Personalized medicine is the massive market opportunity next generation sequencing (NGS) offers. The market was about $28 billion in 2011 and dominated by tissue tests to determine drug therapy decisions. The opportunity lies with the ability to generate targeted medicines based on virus/disease composition or individual human genomes. Unfortunately, cost and lack of analytical abilities have acted as impediments to the expansion of this technology into the clinical diagnostics, pharmaceutical and other applied markets, but progress is being made. From a cost perspective, NGS equipment designers have successfully reduced the cost of sequencing a complete human genome to sub-$5,000, from $1 million in 2007. The consensus is that once the price hits or goes below $1,000, the technology will be fiscally viable for more commercial and industrial applications.
One step in this direction has been the desktop analyzers offered most notably by Illunina (NASDAQ: ILMN) and Life Technologies (NASDAQ: LIFE). These instruments are about a sixth of the cost of the higher-end models and are of increasing interest to clinical customers. Both companies have plans to seek FDA approval, with Illumina expecting to submit its request with a specific assay method by the end of 2012. Consumables pull-through appears to be a healthy $55,000, although the sample size is small at this point.
In an effort to reduce the data-interpretation-headwind, Illumina has announced plans to launch five targeted content sets. These consumables were designed by experts to offer streamlined, targeted sequencing for specific genetic diseases or conditions. The targeted conditions include autism, cancer, cardiomyopathy, inherited disease and exome (genetic diseases). The products are only for laboratory use. Shipments begin in Q4 2012. These standardized sets should help advance the analytical abilities of researchers delving into each condition.
Illumina has also teamed up with Partners HealthCare to speed up clinical interpretation. Together they will offer medical geneticists and pathologists infrastructure and networking tools to support the analytics and reporting processes for genetic sequencing data. The companies are combining Illumina’s MiSeq analyzer with Partners’ GeneInsight suite of IT solutions for streamlining analyses and reporting of genetic test results. GeneInsight is FDA approved. The new tools will link to Illumina’s BaseSpace cloud-storage product enabling analysis of the stored data.
Another initiative Illumina has launched is its BaseSpace cloud-storage offering. The service will take genomics data and store it in a cloud-based system for easy sharing and analyzing. This bioinformatics product gives Illumina a key differentiator, as well as a new revenue stream and a way to help move past the data interpretation issue. Illumina will offer one terabyte free, then charge $250 a month for each additional terabyte, or $2,000 for the year. It also offers a 10 terabyte package that runs $1,500 a month, or $12,000 a year. The service will enable clinical customers and smaller research laboratories to avoid having to invest in their own expensive data warehouses. Illumina is also launching an app store for the BaseSpace that will enable researchers to develop analytical tools and sell them through the store, with Illumina taking a 30 percent cut.
Finally, Illumina has announced an addition to its whole genome sequencing service. The company will now offer a “RapidTrack” service that will expedite the sequencing of whole genomes that customers send to the company. Using the new HiSeq 2500, which is capable of sequencing a complete genome in one day, Illumina will now be able to return data sets to customers in less than two weeks. This high-end offering is much improved from main competitor, Complete Genomics, which can take three months or longer to return the completely sequenced genome. We believe this service offers another means to spur the adoption of sequencing techniques in new markets.
Two startups working to speed the process to achieve personalized medicine are DNAnexus and Bina Technologies. DNAnexus also offers a cloud-based service much like Illumina’s, positioning itself between researchers and the sequencing facilities. Bina Technologies is working on software to reduce the 300 gigabytes of information from each complete genome sequence, to a more manageable level. The company reduces the information into profiles, which are more easily uploaded to cloud-systems and are simple to share and manage.
While headwinds still remain, the push towards developing the ultimate market for NGS appears to be more at the forefront of sequence equipment manufacturers than ever before. We believe this bodes well for the long-term outlook for the industry.
Wednesday, September 19, 2012
Battle Road Research Announces
the Battle Road IPO Review
A Monthly Survey of Growth-Oriented IPOs
(WALTHAM, MA) Battle Road Research (www.battleroad.com), an independent stock research firm, has launched The Battle Road IPO Review, a monthly survey focused on the prospects of more than 150 growth-oriented companies that have come public in the last five years. The first issue features stocks across seven sectors: internet, software, hardware, consumer, business services, and manufacturing.
