Ion Torrent’s Fast and Cheap DNA Sequencer Catches On, Even as Biologists Tighten Belts

9/15/11Follow @xconomy

Ask Jonathan Rothberg a few questions about his new venture in DNA sequencing, and, ever the showman, he find references to a pivotal event in world history while delivering what amounts to a “no comment.”

The questions were basic enough: How many employees do you have in San Francisco and Guilford, CT? How much has your R&D budget grown? How many customers have you signed up in the past nine months? Have you hit any of the milestones outlined in your 2010 merger agreement with Life Technologies?

“Come on, I’m not going to give that information out. This is like 1948 and we’re the Israelis,” Rothberg said with a laugh in a recent phone interview. “We’re still the underdog. Look at how good the other guys are. I respect my competitors too much to give out that information.”

Rothberg and his colleagues at Ion Torrent, the new unit of Carlsbad, CA-based Life Technologies (NASDAQ: LIFE) may be tight-lipped about internal matters at the moment, but they are cutting an increasingly high profile in the world of superfast/cheap genome sequencing. The company introduced its first-of-a-kind DNA sequencing machine based on semiconductor technology in December. Demand has been strong almost right off the bat, as it rang up $13 million in sales in the most recent quarter ended June 30, a 50 percent increase over the prior three-month period. That performance has come even while Ion Torrent has been swimming upstream against government research budgets that are getting nothing but tighter.

The early sales performance is certainly a small sum to a company like Life Technologies, which had $3.6 billion in revenue last year. But there’s undoubtedly a lot more potential for the Ion Torrent machine to drive growth at Life Tech and in the biomedical research world. The earliest version of the machine costs about $49,000, fits on a lab desktop, and reads individual units of DNA in a new way, through semiconductor chips that pick up distinct electron charges from each chemical base of DNA. It’s the first commercial machine of its kind, in an industry where large and heavy sequencing instruments often cost $500,000 or more, and generate their genomes by using fluorescent tags and sophisticated cameras to read the DNA code that varies from species to species and person to person.

San Diego-based Illumina (NASDAQ:ILMN), Menlo Park, CA-based Pacific Biosciences (NASDAQ: PACB) and Mountain View, CA-based Complete Genomics (NASDAQ: GNOM) are a few of the companies deeply invested in fundamentally different kinds of technology for reading DNA at breakneck speed and low cost. Ion Torrent’s Rothberg previously founded another sequencing company, 454 Life Sciences, that was sold to Roche in 2007. There’s no doubting that Rothberg has set some lofty goals for his operation, particularly since he sold Ion Torrent to Life Technologies for $375 million, plus another $350 million in milestone payments, a year ago. Rothberg says the company’s technology is going to bring genome sequencing down to $1,000 per person by 2013; it’s going to continue to help public health officials identify pathogens within hours of outbreaks; it’s going to pave the way for a $100 billion new market.

Jonathan Rothberg

Yeah, Rothberg was quoted in a Forbes story last December saying this would become a $100 billion market. Nine months in to the product launch, he didn’t flinch, making the same prediction.

“It’s like the race to the South Pole 100 years ago,” Rothberg says. “The guys that win now will change healthcare forever. We’re at an amazing point in history.”

No question, a lot has happened for Ion Torrent since it rolled out its first commercial semiconductor sequencer, called the Personal Genome Machine, in December. The original microchip had 1.2 million accessible sensors, which was surpassed in a couple months by a new chip with 6.1 million sensors. The next iteration—expected to come out later this year—is designed to boost capacity to 11 million sensors. After only a few months on the market, the component cost of the mid-range chips dropped in price from $500 to $99. Rothberg isn’t saying yet how much the newest chips will cost.

