company that could bring about the revolution in human genome sequencing is showing early signs of success in 2011. Complete Genomics is hoping to use a laser-tight focus on human genomes, and efficiencies of scale, to make it the dominant force in human sequencing. They recently released their first quarter report for 2011 and the numbers looks good. 600 genomes were sequenced in Q1 alone, and revenue was at $6.8 million. While still running at a loss, Complete Genomics is closing the gap, has ready cash on hand ($68+ million), and there are over 2000 genomes on back order. The stock is up (NASDAQ:GNOM), and the Silicon Valley startup has announced it will offer 4.5 million shares in the near future. Not only that, but Complete Genomics is increasing its production rate, and lowering its costs. They could hit 1200 genomes per month, 4000+ genomes sequenced, and $5000 per genome by the end of the year. In almost every metric, Complete Genomics is doing well and looking to perform even better in the near future. Didn’t we tell you that these guys knew what they were doing?

Let’s hit a few more numbers released in the report:

• Revenue for Q1 2011 was up – $6.8 M as compared to $0.3 M for Q1 2010.
• Costs for Q1 2011 were up – $18.9 M as compared to $14.6 M for Q1 2010
• Net Loss was down for Q1 2011 – $12.5 M from $14.3 M for Q1 2010.
• Complete Genomics sequenced 600 genomes in Q1 2011, with current estimated capacity at 400 genomes per month.
• Median turn around time was 70 days.
• Required sample size was cut in half – 7.5 micrograms from 15 micrograms.
• Order backlog was up for Q1 2011 – ~2100 as compared to ~1000 for Q4 2010. (That’s a big increase!)
• The value of the backlog is estimated at $15 M over the next 12 months.
• Average price was $9.5k per genome for small orders, and $5k-$7.5k for large orders in the hundreds of genomes.
• They have released 69 fully sequenced human genomes into the public domain, which have been downloaded 750 times (this is much larger than the current customer base of 45 groups).

To accompany their Q1 report, Complete Genomics also held a phone press conference in which they made several really interesting projections for the future:

• They expect to increase production capacity to 800-1200 genomes per month by year’s end with improvements on existing equipment.
• Each of their current instruments can handle about 1 genome per day. Next generation equipment, to arrive in 2012, could handle 10 genomes per day, expanding production greatly.
• Turn around time could be down to 30 days by 2012.
• The second quarter should see about 900 more genomes sequenced.
• The total number of genomes sequenced in 2011 is expected to reach 4000!
• Average selling price has been falling since Q4 2010 and is expected to be near $5000 by year’s end.

We’ve made it no secret that Singularity Hub likes Complete Genomics. They made some thrilling claims in the past (sequencing a million genomes, falling below the $5000 price, etc) and while their time tables have stretched forward a bit, they’re still expanding at an accelerated rate. The core of their strategy seems pretty simple: find one area of sequencing and outperform everyone in that field. Complete Genomics does nothing but human genome sequencing and they push themselves to produce more at lower prices. In the phone press conference, CEO Cliff Reid directly stated that they are interested in aggressively improving scale by driving prices down. As prices fall, demand goes up in a way that is more than commensurate. This means that Complete Genomics is going to keep pushing us towards lower sequencing costs. I fully expect that in a few years we’ll see the first $1000 genome, and a few years after that we could have a $100 genome arrive. In my opinion, Complete Genomics is likely the company to get us to that point.

Once genomes become cheap to sequence we could finally reach the genetics promised land that we’ve been hoping for since the first human genome was sequenced a decade ago. In order for that to happen we’ll need hundreds of new discoveries by researchers all over the globe. Luckily, those are exactly the kind of people forming Complete Genomics’ current customer base. As Reid and his company continue to provide these scientists with genomes they will eventually be able to translate loose genetic correlations into actionable medical practices. It’s going to take years for that research to be performed, but Complete Genomics’ cheap wholesale sequencing is already moving us towards that direction. In the phone conference, Reid mentioned that they were already seeing themselves written in grant proposals. That’s a good sign that the scientific community is gearing up to take advantage of the services Complete Genomics provides.

It’s not all roses, of course, there are a few thorns. Illumina’s patent infringement lawsuit against Complete Genomics is still ongoing, although the number of disputed patents has dropped from three to only one. (Reid stated that his company was going to continue to fight the lawsuit strongly.) The stock has been on a tear recently, basically doubling since March. While that is mostly a good thing it may mean that it’s slightly overpriced at the moment. Which may be why Complete Genomics is looking to offer 4.5 million more shares – raise money (~$70M) while the getting is good. Also, the stock may be up but they’ve really only reached the levels that Complete Genomics was hoping to set at their IPO (originals plans were for $12-$14, but that was lowered to $8). I’m also curious as to whether or not they really need their upcoming offering to fuel their growth – their current cash holdings of $68.8 M include $20 M in loans, so it could go either way. So overall…some good financial prospects, but I’d say their future rests on the continued performance of their technology seducing more investors as revenue is unlikely to meet costs for years to come.

Overall, however, I think Complete Genomics is a winner – a winner whose coat tails are big enough for everyone to hold onto. Their nanoball array approach to sequencing isn’t going to be the ultimate technology in the field, but it’s the first that’s proven to be able to scale up so quickly and efficiently. As the company continues to increase production and expand their customer orders we’ll see prices drop until the costs for sequencing a genome represent a reasonable investment for every individual. At the rate Complete Genomics is improving, that future is going to happen in this decade, perhaps even by 2015. The beautiful thing is that those falling prices are enabling the scientific research that will make sequencing yourself a smart investment. How copacetic. Good luck to Complete Genomics, and to all their competitors out there as well. Whoever wins the race to be the leader in human genome sequencing, we’re all going to rake in the benefits together.

[image credit: Complete Genomics, Google Finance]
[source: Complete Genomics Press Release and Press Conference Call]

I took a look inside Complete Genomics' lab. What I saw turned me into a believer.

The future of human genetics will arrive when we understand how each gene in your DNA interacts with every other gene to form who you are. In order to get that understanding we’re going to need to sequence a huge number of genomes. And in order to sequence genomes we’re going to need Complete Genomics. The Mountain View based startup recently went public (NASDAQ: GNOM); with their requisite silent period ended we finally got a chance to tour their facilities and talk again with their CEO Cliff Reid. We were impressed. Complete Genomics isn’t going to conquer the entire world of DNA testing, but the kingdom of human genome sequencing they’ve carved out for themselves looks amazingly well fortified. As far as I can tell, if CG really takes off no one else will be able to challenge them in whole human genome sequencing for years to come. We asked Cliff Reid about the IPO, the genomics market, and some recent advancements in Complete Genomics’ analytical software. Check out his answers in the videos below.

Complete Genomics doesn’t sell a device, they sell a service. Companies like Illumina make DNA sequencers they sell to other companies. Reid and his gang take DNA samples and return with huge amounts of DNA data. Customers never need to deal with the biochemistry. That full service approach helps Complete Genomics focus on increasing the number of human genomes they can sequence for customers, and lowering the price for each. In the following clip, Reid gives us an update on the company, including the success of the IPO, and a look at its production capability and the current price of sequencing human genomes.

