Illumina Leads $8M Investment in GenoLogics to Help Manage DNA Data Overload

10/20/11Follow @xconomy

San Diego-based Illumina, the world’s leading maker of gene sequencing instruments, is getting more serious about software as its customers continue to drown in a sea of cheap DNA data.

Victoria, BC-based GenoLogics is announcing today it has raised $8 million in what it called a “strategic financing” led by Illumina (NASDAQ: ILMN), the world’s leading maker of DNA sequencing instruments. GenoLogics plans to use the money to develop genomics software tailored for cheaper desktop sequencers, to build up its sales and marketing efforts, and develop new applications that can go beyond the research bench and be used in the clinical setting. Illumina’s chief commercial officer Tristan Orpin will join GenoLogics board in connection with the deal.

“The strategic investment by Illumina illustrates our companies’ collective commitment to helping our customers overcome some of the most challenging barriers to next-generation sequencing adoption, namely data management,” GenoLogics CEO Michael Ball said in a statement. “Illumina provides important insights to these challenges and we look forward to working jointly with them.”

GenoLogics was founded in 2002, and has now raised at least $26.5 million since 2005 from a syndicate that includes Illumina, as well as Kirkland, WA-based OVP Venture Partners, GrowthWorks Capital, and Yaletown Venture Partners. The company’s big idea is to create a centralized system that keeps track of data from biological experiments across multiple instruments and applications.

Demand for genomics software has traditionally been thin, as researchers have opted in many cases for custom-made, open source programs. But genomics researchers have been struggling with information overload the past couple years, as companies like Illumina, Life Technologies, Complete Genomics and others have driven the cost of sequencing entire human genomes down to $4,000 or less—creating huge new demand to sequence large volumes of biological samples that need to be analyzed and interpreted.

While scientists may be crying for help with their data, there are limits to the amount they can spend on this type of software. Illumina missed its third-quarter sales forecast by about $40 million after reporting that scientists were skittish about purchasing its tools and chemical reagents as the U.S. National Institutes of Health is facing the threat of budget cuts.

Illumina CEO Jay Flatley downplayed the importance of software in an Xconomy interview in April 2010, but the company has changed its views more recently about the need to integrate its hardware with software. Illumina struck a co-selling partnership with GenoLogics earlier this year. Alex Dickinson, an Illumina senior vice president, will be able to talk some more about the company’s evolving strategy about DNA data analysis at the next Xconomy event in San Francisco on Monday Oct. 24, titled “Computing in the Age of the $1,000 Genome.”

GenoLogics has about 60 employees, according to a company fact sheet. Its customers include the University of Washington, the University of Southern California, Jackson Laboratory, Pfizer, and Sanofi.

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