San Diego-based Illumina, the market leading maker of DNA sequencing instruments, has just made it through a rough year, and now it may be entering its final chapters as an independent company.

Illumina (NASDAQ: ILMN) said last night that it has gotten an unsolicited (that’s polite PR language for hostile) takeover bid from Switzerland-based Roche. The offer values Illumina at $44.50 a share, or about $5.7 billion. That represents about an 18 percent premium over Illumina’s closing stock price of $37.69 on Tuesday. Roche said it plans to run a “tender offer” in which shareholders are being asked to tender their shares at its price until Roche has corralled enough shares to take control. Illumina, in a brief statement, asked shareholders to do nothing until the board makes a recommendation.

The offer must look like a screaming low-ball offer to Illumina shareholders, given that the company traded as high as $79.40 a share in the last year. But Illumina has gone through a rough stretch of late, as it fell short of its quarterly sales goal last fall, and made layoffs, as customers worried about potential federal research budget cuts, and competitors like Life Technologies, Complete Genomics, and Pacific Biosciences all fought hard for their share of a fast-moving market for sequencing tools. Still, Illumina is the dominant player in the market, and the DNA sequencing market is expected to grow as machines get faster and cheaper, making them available to many more scientists. The market is expected to grow from $1.2 billion in 2009 to more than $3.6 billion by 2014, according to figures from Scientia Advisors.

Given the opportunity, I’ve got to imagine the Illumina board is seething at this unsolicited takeover bid. It sounded like it in last night’s terse, but diplomatic, statement.

“Consistent with its fiduciary duties and responsibilities, and in consultation with its financial and legal advisors, Illumina’s Board of Directors will thoroughly review Roche’s proposal and make a recommendation to stockholders in due course that the Board believes is in the best interests of Illumina stockholders. Illumina stockholders are advised to take no action at this time pending the Board’s recommendation.

Analysts at Bernstein, quoted by Dow Jones, didn’t sound so excited about the deal either. Roche has sought to become a diversified healthcare giant that makes drugs and diagnostics, and while high-powered genetic instruments like those from Illumina are primarily research tools today, many in the industry believe they will have more value in the future as diagnostic tools.

“Large scale genomics may, or may not, have an important role in clinical practice in the next 10 to 15 years, but Roche feels it needs to have the option to play just in case the hype eventually becomes reality,” is how analysts at Bernstein interpreted the Swiss company’s move Wednesday, according to Dow Jones.

Quintin Lai, an analyst with Robert W. Baird who covers Illumina, said he believes Roche is mostly interested in using Illumina tools for making products to diagnose cancer. “We think Roche covets the clinical diagnostics potential that ILMN’s technology provides,” Lai wrote today in a note to clients. “We have noted that next-generation sequencing is attracting strong interest in the area of cancer diagnostics and therapy selection.”

Illumina shares shot up 45 percent, all the way to $54.63, in speculation that takeover bids from Roche, or possibly another company, will run much higher. This will certainly be an interesting story to watch unfold over the coming weeks.

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Pacific Biosciences is bringing in an industry pioneer, Michael Hunkapiller, as its new CEO after a disappointing first year on the market with its new breed of DNA sequencing instrument.

The Menlo Park, CA-based company (NASDAQ: PACB) said today that CEO Hugh Martin has resigned effectively immediately, and is being replaced by Mike Hunkapiller, who helped build Applied Biosystems (now part of Life Technologies) into one of the DNA sequencing industry leaders over the past two decades.

Martin will get a severance package that includes a one-year lump sum equal to his base salary, a six-month consulting contract at $20,000 a month, and accelerated vesting of his PacBio stock options, according to a regulatory filing. Hunkapiller will start with a base salary of $400,000, and will get an option grant to buy as many as 1 million shares of PacBio stock, according to the filing.

The writing could have been interpreted as being on the wall back in October, when Hunkapiller, 63, a member of the board since 2005, stepped up his involvement to become full-time executive chairman of the PacBio board. The company introduced its new $700,000 sequencing machine to the market in April, and hit its first quarter sales goal. But then PacBio, and other rival sequencing companies, ran into challenges as scientists worried about federal research budget cuts that are curbing their ability to buy expensive new scientific tools. PacBio cut 130 jobs in September—28 percent of its workforce—and said it generated $10.6 million of sales in its second quarter on the market. That was a slight drop from its debut quarter.

Hugh Martin

Investors have punished the company for its performance, driving the stock down from a high of $16.85 a share all the way to $2.96 at the opening of today’s trading. The company, which has raised more than $580 million from investors, now has a market valuation of about $160 million. The company went public at about an $800 million valuation in October 2010.