Getting to explore Complete Genomics’ Mountain View facilities was pretty amazing. I was struck by the relatively small size of the sequencing lab (though there’s plenty of room for expansion) and the degree to which automation is used. The company can produce 400 whole genome sequences each month, but there’s only ever two technicians working at any given time in the sequencing room. Robotic instrumentation and equipment makes the lab almost seem like a ghost town, but there’s a lot of action going on. I wish we could have turned our cameras on while touring that place, I bet many of you (and all of CG’s competitors) would have loved to see what they had cooking.

While we didn’t get any trade secrets out of Reid, the recipe for Complete Genomics’ secret sauce is pretty clear. This company is about doing one thing and doing it really well. Other big names in sequencing (Illumina, BGI, etc) are looking to handle many different kinds of genetic reading such as examining RNA, sequencing microbes, and sequencing animals. Complete Genomics is doing just one thing – whole human genomes. With that laser-like focus comes the ability to scale their entire company around a central mission. As we’ve said in previous coverage of this company, economies of scale, and single-mindedness in action will help Complete Genomics get cheaper and cheaper, faster and faster.

Eventually that means you’ll have access to inexpensive sequencing for your own genome.

Yet it will take a while to get there. Most of the whole genome sequencing done today is purchased by research labs, not by individuals looking to understand their own health. That’s how it should be. It’s going to take years for researchers to fully understand our DNA and what the variations in our genes mean. Selling genome information to individual customers like you and me would be premature. For now, Complete Genomics is focusing on the research market and helping them make the discoveries that will revolutionize genetics. Once the price per genome comes down, and the science behind genetics is better understood, Complete Genomics will transition into the consumer market. Reid says as much in the following video:

Complete Genomics isn’t 23andMe, Pathway Genomics, or any of the other companies selling genetic tests on the market today. First off, those groups are only testing a small subset of your entire genome for simple variations in individual letters of DNA (single nucleotide polymorphisms or SNPs). Complete Genomics is sequencing whole genomes – all 3 billion letters of DNA. Just as importantly Complete Genomics is waiting until researchers know more about the genome before they try to offer genome sequencing to consumers. That’s different from the current genetic testing companies that the FDA and congress are worried about. Those businesses will sell you genetic tests today, while much of the science is still not completely understood. Don’t get me wrong, I think there’s a place for that. Complete Genomics, however, is waiting until there’s an actual use for you to know your whole genome sequence before they try to sell it to you.

In the years ahead someone is going to have to process thousands (millions?) of genomes before we understand our DNA well enough to make the sort of pinpoint health recommendations that the public expects from this promising technology. Who’s going to sequence all that DNA? My guess is Complete Genomics. Again, getting back to that focus on whole genome sequencing, the company has built it’s entire technology around reading human DNA faster, better, and cheaper than anyone else.

The center of their business is their fluorescent read technology, which analyzes nanoballs of DNA that correspond to different A, C, T, G ‘letters’ of genetic code (learn more about the nanoballs on the Complete Genomics website). In Reid’s words they, “use silicon to read silicon”. A silicon based semi-conductor camera is precisely aligned with a different silicon wafer full of tiny pockets where the nanoballs sit. When I say tiny, I mean tiny – those pockets are just 300 nanometers across. The camera only has to use a few pixels (soon even fewer will be needed) to optically read each nanoball and determine if it contains an A, C, T or G.

According to Reid, Complete Genomics had reached the limits of optical reading technology. They are (or soon will be) using as little digital information to read each letter of DNA as you possibly could. The best other companies could probably do is match them. Add in the fact that their automated reading technologies are getting faster, and their analytical software is getting smarter, and you can see that Complete Genomics is quickly making itself the foremost leader in whole human genome sequencing.

Even if another company finds a way to sequence whole genomes with the same speed as Complete Genomics, I still think Reid and his cohort will come out on top. By focusing on just one product (whole human genomes) Complete Genomics will develop an unprecedented amount of experience in their field. They’ll discover all the little undiscovered idiosyncrasies that make human genomes unique compared to other sequencing projects and they’ll understand those twists and turns better because human genomes will be the only thing they work with. Single minded focus will help Complete Genomics learn all the tricks, and this will help make them more streamlined, faster, cheaper, and better at analyzing human genomes.

In the following video, Reid discusses Complete Genomics’ technology. Recently, the company announced a particularly exciting advancement in their software for digital analysis of DNA. Now when a researcher sends a genome to be sequenced CG will include information about copy number variation and structural variation – data that can illuminate where in a cancer cell genome that DNA has gone bad. Basically Complete Genomics is making it much easier for scientists to translate genomic data into insights about the nature of cancer. Coupled with a growing assortment of open source analytical code (CGA tools), Complete Genomics’ software is accelerating research into genetics. Pretty cool.

Other companies, like Ion Torrent, have developed DNA reading technologies that use semiconductors rather than optics to sequence genes. These CMOS based sequencing technologies have been hailed as the next step forward in genetics. As you saw in the video, Reid explained the reason why they aren’t afraid of semi-conductor based DNA readers. Can we all say that reason together? Complete Genomics only has to worry about whole human genome sequencing. While we toured the Complete Genomics facility, Reid pointed out that if you calculate how much current CMOS tech will cost to sequence a full human genome, the price would be many hundreds of thousands of dollars (or more). The big advantage semiconductor sequencing has is that it can fit on a desktop. Complete Genomics doesn’t want to fit on a desktop and they don’t want to be portable. They just want to sequence whole human genomes.

The same logic applies to those companies looking to push the boundaries of how much DNA they can read at a time. In the sequencing field, there are both ‘long reads’ and ‘short reads’. The human genome has more than 3 billion base pairs (those A,C,T, G letters). In order to sequence a genome you end up first sequencing smaller chunks of those letters, and then pasting those chunks together to get the full 3 billion letter code. The shorter the chunks you use, the more you need to double check your work and the more complex it is to paste things together. ‘Short reads’ sequence each chunk multiple times (10x or more for some Complete Genomics projects) while ‘long reads’ get away with doing that less. Long reads, however, also tend to be slower and more expensive. As Reid explains, long reads are good for some things, but Complete Genomics isn’t into those things. They have improved software that makes short reads the most economic way for them to proceed with human genomes.

This company knows exactly what it wants to do. And it is doing it really well.

That doesn’t mean I’m completely free of concerns. I’ll stop my blatant cheerleading for a second and do a little math. Reid didn’t give us an exact total for how many genomes they’ve sequenced (that’s ok, we know from other press materials that the number is more than 500 – damn impressive) but he did tell us that his current capacity is around 400 genomes per month. Those sell at a price of $10,000 each (or less if bought in bulk). Assuming there’s enough market demand (which I think there is), that means with current levels of production Complete Genomics could make around $4 million a month in revenue. So, maybe $48 million a year? Remember, even as Complete Genomics increases its production to drive up their revenue, the price per genome is planned to recede. This company has spent “tens of millions” on improving their software, and according to their own reports they spent more than $20 million in Q3 of 2010. Is $48 million per year enough for Complete Genomics to grow? Reid says they are very happy with their IPO, but I know that if I were in his place I would have been even happier if they had raised their original target of $80M instead of the $50M or so they got.