While capacity is booming and price is falling, scientists are starting to think about experiments that couldn’t have been dreamed of a year or two ago. Ion Torrent isn’t saying how many machines it has sold so far, but, thanks to the global distribution of Life Tech, Ion Torrent’s machine is now established in labs in 40 countries, Rothberg says. The instrument, along with a rival instrument from PacBio, played a starring role in the German E.coli outbreak, helping researchers identify the kind of pathogen they were up against in a matter of hours. Mark Stevenson, Life Technologies’ president, said on a recent investor conference call that scientists love the machine’s speed, because speedily obtained raw data can pave the way to fast publishing in top peer-reviewed journals. And, he added, Life considers itself fortunate to be selling a $50,000 machine in a period of budget austerity, at least compared to, say, a $500,000 machine.

This being a brand new way of doing science, skeptics are voicing all kinds of hesitation and criticism about the new machine, which creates risks in the commercial rollout. Scientists’ ability to generate raw sequence data far exceeds their current ability to make sense of all the data on their computers. And scientists have raised questions about the accuracy of the early genomes produced from the new instrument, and pointed out that while Ion Torrent is fast at reading short genomes like those of bacteria, it isn’t yet able to compete in one area of intense interest—the sequencing of whole human genomes. (Harvard’s George Church told the New York Times in July that it probably cost $2 million to sequence Intel co-founder Gordon Moore’s genome on the Ion Torrent machine, while Illumina and Complete Genomics can do that kind of sequencing job for less than $5,000.)

Daniel MacArthur, a genomics researcher and prominent science blogger for Wired, says he is impressed that Life Technologies has been willing to promote the new Ion Torrent machines over its workhorse legacy instruments known as SOLiD. But as someone with experience using various sequencing machines, he’s nowhere ready to declare Ion Torrent the best thing since sliced bread. Here’s what he said in an e-mail yesterday:

“I’m typically skeptical that a company the size of LIFE can successfully take disruptive technology to fruition, but I admit there are some promising signs here: LIFE has clearly been willing to set aside (at least to some extent) its ailing SOLiD platform in favour of the new technology, and the public competitions it’s been holding are an intriguing way of harvesting innovation from its customer community.

Still, I’m not yet convinced that Ion Torrent is sufficiently different from the competition to be a truly disruptive innovation. Right now my money’s on the real disruptive technology being one of the third-gen single-molecule platforms currently in development, such as Oxford Nanopore. Something like PacBio, but with a lower error rate, higher yield and cheaper instrumentation/reagent costs, would really change the field.”

Rothberg has heard all the critiques before, and he insists that his team is all over it—improving accuracy, throughput, and ease of sample preparation steps to feed his instrument. And he says all these improvements are happening while maintaining profit margins. The genomic research community, he says, is in the midst of figuring out the new kinds of experiments the machine can enable. It’s a lot like how hackers and open-source programmers have figured out new applications for computers that the original inventors never imagined. “There will be killer apps,” Rothberg says.

No one really knows yet what all those killer apps will be, but Rothberg says he can foresee the machine being used for spotting differences between healthy tissue and tumor samples from an individual with cancer. There’s long-range potential for screening of newborns for all kinds of genetic abnormalities and future predispositions for disease. And while the FDA may want to weigh in on this question in the future, an automated machine that’s cheap, requires minimal skill to run, and can provide basic answers in a couple of hours also sounds like something that could work as a diagnostic tool in a doctor’s office.

While the Ion Torrent is officially a research-only tool, some users apparently have diagnostic applications in mind. “We are winning diagnostic accounts,” Rothberg says. “We lose if someone wants complete human genome sequencing at low cost. If that’s what they want, they should go to Complete Genomics. But if you have an outbreak and want to know what it is in 2 hours? You use ours.” He adds that most diagnostic applications don’t require the full genome to be sequenced, but really need to focus on a particular region.

All of this work is still in the very earliest stages, which Rothberg says is what excites him so much. He used a computer analogy, saying sequencing technology is where computing was when the Apple II series came out. And while he admits Ion Torrent isn’t yet in position to take away anybody’s market share lead just yet, and while he says he respects his competitors, he isn’t shy about predicting victory.

“Nobody has ever competed with semiconductors and won. Semiconductors are the winning hand right now,” Rothberg says. “Nobody wants to be on the wrong side of history.”

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