“Our clients tell us they are interested in seeking out new investment opportunities, particularly from among companies that are relatively new to the public markets. As a research-only firm, without an investment banking axe to grind, we are in a unique position to assess the prospects of many of these growth-oriented companies,” according to Ben Z. Rose, President of Battle Road Research.
From its proprietary database of growth-oriented IPOs of the last five years, Battle Roadanalysts utilize qualitative and quantitative measures to help its clients screen for investment opportunities across a range of technology, consumer, business services and manufacturing stocks. The initial focus of the Battle Road IPO Review is on long-oriented ideas. 90 percent of the companies are below $5 billion in market cap, as of mid September, 2012. The Battle Road IPO Review is available in hard copy or directly from Battle Road Research’s website at www.battleroad.com.
Established in 2001,Battle Roadis a research-only firm, not an investment bank, not a broker dealer, and not an asset manager. Unlike Wall Street and regional investment banks, who are paid by the companies they research,Battle Roadhas never accepted compensation from any company that it researches.
“As we set out in search of investment ideas for our clients, we trust that the Battle Road IPO Review will be a helpful addition to our clients’ stock-selection process, and will help further our reputation as a credible stock research company, free from the influence of investment banking,” Rose concluded.
About Battle Road Research
Battle Road Research provides fund managers and analysts with an independent voice on technology, and consumer stocks. Our research process combines rigorous financial analysis with insights gleaned from industry sources. We present our findings in straight-forward Buy, Hold, or Sell research reports. The Battle Road IPO Review is a monthly survey focused on the prospects of over 150 growth-oriented IPOs of the last few years. Since our founding in 2001 we have refrained from investment banking, company-paid reports, and personal investment in the stocks we research.
Ben Z. Rose, President,Battle RoadResearch
781-894-0705, ext. 204
October 13, 2014
Research on companies which have come public in the last several years is available mostly from the investment banks who were paid by the companies during the IPO process. This leads to a conflict of interest as the investment bank seeks to please the owners of the company, as well as provide an objective assessment of the company’s growth prospects to investors, the other group of clients whom the bank serves through its brokerage arm.
This conflict continues long after the IPO is complete, for once a company becomes public, investment bankers and analysts who played a role in the IPO may advise the company on future stock offerings, mergers and acquisitions, and customized plans for insiders to sell their stock.
As a research-only firm, Battle Road is focused on helping asset managers seek out stocks to buy and stocks to avoid, without the conflict presented by conducting business with the subject of its research. Since our founding in 2001, we have remained true to this principle.
The idea for the Battle Road IPO Review originated with one of our clients, a portfolio manager, who sought our help in seeking out solid companies with sustainable competitive advantages –and reasonable valuations—from among the many companies which have come public in recent years. Using quantitative and qualitative measures we developed a methodology for screening for new buy ideas.
The Battle Road IPO Review has become a monthly service that screens for new ideas from a uniquely designed universe of over 180 growth-oriented IPOs of the last seven years. The universe includes software, internet, computer hardware, cyber security, consumer, and business services companies. The median market cap. in the Battle Road IPO universe is $1.1 billion. The universe is rapidly growing with the addition of newly-minted IPOs on a regular basis.
We rank order the stocks by group each month and call out names for further exploration, based on our assessment of the company’s strengths and weaknesses, as well as other measures which include our interpretation of the company’s current valuation, balance sheet, quality of earnings, and other metrics. We draw upon these metrics, as well as qualitative factors to determine our monthly Exploration List, which is a sub-set of all stocks that we believe should out-perform the overall coverage universe. The Exploration List is therefore a screening tool for new ideas. We strive to develop a list that features both growth and value-oriented stocks. Our goal is for the median stock performance of the Exploration List to exceed the median stock performance of the coverage universe.
Our clients use the Battle Road IPO Review to:
About Battle Road Research
Battle Road Research provides fund managers and analysts with an independent voice on technology and consumer stocks. Our research process combines rigorous financial analysis with insights gleaned from industry sources. We present our findings in straight-forward Buy, Hold, or Sell research reports. In addition, we publish The Battle Road IPO Review, a monthly screen for new ideas that examines the prospects of more than 180 growth-oriented IPOs of the last seven years. Since our founding in 2001 we have refrained from investment banking, company consulting, company-paid reports, and personal investment in the stocks we research.
Battle Road Research was one of the first eleven members of the Investorside Research Association, www.investorside.com, the only trade group that certifies its members are free of investment banking, consulting, and research for hire conflicts.