I think this next year is going to be a critical time for the company. Depending on funding and revenue they could have to stay on a conservative growth curve. Or, if they secure the finances, they could really ramp up – trust me, the technology looks like it is more than ready.

I really want a whole genome sequence to cost less than $1000 and not simply because I ‘m itching to peer at my own software code. By the time we hit that price point, researchers will have had the opportunity to look at thousands (tens of thousands?) of genomes and finally get the data they need to puzzle out some of the secrets of our DNA. That future may be nearer than we think. For now, Complete Genomics looks like the company that is going to take us there. I can’t wait.

Update: No person at Singularity Hub currently owns any stock in Complete Genomics or owns any financial stake in the company whatsoever.

[image credit: Complete Genomics]
[video credits: Aaron Saenz/Singularity Hub]
[source: Cliff Reid/Complete Genomics]

Open up your financial umbrellas, Complete Genomics is going to make it rain. The Mountain View startup has built a name for itself as one of the premier providers of whole genome sequencing for humans. Now we are just days away from their IPO. According to the filing statements with the SEC, Complete Genomics will offer 6 million shares of their stock at a price between $12 to $14. To encourage prospective investors to leap at their offer, the company released details of its current and future production. At the beginning of the year, the worldwide total number of human genomes ever sequenced was less than 300. Complete Genomics produced that many in the third quarter of 2010 alone. They hope to produce 400 genomes per month by the end of the year. These are big numbers, and they’re likely to get bigger. Much much bigger. In our interview with CEO Cliff Reid back in January, he claimed that Complete Genomics would sequence 1 million human genomes by 2014, and at prices substantially lower than any on the market today (possibly < $1000). The race to establish whole genome sequencing supremacy is underway, and this IPO will be a sign of how much faith the public has that Complete Genomics can come out on top.

It’s been a big season for genome sequencing. Ion Torrent, a company developing CMOS based DNA sequencing technology was purchased by Life Technologies for $375 million. Critical parts of the CMOS approach to DNA were actually licensed to Ion Torrent earlier in the year by DNA Electronics, a UK company looking to develop handheld genetic scanners that we’ve discussed before. Pacific Biosciences (NASDAQ: PACB), which has developed optics based DNA sequencing tech, had its IPO at the end of October and raised around $200 million. BGI, China’s premier genome institute recently announced it was teaming up with OpGen to further their own optical approach to DNA sequencing. Everywhere you look, from the EU to California to Asia, forces and finances are gathering to see who will provide the next generation of genome testing and analysis.

This heightened activity in the field may be just what Complete Genomics needs to fuel their IPO. With Ion Torrent selling for $375 M and Pacific Biosciences raising $200 M at a similar share price (~$16), Complete Genomics gets a good idea of what it can raise. The $86 million it hopes to pull in through its stock offering will nearly double what it has gained through venture investments. Complete Genomics gathered $39 million in venture funding this August putting it up to around $91 million in total. With another $86 M, Complete Genomics would have the funds to expand its new sequencing centers aggressively – a key requirement if they are to develop as quickly as Cliff Reid seems to be planning. Investors may look at Complete Genomics’s competitors recent financial gains, compare their tech to CG’s rapidly growing capabilities,and flock to the IPO.

Yet such investments are not without their concerns. Even while raising venture funds, Complete Genomics was fighting off patent infringement lawsuits from Illumina - perhaps their main rival in whole genome sequencing. Genetic testing based on SNP (single nucleotide polymorphisms) has faced growing concerns over accuracy and relevance in the light of real and perceived errors. The field of genetics, in general, has faced criticism for the lack of real world benefit for patients in the ten years after the first human genome was sequenced. Investors may see Complete Genomics’ cheap whole genome sequencing, which provides phenomenonally more data than SNP tests, as the technology that will come to dominate genetics and reconfirm its importance in medicine. Or they may see the uncertainty in genetics as a great reason to avoid investing in the field altogether.

The same factors which make investments a risk make them very exciting to techno-optimists like myself. I can’t say for certain that Complete Genomics will be the undisputed leader in whole genome sequencing. There’s too much potential competition from Illumina, and the CMOS and optical approaches developed by others are too attractive looking, to call things in Cliff Reid’s favor at the moment. Still, I do think Complete Genomics has the right approach to sequencing: specialize in one field (human genomes) and use economy of scale to push towards ever cheaper and larger production. 400 genomes a month by 2011 is an amazing accomplishment, especially as the costs for materials for each genome may be as low as $1800. The only way Complete Genomics is going to lose is if some other company can beat that. Either way, scientific research and personal genomics will have won. Cheap and fast whole genome sequencing will provide us with huge amounts of new genetic data that we can use to understand illnesses, and provide better healthcare. When your genome costs less than $1000 to sequence, millions all over the world will be encouraged to get themselves tested and claim an informed ownership of their own genetic information. Win or Fail, Complete Genomics’ IPO is another sign that the next DNA revolution is near.

[image credit: Complete Genomics]
[sources: Complete Genomics, SEC]

Europe’s leading genetic sequencing provider, GATC Biotech, recently announced that it would sequence 100,000 human genomes by 2014. Based in Germany, GATC plan on using sequencing technology from other industry leaders, including Illumina’s HiSeq2000 and Pacific Bio’s PacBio RS single molecule platform, to achieve their goal. They are reportedly already on target to finish 100 human genomes by the end of 2010. To facilitate the ramp up needed to hit the 100k mark in four years, GATC has created a new unit, and has grown their staff to 120 employees. They predict that sequencing customers will come from the pharmaceutical and diagnostic industries, as well as academia. While GATC isn’t adding any new technology to the whole genome sequencing game, they are a major force in Europe, and seem to have the resources necessary to make their goal a reality. With another company competing for sequencing dominance, the chances for cheap reliable access to your own genome are looking better every day.

President Kennedy famously put the US on track to win the space race by setting the goal, “… of landing a man on the moon and returning him safely to the earth.” Whole genome sequencing is now entering a similar race, with similar bold statements by prominent companies. Yet no one seems certain as to where the moon is, metaphorically speaking. Complete Genomics has announced it will sequence a million genomes in the next five years. GATC has its 100k genome goal set around the same time frame. Which of these is the important landmark? Does it really matter if either one succeeds?

Globally, the number of human genomes that have been sequenced is still in the low hundreds. With such a small data set, the number of things we can learn from a genome is still fairly limited. As we mentioned before, it has been 10 years since the first human genome was sequenced and we still haven’t had a revolution in genetics. How many genomes will it take before we get there? We may have major breakthroughs by the time we sequence a few thousand genomes, or it may take us two or three million before we find the connections needed to make big breakthroughs in genetics. Those leaps in understanding are going to be more meaningful than hitting some arbitrary mark (1 million or 100,000) in the number of genomes sequenced.