“We are thankful for Hugh’s dedication and efforts in transforming PacBio from an early stage R&D company to a leader in single molecule technology,” said Bill Ericson, a general partner at Mohr Davidow Ventures and PacBio’s lead independent director, in a statement. “Mike brings unmatched expertise, experience and relationships with customers in the life science tools market and is uniquely qualified to lead the company through its next stage of growth.”

Martin added in the statement that, “I am in support of this decision and am looking forward to identifying my next exciting career venture.”

The PacBio instrument uses a different technology than other sequencers made by San Diego-based Illumina (NASDAQ: ILMN) and Carlsbad, CA-based Life Technologies (NASDAQ: LIFE). PacBio’s instrument has been used by scientists in high-profile investigations, providing fast answers to help scientists understand the Haitian cholera outbreak and the German E.coli scare of the past couple years. The instrument in its current form isn’t ideal for sequencing human genomes, and its larger competitors, as well as Mountain View, CA-based Complete Genomics (NASDAQ: GNOM) have made that more of a focus.

Hunkapiller also has another gig with Alloy Ventures, and he said he will continue to represent Alloy on the boards of a trio of small companies—NuGen, Verinata Health Systems, and RainDance Technologies.

Martin, who was listed as 57 in the company’s last proxy statement, has been public about his diagnosis with multiple myeloma, a serious cancer of the bone marrow, although he said back in October he was feeling fine physically, and he appeared to be fine when he appeared at an Xconomy genomics event that month in San Francisco. The disease was considered a death sentence a decade ago, but 5-year survival rates have dramatically increased with the introduction of new therapies from Millennium: The Takeda Oncology Company and Celgene.

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Pacific Biosciences saw its sales flatten in its second quarter on the market with a new breed of DNA sequencing instrument, and now it’s shuffling things around a bit on the org chart to see if it can kickstart its growth.

The Menlo Park, CA-based company (NASDAQ: PACB) said today it generated $10.5 million in total revenue in the quarter ended Sept. 30, just a smidge lower than the $10.6 million in revenues it reported in the prior three-month period, which was its commercial debut. PacBio’s net loss widened to $29.3 million in the most recent quarter, up from $22.5 million in the prior quarter.

Separately, the company announced that board member Mike Hunkapiller is taking on a more active role as executive chairman of the board. Hunkapiller, a general partner with Alloy Ventures, is best known as the co-founder and former president of Foster City, CA-based Applied Biosystems during that company’s rise to prominence in the sequencing instrument market. Hunkapiller will come in to work three days a week, and work with president and CEO Hugh Martin, according to PacBio spokeswoman Nicole Litchfield. Martin will not scale back his duties at the company, and is “doing fine” physically, Litchfield says. (Martin has multiple myeloma, a cancer of the bone marrow. He looked fine when I saw him Monday at an Xconomy genomics event.)

PacBio’s slowing sales performance shouldn’t come as a surprise. The company is selling a new $700,000 DNA sequencing instrument during a shaky economy, at a time when scientists are nervous about potential cuts to the National Institutes of Health—the principal agency that allows researchers to buy fancy new tools. The company cut 130 jobs, about 28 percent of its staff, in September when it became more clear that sales were going to be slower than hoped. PacBio is also slugging it out in a fast-moving, competitive field with Illumina (NASDAQ: ILMN), Life Technologies (NASDAQ: LIFE), and Complete Genomics (NASDAQ: GNOM) all pushing for a growing piece of mindshare and revenue in this new wave of sequencing.

Hugh Martin

“I have spent much of my career on the leading edge of sequencing technology and I believe PacBio’s single molecule, real-time technology will disrupt the sequencing market,” Hunkapiller said in a PacBio statement. “I am delighted that Hugh and the Board asked me to take on this newly created role and look forward to devoting more time to advising the company on how to accelerate adoption of their products in important applications.”

The company, which went public a year ago at $16 a share, began life as a public entity with an $800 million valuation. Today its stock closed at $4.07, giving it a valuation of about $207 million.

PacBio’s valuation suggests that Wall Street is assigning almost zero value to its technology. The company closed September with about $193.7 million in cash reserves, down from $216.6 million in cash it had at the end of June.

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Scientists will soon be able to obtain the full 6 billion letter string of DNA that makes us who we are for $1,000, and the cost might drop all the way to $100 or less. Probably 1 billion people will get their DNA sequenced when prices go that low.