The real saving grace of all this competition to sequence the most genomes quickest is that it is driving prices down rapidly. Illumina’s HiSeq2000 and other instruments are drastically reducing the reagents costs needed for each genome. Complete Genomics is already looking to offer genomes at less than $10,000 USD this year. With service groups like GATC getting into things, we’ll hopefully see prices plummet in the next five years. That will help research teams, in the pharma industry or academia, find those major breakthroughs in genetics we’ve been waiting for. It will also mean that millions of people around the world would be able to afford to get access to their own sequence, especially if prices fall below the $1000 mark. In the end, I’m not terribly thrilled that GATC is aiming to hit the 100k genome goal by 2014, but I am enthusiastic to see what kind of changes in genetics their efforts might enable.

[image credits: GATC Biotech]
[source: GATC Biotech Press Release]

CG wants to hit 5000 sequences by the end of 2010. Well they already have 500 on order. Time to hit the lab!

Complete Genomics has made some heavy predictions about the number of whole genome sequences it will complete in the next five years, so you know we have to keep tabs on them and see if they’re going to live up to their claims. According to a recent press release, CG has increased the number of current customers from around 10 to more than 30. These new customers include the University of North Carolina, the Institute of Cancer Research UK, the Erasmus Medical Centre in Rotterdam, and many others. With all the new business CG has booked orders exceeding 500 whole genome sequences. That’s a pretty good step towards achieving their goal of 5000 WGS for 2010. While Complete Genomics still has a long way to go before it will hit the 5k or the 1 million mark, this new round of orders is good evidence that they’re becoming the dominant force for sequencing whole human genomes.

Right now, the vast majority of whole genome sequences are used for genetic research. The Institute for Systems Biology ordered 100 genomes from CG, and now Pfizer and VIB are following suit (for unspecified amounts). You’ll notice other new customers listed above are also research institutions. That reflects where the field of genetics is at the moment: there are a few gene therapies available, but mostly we’re still just trying to understand the details of our DNA.

Eventually, however, that will change. At some point our genetic code will be researched enough that we can make powerful conclusions about physical health based solely on a genetic test. Already, we’ve got plenty of personal DNA testing services that will look at small portions of your genes for some valuable (but limited) insights. We’ll soon reach a day when medical treatments will work best if doctors have access to your whole genome. Then everyone will feel a large pressure to get sequenced. By specializing in only human genome sequencing, Complete Genomics has been able to increase their production and decrease their costs. Hopefully that trend will continue. Right now, CG is the cheapest sequencer, providing bulk orders at about $5000 per WGS. When that drops below $1000 many individuals will start to get tested outside of research institutions. When the cost drops below $100 or even $1…it may take years but some day whole genome sequencing will be as common as taking your temperature. Complete Genomics looks like the most likely candidate to get us there.

[image credit: Complete Genomics]

Dr. Cliff Reid, CEO Complete Genomics, Has A Master Plan To Sequence 1 Million Genomes!

Without a doubt the hottest company in the genomics sector right now is gene sequencing powerhouse Complete Genomics. In just the last four years the company has come out of nowhere to dominate the market for low cost sequencing of human genomes in large quantities. Although Complete Genomics is now slated to sequence an incredible 5,000 human genomes in 2010, this is nothing compared to what the company has in store for the years ahead.  Just days ago, in a Singularity Hub exclusive interview with Complete Genomics CEO Dr. Cliff Reid, we have learned that the company is now hoping to sequence 50,000 genomes in 2011 and a whopping 1 million genomes by 2014. Considering that by the end of 2009 only about 100 or so human genomes had ever been sequenced, most of them by – you guessed it – Complete Genomics, this represents an enormous shift in the industry. In the rest of this post I will share with you the juicy details from the interview, followed by the full video of our conversation at the end.

Although companies like 23andme or Illumina have been hogging much of the headlines in genomics recently, the real story may be that Complete Genomics is about to rewrite the game for the entire industry. Simply put, Complete Genomics is the first company to realize that sequencing human genomes is a brute force computational problem that is best overcome through large scale centralization.

Traditionally if a research team wanted to sequence a human genome they would be forced to purchase expensive machines from the likes of Illumina to do the job. These machines, such as Illumina’s latest HiSeq 2000, might cost half a million dollars or more up front, require the hiring and training of several staff to operate and maintain the instruments, and require several different types of expensive, specialized materials as continuous inputs. What’s more, these expensive and wonderful machines might end up sitting around much of the time unused in between projects. In a world that demands the sequencing of millions of human genomes in the coming years, this model of distributing individual sequencing machines is simply too costly and inefficient.

Enter Complete Genomics: Master of Centralization and Scale

In the next decade we may sequence the genome of nearly every person in the developed world. With 6 billion people in the world and approximately three billion base pairs per genome we are talking about an enormous task of scale and computation.  Years ago Complete Genomics realized that centralization in a dedicated sequencing facility was the answer to this challenge.  Today they are bringing their vision to reality.

Instead of building individual machines that can be shipped off to laboratories, Complete Genomics is turning the traditional industry model upside down and doing the sequencing itself.  Researchers send Complete Genomics a sample of human DNA in the mail, allow them to process it in their sequencing center, and shortly thereafter they will ship back the sequencing results at a cost and speed that is crushing the rest of the industry.

What do I mean by “crushing”?  In November of last year Complete Genomics announced that they had sequenced 3 human genomes at an average cost of materials below $5000 apiece, shattering all previous records by nearly a factor of ten!  Last year Complete Genomics was charging its customers $20,000 per genome and this year they will be charging $10,000 or less.  We can expect the company’s costs and the prices it charges its customers to continue to drop dramatically in the next few years. The $1,000 genome is indeed within sight.

Complete Genomics is essentially turning genomic sequencing into an assembly line process with all of its associated advantages. Equipment can run pretty much 24/7 without interruptions, thereby maximizing the output and return from multimillion dollar investments. A small staff can be trained to run an entire facility of sequencing machines. This significantly reduces the human cost of training and labor.  Reagents and other supporting materials can be purchased in bulk on the cheap.

Further streamlining the process and the costs, Complete Genomics is only sequencing human genomes. This is a huge differentiator that people often overlook, yet it is crucial to the competitive advantage of the company. When working with multiple organisms, there are unique factors such as reagents, read sizes, genetic coding idiosyncrasies, and preparation methods that must be accounted for. By focusing solely on human genomes Complete Genomics is further optimizing its operations for low cost and high efficiency.

Although originally slated to go live this January, Cliff Reid says that Complete Genomics’ first large scale sequencing center is now going to launch on April 1. It is because of this delay that Complete Genomics’ is only targeting 5,000 genomes this year instead of its original target of 10,000. Of course 5000 genomes is still nearly 50 times the number of genomes that have ever been sequenced to date by all companies/institutions combined. Not bad!

Can They Really Sequence 1 Million Genomes In 5 Years?

Although Complete Genomics is aiming for 1 million genomes by 2014, we need to take this target with a grain of salt.  Given that the company is set to deliver only half as many genomes in 2010 as originally planned, who is to say that their 2014 roadmap won’t fall equally short?  Yet to focus on a specific number really misses the point.  The key takeaway here is that Complete Genomics is finally ushering in the long awaited era of cheap, high volume genomes through assembly line centralization and scale.  The model seems to be a winner, and even if Complete Genomics were to somehow stumble, it is likely that competitors would be quick to follow suit.

A comparison to Henry Ford’s pioneering of the car assembly line with its hugely successful Model T naturally comes to mind, and this is not lost upon Cliff Reid.  Ford famously said “Any customer can have a car painted any color that he wants so long as it is black.”  In homage to Ford, Reid joked during the interview that “We’ll sequence any organism, as long as its human”.

United States Today…Tomorrow The World

Over the course of the next year Complete Genomics will be creating plenty of waves in the industry with the world’s first human only large scale sequencing facility here in Mountain View, California.  This facility will single handedly sequence on the order of 50,000 human genomes in the next 18 months.  Impressive – yes – but to get to 1 million genomes in the next 5 years Complete Genomics is going to need more large scale sequencing facilities.  Many of them will need to be in other parts of the world, such as Asia.

Can you say CAPEX?  According to Reid, the current plan is to build up to 10 sequencing facilities in the next several years, each of them able to produce anywhere from 50,000 to 100,000 genomes per year.  Although increased output and redundancy of operations is a key driver of these added facilities, Reid points out that political jurisdiction is an equally important driver.  Governments will be reluctant to see their citizens’ genomic data crossing borders.  If Complete Genomics wants to be in the game of sequencing genomes of major countries in Asia they are going to have to go inside those countries to get the job done, and that is indeed where they will go.

More Genomes, More Money – An IPO?

As we can see it is going to take a fair amount of capital for Complete Genomics to pull off its master plan.  Last quarter the company secured $45 million in funding despite a very harsh economic environment.  Yet this cash infusion is only a temporary measure to get the first facility or two up and running.  More money will be needed to realize the company’s vision for ten or more sequencing facilities and 1 million genomes in the next 5 years.  As Reid says in the interview “Fast growing companies like ours inhale cash”.

Of particular interest to many following this hot story is whether or not an IPO is in the company’s future.  Although legally and strategically we can’t expect Reid to full out confirm an upcoming IPO, he does the next closest thing with the following comment “We also hear rumblings of the public offering market becoming open to certain companies and we would consider that a very attractive option”.  Investors get your cash reserves ready – an IPO looks like a strong possibility.

What Will We Do With 1 Million Genomes?

One argument I often hear from people is that all this genome sequencing business is a big waste of time.  After all, more than fifty genomes have already been sequenced and what do we have to show for it?  Where is the medical revolution that genetics was supposed to unleash?  Will there really be a demand for the sequencing of 1 million genomes in the next 5 years even if Complete Genomics can provide it?

Are you freaking kidding me!  One million genomes is just the tip of the iceberg folks!  Over the next decade or two we will probably sequence tens of millions of human genomes, and – yes – this data WILL be useful.

As with nearly all hot topics of the day – and genomics is no exception – our imaginations have gotten ahead of the technology.  The medical revolution promised by genomics will indeed become reality, but it will take many more years than people thought.  It turns out that by sequencing only a handful of human genomes there is only so much information that can be learned.

As Reid likes to say, there are only about 1,000 major human diseases out there.  One million sequenced human genomes will allow us to study the genetics of each of these 1,000 diseases, each with a pool of 1,000 genomes for comparison.  The information that will be teased out of this data will indeed produce the medical revolution that we have all been waiting for, but first we need tens of thousands of genomes to perform the required analysis.  We need the data!

We Are A Data Company

One of the things I love most about Complete Genomics is their laser focus on doing only one thing: sequencing human genomes.  This extreme focus on doing one thing well has been a proven secret to success for many of the world’s greatest companies.  It will be no different with Complete Genomics.

Rat genomes, worm genomes, and the genomes of countless other organisms will need to be sequenced in the coming years, but Complete Genomics is going to ignore those.  As Complete Genomics comes to dominate the market for human genome sequencing in the next several years, it may be the sequencing of non-human genomes that will provide a still enormous market for the Illuminas of the world.  It is great when a field is so large that there is enough room for pretty much everybody to win.  Genomics is one such field.

In the end Complete Genomics is a data company.  Their gift to the world in the next several years will be to deliver the vast store of data that is locked within the individual genomes of each of us.  Understanding this data, and converting this understanding into real world medical solutions, however, is not Complete Genomics’ game.  They will leave that task to other companies.  Complete Genomics is not the company that will directly give us the medical revolution that we have been waiting for, but indirectly their role is equally important.  They are giving us the data.

But Who Are The Customers?

Although it is exciting to think of average citizens purchasing their genomes directly from Complete Genomics, at least for the next two years Reid explains that the real demand will come from research institutions and corporations.  These organizations have the budgets, not to mention the desire to discover the next big medical breakthrough, to justify the purchase of thousands of genomes from Complete Genomics.  Individuals will indeed be able to purchase there own genomes in the future, but at least for the next 2 years individuals will not be the key driver in this business.

Complete Genomics – We’re Watching You!

Well, that about sums up the interview with Complete Genomics, but our coverage of the company has only just begun.  We will be monitoring the progress of the company closely, so stay tuned for more posts in the future.  In the meantime, be sure to check out a full video of the interview below:

Illumina recently unveiled it's new sequencer, which shows some significant improvements.

The ongoing race to become the household name for whole genome sequencing is speeding up. Industry giants Illumina (ILMN) and Complete Genomics have both made recent announcements which demonstrate how serious this competition really is. The most recent battleground is the JP Morgan Healthcare Conference in San Francisco where thousands of investors and billions of dollars are at stake. Illumina unveiled a new sequencing machine, the HiSeq 2000, which has 30x coverage and 2×100 base pair read length. Importantly, it only requires $10k in materials to process each sample and can sequence two entire genomes over a period of about 8 days. Complete Genomics has countered with some impressive news of their own. This fall they announced the sequencing of 3 individual genomes at an average materials price of just $4400, and future whole genome sequencing (WGS) will be sold at just $20k per sample with large price breaks as order sizes increase. According to their twitter feed, CG told investors at JP Morgan this week that they have delivered 50 genomes and plan to complete a whopping 5000 more in 2010. We’ll get a chance to learn more about Complete Genomics plans for this year when we interview CEO Cliff Reid at PMWC next week. It’s a fierce battle between these two genetic giants, but the war is likely to lead to some amazing benefits to you and I.