It’s a big opportunity with big hurdles that will have to be overcome. There are technical problems (software and storage) scientific cultural challenges (data sharing), and ethical challenges (consumer privacy) that have to be solved before the data’s potential for changing health and medicine can be realized. There’s plenty of caution among regulators and insurers, who are wondering what to do with this coming mountain of DNA data.

These were some of the themes that came up yesterday at our big event in San Francisco, “Computing in the Age of the $1,000 Genome.” As Ashley Dombkowksi, the chief business officer of 23andMe put it succinctly, “It’s not about the $1,000 genome or $100 genome. It’s the million-dollar interpret-ome. That’s where real value is.” Of course, no one has gotten there yet. You can read some of the other quotes by searching on the Twitter hashtag for this event, #1kGenome.

I’d like to thank all the speakers and attendees who made this event a big success. That includes the event host, QB3, and the event sponsors: Alexandria Real Estate Equities, Complete Genomics, Fenwick & West, and Silicon Valley Bank. We’d also like to thank the underwriters of Xconomy San Francisco who provide long-term support for our work: Alexandria Real Estate Equities, AMRI, Fenwick & West, Goodwin Procter, J. Robert Scott Executive Search, the Kauffman Foundation, Latham & Watkins, Morrison Foerster Cleantech Group, Silicon Valley Bank, and the U.S. Department of Homeland Security’s Science & Technology Directorate.

My colleague Wade Roush snapped a bunch of photos of the action, and you can see a few of them below in thumbnail images. For a larger image, just click on the thumbnail. We’ll have more photos to post on the site later in the week. And at the pace genomics is moving, we’ll definitely have a lot more to write about here for the weeks and months ahead.

	NEXT IMAGE >>
	Computing in the Age of the $1,000 Genome – Cliff Reid of Complete Genomics
	photo by Wade Roush

… Next Page »

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Illumina has long been about hardware, hardware, hardware. The San Diego-based company became the market leader in DNA sequencing instruments by focusing on the hardware and the consumable chemicals to run the machines. Its scientific customers were basically on their own when it came to finding software to analyze all the DNA data Illumina machines could pump out.

But things have changed this year. Now Illumina (NASDAQ: ILMN), driven to fend off hungry rivals like Life Technologies (NASDAQ: LIFE), Complete Genomics (NASDAQ: GNOM), and Pacific Biosciences (NASDAQ: PACB), is looking to take a page out of the Apple playbook. The Illumina strategy is becoming more about combining hardware and software in a simple way that works well together.

“A lot of people here are inspired by Apple,” says Alex Dickinson, an Illumina senior vice president. “The amazing thing about Apple is the seamless integration between hardware they provide, and software and services. Look at the iPhone and iTunes. They stepped that up, introducing iCloud, which offers extraordinary seamless integration.” (I’m sure my colleague Wade will disagree with that last statement about iCloud, but that’s another story).

Dickinson will be on hand at our next big Xconomy event “Computing in the Age of the $1,000 Genome” on Monday, Oct. 24 in San Francisco, to elaborate more on where Illumina is going with this.

Illumina is being driven in this combined hardware/software direction by customers, who are telling the company that sequencing itself has gotten so fast and cheap that they can’t really analyze and interpret the data fast enough to keep up anymore. Since whole genomes can be sequenced now for $4,000, it doesn’t take a genius to see the interpretation and analysis getting even more overwhelming when the price of sequencing drops to a highly-accessible $1,000 per genome, as many observers predict it will within a couple years.

Alex Dickinson

Illumina’s newest version of its MiSeq desktop sequencer reflects the Apple-inspired integration. The MiSeq, which costs about $125,000, is now supported by a cloud-computing program called BaseSpace, which is supported by Amazon Web Services. Illumina touted this new offering as the “Most Intuitive and Fully Integrated Personal Sequencer Experience” when the product was announced earlier this month at the American Society of Human Genetics conference in Montreal.

Here’s how Dickinson described the new tool:

“We built a graphical interface into the instrument itself,” Dickinson says. “You check a box on instrument, and it can start streaming your data into BaseSpace. The user gets a Mozy or Dropbox-like ability to get automated off-site data backup. And once that data is up in the cloud, the next step is for us to offer tools for bioinformatics. Borrowing from Apple, we are building an open app store. We have five apps that are Illumina-made apps to start with, and we are working with other companies to bring them in. Just like with Facebook and iPhone app, people have access to develop on this platform.”