As WGS becomes cheaper, we’ll see gains in research, diagnosis, and genetic treatments. What constitutes “cheap” is really at the heart of this competition. Certainly genome prices are falling and will continue to do so. Singularity Hub believes, as many do, that the magic sales tag reads around $1000. At that cost, most individuals in industrialized nations will be able to afford WGS (or pressure their insurance providers to cover it). We would see nearly universal sequencing among those interested in harvesting the benefits of genetic research.

Both companies have a ways to go. Illumina’s price per sequencing is still hovering near $10k or above with the HiSeq 2000, though this is about one fifth the price of their first personal genome studies (~$48k). The new sequencing machine, however, does have some major promise at becoming a definitive tool in the market. The Beijing Genomics Institute has shown interest in purchasing 128 machines! At $690k a piece, that’s a major investment.

Complete Genomics is shooting for the $1000 price line by focusing exclusively on human genomes and economies of scale. Hopefully Singularity Hub will be able to tour their new (and large) facilities in Silicon Valley soon. CG’s commitment to 5000 genomes in 2010 is both promising and concerning. It’s remarkable that the genetics company is following a seemingly exponential ramp up in production going into the new year. Unfortunately, CG had originally promised 10,000 genomes to be completed in this time frame. I’m actually okay with the factor of two discrepancy. As long as CG sequencing is in the thousands, and not hundreds, I think we can be very hopeful for reaching the $1000 benchmark in the next few years.

I should mention that this isn’t a two-horse race. Not really. While Illumina and Complete Genomics are dominating the media feeds and the production benchmarks, there are other genetic sequencing companies. And, it’s still very early in the formation of the WGS industry. We could see a dark horse candidate arrive and become the new household name for sequencing. Genetic expertise isn’t limited to the US and we should all keep an eye out for companies in Europe, China, and India preparing to jump ahead in the race.

As always when dealing with genetics, I find the writing at Genetic Future to be of enormous help in putting new developments in perspective. Along with the Genomics Law Report, GF provided a well reasoned view on the recent developments at Illumina. I would also encourage interested readers to check out CG’s twitter feed, as they put some really juicy news in there on occasion. Hopefully between these sources (and Singularity Hub of course) we’ll be able to keep you abreast of all that is going on in the genetic sequencing industry. This is exciting stuff, folks. Starting now, genetic research is being accelerated by the lowered costs of WGS and we can hope to reap the benefits of those studies in the next five to ten years. In that same time frame you may see personal genomics fall into your budget. That’s going to change our healthcare, the way we plan our lives, and maybe even how we think of ourselves. The genetic revolution is coming.

[image credit: Illumina]

Complete Genomics is providing 100 whole genomes sequences to ISB. It's the largest genetic association study of its kind to date.

The era of genetic studies based on whole genome sequencing is definitely upon us. According to a recent press release, Complete Genomics will provide the Institute for Systems Biology with 100 (nearly) whole genome sequences to research Huntington’s disease – a degenerative brain condition which affects nearly 1 in 10,000 people in the US. This will be the largest genetic association study of its kind ever. While the genetic causes for Huntington’s are well understood, the study will focus on the unknown “disease modifiers” – genes that cause the variation in severity in patients. If successful, the ISB study will also boost Complete Genomics’ reputation for sequencing.

There are many ways to associate genes with diseases. Companies like 23andMe regularly use SNPs (single nucleotide polymorphisms) to identify individuals with high risks for certain conditions. The ISB study, however, will examine nearly all of the genome – looking at SNPs, and sequences of DNA that cannot be analyzed with today’s SNP technology. As whole genome sequencing becomes cheaper (CG is at $20k and dropping) more and more research institutes will be able to follow in ISB’s footsteps and find important discoveries in the less well known stretches of your DNA. That’s going to lead to a better understanding of the associations between illness and genetics and ultimately provide you with improved healthcare.

Of course, the study isn’t remarkable simply for using whole genome sequences, it’s the number of those genomes that’s impressive. 100 genomes (probably around $20k each) is a substantial research investment. ISB is taking advantage of the patient pool size by looking at volunteers with severe forms of Huntington’s, members that exhibit a family history of the disease, unaffected family members, and control groups. This comprehensive sampling will likely be necessary as the “disease modifiers” could consist of several unknown genes interacting together. The more data ISB collects from CG, the better the associations they can form.

The mountain of data could be a problem, however. Great advancements have been made in lowering the costs of whole genome sequencing, but now the cheaper tests are increasing the size of data sets that scientists have to pour through. Undoubtedly ISB will analyze the data as quickly and completely as they can, but 3 billion base pairs per genome…that’s going to take some major computing power and time.

While ISB’s research may be a boon to sufferers from Huntington’s, the guaranteed winner is Complete Genomics. This is the first large sequence study that CG will attempt with their newly expanded facilities. It also puts them squarely on the path to achieving their goal of sequencing 10,000 genomes by the end of 2010. By expanding the range of DNA analysis to outside the standard set of SNPs, CG and other whole genome sequence companies are allowing geneticists to really examine the exome (protein coding sections) and regulatory portions of DNA. As CG, Illumina, and others make whole genome sequencing more affordable, these associated scientific advantages will become even more desirable. That’s going to mean big business growth in the next few years. Hopefully it will also mean big successes in medicine as well.

[photo credit Nova, PBS]

The race to provide you with access to your genome is really heating up. Industry leader Illumina (NASDAQ: ILMN) has completed its first genome sequencing service for an individual at the low-low price of $48,000. That’s almost ten times what Complete Genomics plans to charge, but Illumina is offering the service directly to private individuals, not research groups. In fact, this is the first time any one person has had their genome sequenced for less than $50k. Illumina’s performance shows that it is still one of the forces to be reckoned with in whole human genome sequencing.

What are we to make of Illumina’s successful personalized genome sequencing service? It stacks up well against Knome’s KnomeCOMPLETE™ service which is perhaps the only other successful individual genome sequencing service on the market at the moment. Knome is trying hard to remain a contender in the field, but at $99.5k, it’s more than double Illumnia’s price.  With comparable capabilities and results, price becomes the real determining factor between those two companies.

Of course, it’s hard to take either seriously as a contender against Complete Genomics. $99,500 versus $48,000 versus $5000, which price would you want to pay? Of course, CG is only offering that low price to orders of 40+ genomes. In orders of 8+, they’ll be charging $20,000 (see our earlier article for more). The price for a single solitary genome could be even higher. But it’s actually unclear whether Illumina or Complete Genomics is really after the individual customer market. We know people who are after the individual market, and may be offering it at only $1000, and we’ll get that story published soonish. (It seems like we mention this mystery company every other day. Sheesh)

While CEO of Illumina, Jay Flatley was the first to get his genome sequenced under the new system, the first official customer was Herman Hauser of Amadeus Capital Partners. According to the Illumina website, both men intend to place their genomes in the public domain (potentially doubling the number of such genomes) in order to facilitate understanding and research. The next two customers on the docket are preeminent scholar of African American studies, Henry Louis “Skip” Gates, Jr. and his father, Henry Louis Gates, Sr. As Skip Gates hosted and produced two TV specials on African American heritage that featured DNA tests, I anticipate his genome results will facilitate the production of a third show.

There are two broad approaches to the task of analyzing the entirety of your DNA. You can specialize as much as possible, and in doing so reduce costs, or you can keep your range of applications wide, but sacrifice in economic efficiency. Complete Genomics represents the first approach, Illumina the second. Illumina can sequence DNA and RNA and not just from humans. Their sequencing services are broad, rigorous, and perhaps the most trusted in the industry.

So that’s how I view Illumina’s latest success: just another feather in a well-feathered cap. Unless Illumina drastically brings the costs down, Complete Genomics, or another company like them, will dominate the human genome sequencing market. If Illumina does cut the price, they certainly will enjoy a large share of the market. They have broad respect in a variety of DNA testing fields and they are working with 23andMe, Knome, deCODE Genetics, and Navigenics in secondary data analysis.

Knowledge of your genome is likely to be one of your strongest assets in the decades to come. Current uses and understanding of genetics tend to focus on relatively few genes – single nucleotide polymorphisms or SNPs. Companies like 23andME help you determine ancestry, risks for diseases, and important trait information just by using SNPs (and some short sequences of DNA). That’s why services from those companies are so cheap. As research into genetic traits continue, the range of ‘interesting’ DNA segments will increase. Whole genome sequencing has the potential to tell you about every inherited aspect of your body. In that light, sequencing your complete genome is likely to change from novelty to necessity.

Anyone who’s read my posts before probably knows that I love when businesses compete. The only thing that makes me happier than knowing someone is trying to provide wide-range access to genome sequencing, is knowing that someone else is trying to do it even cheaper. The public needs that access sooner rather than later. Today, knowing your genome just gives you a little more information for you and your doctor to use when planning your healthcare. Tomorrow, understanding your genome could help you extend your life by 30 years, increase your intelligence, or make you glow in the dark. It all starts with sequencing, and thankfully no one has a monopoly on that. Yet.

Complete Genomics is going to sequence 10,000 genomes by the end of 2010. But you and I may not be able to access the $5000 price tag.

Complete Genomics has had a busy spring. For those of you who missed our February story, or our recent article, CG is a human genome sequencing company that is focusing on economies of scale. In a recent press release seen on BusinessWire this week, CG finally gave some hard facts about their successes. They’ve completed 14 genomes since March, a noteworthy feat considering that just 20 human genomes in the world have ever been published. Complete Genomics is set to dramatically expand its capabilities in the next year, aiming to complete 10,000 genomes by the end of 2010.

I don’t want to do a wholesale endorsement of a company, but Complete Genomics is just way ahead of the curve here. Their pricing of $5000, see the caveat below, is affordable for most institutions. And 10,000 genomes by the end of 2010, are you kidding me? That’s just incredible, and really gives hope that genomic sequencing will become a possibility for research institutions of all sizes. As amazing as CG is, we know of one company that has a real shot of sequencing a genome for just $1,000 in the next 6 months…we will tell you about them as soon as we can.

With scale comes availability, so ten thousand genomes translates to a lot more great scientific research. By comparing the sequences of tumor cells to non-tumor cells, cancer investigators can discover genes that may serve to eliminate the disease while preserving health tissue. Small scale disease studies will likely expand as genome sequencing becomes affordable and we could see a rise of genetically informed therapies for a huge host of illnesses.

According to their release, Complete Genomics’ current client list (more than a dozen) includes: “Pfizer, the Flanders Institute for Biotechnology (VIB), Duke University, Brigham & Women’s Hospital, and the HudsonAlpha Institute for Biotechnology in addition to the previously announced Institute for Systems Biology and Broad Institute of MIT and Harvard.” These institutions are each purchasing five to ten genomes for their disease studies on HIV, schizophrenia, and various cancers (lung, breast, colorectal, melanoma).

Cliff Reid, CEO, has renewed his pledge of 10,000 genomes by end of 2010, and finally revealed some of the intended prices for the sequencing services. For studies of 40 or more genomes, the costs will be around $5000 per. For small studies (8 or more genomes), the costs are considerably higher: $20,000 per. This agrees with my earlier estimate for what current customers are likely paying. It also means that the average citizen will not be able to afford to sequence their own DNA unless they form a co-op of like-minded individuals.

But that may change. Complete Genomics is rapidly expanding their capabilities, and may eventually reach a production rate far above ten thousand genomes per year. That opens the opportunity for cheap individual sequences, or gives hope that an aggregating service (that finds 40+ people who want to sequence and helps them negotiate a group rate) would be easily formed.

The recent press release vaguely outlines how CG hopes to achieve their triumph of scaling. First, they are developing new sequencing instruments to process several high density nanoarrays of DNA (DNBs) at once. These DNBs will contain about 2.85 billion spots of DNA, with 70 bases per spot, allowing an entire genome to be sequenced on one array. This means Complete Genomics will be able to process around one terrabase (10^12 bases) in a single pass! Sequenced information will be stored on massive computing clusters using proprietary software.

As Complete Genomics transitions from their R&D phase to their commercial phase (expect a launch party in January), I’m excited by their commitment to scale. However, I am concerned with the higher than expected price tag. I was really hoping that you and I might be able to afford to sequence ourselves for one to five thousand dollars (and another company may still provide that opportunity). As CG develops its production further, and as competitors ramp up their own capabilities, we can hope that the economies of scale will work in our favor. Having access to your complete genome at an affordable price may be a necessity in the years to come.

Complete Genomics is pushing down the costs of sequencing the human genome.

It’s getting progressively cheaper to sequence your entire genome. Earlier in June, Illumina announced it would provide sequencing for close to $50k, half of their original price. Not to be outdone, Complete Genomics just released on Monday that it had gathered $45 million dollars in funding. The Silicon Valley based company is planning to use that money to further develop their streamline sequencing operations so that they can offer a complete genome for just $5000 by next year. CG’s goal is to finish 10,000 sequences by years end 2010. Even though that’s later than we had hoped, it’s still a whole lot of DNA and at the cheapest price for a whole genome seen so far. The question is, can they really pull it off?

We’ve been looking for a company, any company really, to break the $1000 price mark for a complete genome sequencing sometime in the next few years. That’s about the point where retail sales of the service will explode. With their exponentially decreasing price tag, Complete Genomics might be on that path. However, we know of at least one company that is trying to reach that goal by the end of this year. Stay tuned for that story in the next few weeks.

If you’ve never heard of Complete Genomics, read our first and second story to catch up. Basically they use a common form of short read sequencing and throw in a ton of computer power to sequence a human genome. Interest in personal genomics is escalating as genetic links to diseases are discovered. 23andMe already offers some testing for such diseases and is hoping to gather samples for further clinical trials. By providing the entire genome for perusal on the cheap, CG could make it economically feasible to expand that research into many more illnesses. Already, we’ve shown you how some facilities are erroneously promising to predict a child’s aptitude based on genetic sampling. Perhaps with the cheap sequencing CG could provide, scientific research will match pace with the growing demand for such testing.

Daniel MacArthur of Genetic Future was able to pry CG head Cliff Reid to provide some details in how they hope to achieve their goals. First, Reid disclosed that the test won’t be offered directly to consumers, but rather through retail providers such as Knome and 23andMe. That means the price you or I will see could be considerably higher than $5k. Whatever the retail price, Reid promises 120 billion base pairs sequenced, 98% of the genome, with just one error in 10,000. That’s considerably better stats than what CG offered in February (92% of genome, about one error in 1,000).

Between now and year’s end 2009, Complete Genomics will focus on its dozens of customers currently in the line up. These include the Broad Institute out of MIT and Harvard which announced it was purchasing at least 5 genomes from CG in March. The Broad Institute reportedly paid $20k for each of their genomes which might be taken as the current baseline price for CG customers. If so, that’s a factor of four that the company has to make up between now and next year.

But scaling is no problem for genome sequencing. Remember that it took 15 years to sequence the first human genome, but the next 6 were done in 24 months. Now we’re talking about doing thousands a year. That’s just nuts and one of the amazing parts about sequencing that I love. Exponential growth is sexy science. And it’s supposed to be one of CG’s strengths. They just finished their first genome in the summer of 2008, and are now on schedule to finish 100 by the end of 2009. Current estimates of finishing 1000 by mid 2010, and 9000 more by the end of that year fit within the exponential growth curve. As MacArthur points out, most of these sequencing services will likely be purchased by researchers in genomic and cancer studies. So the demand is also there.

How can CG scale so quickly? By remaining inflexible but efficient. Their process doesn’t rely on making huge improvements in sequencing technology. Or finding a new sequencing technique. It comes down to streamlining the process. Stick to one task, human genome sequencing, miniaturize whenever possible, fewer reagents means lower costs, and build build build. You can bet a huge portion of that $45 million is going to expanding their facilities in Mountain View.

Who provides the cheap genomes is probably less important than the change it will create. While scientific research will undoubtedly benefit first, the public at large will likely become a dominant consumer. Genetic information is on the journey to becoming one of the most important sets of data someone can know about themselves, with insights into disease, aptitudes, and longevity. Give us the chance for cheap access to that info and you’ll never run out of customers. Just a little while longer, it’s bound to happen.

Complete Genomics uses a sequencing technology called “short read”, which means that they decode the DNA in small segments and then stitch all of these small segments together to make the whole sequence.  This same technique is used by many of Complete’s competitors, and is plagued with the problem that errors are sometimes introduced into the sequence during the stitching process.  MacArthur notes that Complete Genomics’ current error rate of 0.1%, which is reasonable by current industry standards, would result in 300,000 errors in a 3 billion base pair whole human genome.

So what does this mean?  It means that although Complete Genomics’ ability to accurately decode genomes seems to be within the range of its competitors, it falls short of the 100% accuracy that is ultimately desired.  The upshot is that the coming revolution in genomics in the next few years will be somewhat limited by sequencing that is not 100% accurate.  There is still a great deal of work that can be done on genomes that are 99.9% accurate and great scientific progress will undoubtedly result.  Ideally though, in the next ten years the technology will improve to true 100% accuracy, at which point further doors will be opened in the field of genetic analysis.

MacArthur reminds us that Complete Genomics is committed to only sequencing human genomes, even though genomes of monkeys and other organisms could easily be performed.  The reason:

“focusing only on large-scale human -omics will allow Complete to avoid the worst complexities of the service model (i.e. receiving many types of sample that require processing in many different ways), but still focus on the area where the market is the strongest.”

“Reid says that the goal of Complete is to create “a stream-lined factory” producing complete human genomes; by focusing on just one application (unlike any other genome facility) they can hone this process down to the point that they can do it cheaper and better than anyone else.”

Our interpretation: Complete Genomics is smart!  These guys are carving out the position as the company to go to for human genomic sequencing.  The genomics field is competitive and wide.  By narrowing their focus to human only genome sequencing, Complete Genomics is simplifying their business model and further solidifying their position in the lucrative market for human genome sequencing.

Image: source

When reading Daniel’s post you can feel the intensity at the conference as companies at AGBT fight for top bragging rights to deliver the fastest and cheapest genome sequencing capability to the world.  The stakes are extremely high: literally billions of dollars in sales await the company that can dominate in the delivery of affordable, rapid, whole genome sequencing to every human on the planet.

The intensity at the conference reached a climax when Clifford Reid, the CEO of Complete Genomics, delivered his much anticipated presentation to confirm whether or not the company’s industry shattering claim of $5000 sequencing of a whole human genome by mid-2009 was really true.  According to MacArthur, Complete Genomics did not disappoint, and hence a company that nobody had even heard of until it came out of stealth mode in October 2008 now appears to have cemented its position solidly at the front of this high stakes race.

So what is the secret behind Complete Genomics’ stunning success?  The secret is that Complete Genomics’ has completely upended the business model for genetic sequencing, focusing on computational might and centralization while its competitors have focused on flexibility and distribution.

Complete Genomics’ competitors have built their business models around the production of devices that their clients can purchase and install at their own facilities.  This business model offers customers the flexibility of performing their own genetic sequencing, but in exchange for this flexibility customers are limiting the computing capacity they can throw at the problem to what can be squeezed into a deliverable product.

Complete Genomics, on the other hand, does not produce anything that its customers can install or use.  Realizing that genetic sequencing is a raw horsepower problem of who has the most computing capacity,  Complete Genomics has built a server farm that can be continuously expanded to throw more and more computing muscle at the problem.  Complete Genomics has optimized the computation of genetic sequencing, building one centralized, giant super sequencer that now seems poised to leave its competitors in the dust.  Within the next 5 years Complete Genomics is aiming to sequence a whopping 1 million human genomes!

It is important to point out that being the fastest doesn’t mean anything if your output is littered with errors.  MacArthur notes that investigation is still required to confirm the accuracy of Complete Genomics’ sequencing technique when he writes:

“I was convinced by the SNP data, but I will be very interested to see how the system performs in terms of calling large-scale structural variants, and in dealing with highly repetitive regions. These are major problems for very short read technologies that can’t be solved by simply increasing coverage; information on these issues was largely missing from Reid’s presentation, aside from an almost cursory mention of a technology called “long fragment reads” that might help to address such problems. Large-scale structural variants play an important role in human variation and disease, so Complete will need to deal with these areas effectively if it is to generate genome sequences that can realistically be called “complete”.”

As an aside, many might mistakenly think that genomes are already being sequenced for less than $1,000 by companies like 23andme and decodeme, but these companies do not offer full genome sequencing.   Instead they only analyze a few hundred hot spots in your dna called SNP’s that can tell you lots of interesting things about your dna, but not the whole story.  Fully sequencing every single one of the approximately 3 billion base pairs of your dna is a completely different scenario, and this is where the real battle is being fought.

Update: More information has recently been revealed about Complete Genomics