Getting this right will be easier said than done. Sequencing is just now starting … Next Page »

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Between the formation of the new $100 million West Health Investment Fund and the new wet-lab space Johnson & Johnson is hosting for as many as 20 startups, you’d have to say it’s been a good week for life sciences innovation in San Diego. Get briefed here or get left behind.

—San Diego’s Gary and Mary West, who provided $90 million to establish the West Wireless Health Institute, established the $100 million West Health Investment Fund to invest solely in startups that promise to drive down the cost of health care. Don Casey, the fund manager and West Wireless CEO, vowed that the fund would not cause a “balloon squeeze,” where innovation moves the cost from one part of the health system to another.

—Johnson & Johnson has refurbished part of its Pharmaceutical Research & Development facility in San Diego to provide lab and office space for as many 20 life sciences startups. Each startup will have to make monthly payments to stay at the Janssen Labs at San Diego, but J&J says there is no “quid pro quo,” and each tenant will get office space and access to a common area with wet lab research equipment that would be difficult for a company to afford on its own.

—Anadys Pharmaceuticals (NASDAQ: ANDS), the San Diego-based biotech developing antiviral drugs for treating hepatitis, agreed to an all-cash buyout offer worth $230 million from Roche, the Swiss pharmaceutical giant. Roche’s offer to pay $3.70 for each Anadys share was a 256 percent premium over the previous trading day’s close of $1.04. Anadys had just released encouraging results from a mid-stage clinical trial of its lead hepatitis C drug.

—Venture capital firms invested $6.95 billion in 876 deals throughout the United States—including $202 million in 21 venture deals in the San Diego area—during the three months that ended Sept. 30, according to the MoneyTree Report. The third-quarter survey from PricewaterhouseCoopers, the National Venture Capital Association, and Thomson Reuters also highlighted a shift in VC activity, with a pullback in funding for life sciences. That was also true in San Diego, where nine life sciences companies got $26 million, or 13 percent of total VC investments here.

—Following a two-year setback, San Diego’s Sequenom (NASDAQ: SQNM) rolled out a laboratory-developed blood test that can determine with … Next Page »

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[Updated: 11:18 am PT] One of the most fastest-moving, highest-impact innovation stories in history is happening in genomics. Lucky for those of us who follow the business on the West Coast, this epic story is playing out right where we live, right now.

Everyone in the Valley knows about Moore’s Law, and how computing power and speed doubles every 18 to 24 months, but fewer realize that the rate of progress in whole-genome sequencing is outpacing the rate of progress in the semiconductor business. That’s why I’m psyched to have pulled together many of the leaders in this field for a half-day conference, “Computing in the Age of the $1,000 Genome.” The conference is now less than a week away, on Monday October 24. It will be hosted by the folks at QB3, in Genentech Hall at UCSF’s Mission Bay campus.

This event will feature a cast of speakers from Complete Genomics, PacBio, 23andMe, Microsoft, EMC/Isilon, PerkinElmer, Stanford University, Mohr Davidow Ventures, and a handful of hot Silicon Valley genomic computing players like DNAnexus, Ingenuity Systems, and NextBio.

We’re putting these speakers together with terrific guest moderators from Fortune, Wired, and leading life sciences companies for a series of interactive chats. There will be no PowerPoints, and plenty of time for networking. Promise.

So, here’s how the afternoon will flow:

1:00 pm: Registration and networking.

2:00 pm: Welcoming remarks, QB3.

2:05 pm: Opening keynote chat: How new DNA sequencing technologies are creating computing’s next big challenge.

Luke Timmerman, Xconomy national biotech editor (moderator)

Hugh Martin, CEO, PacBio

Cliff Reid, CEO, Complete Genomics

2:40 pm: The challenges big computing companies are wrestling with in genomics.

Tim Hunkapiller, consultant, Life Technologies (moderator)

Paul Rutherford, chief technology officer, EMC/Isilon

Jim Karkanias, senior director, Microsoft Health Solutions

Alex Dickinson, senior vice president, Illumina [Added speaker: 11:18 am PT]

3:10 pm: Networking break.

3:45 pm: Strategies from the new wave of genomics computing startups.

Rob Arnold, general manager, Geospiza unit, PerkinElmer (moderator)

Andreas Sundquist, co-founder and CEO, DNAnexus

Doug Bassett, chief scientific officer, Ingenuity Systems

Ilya Kupershmidt, co-founder and VP of products, NextBio

4:15 pm: How will doctors use all these genomes for personalized medicine?

David Ewing Duncan, author, “Experimental Man” (moderator)

Atul Butte, associate professor, Stanford; co-founder, NuMedii

Ashley Dombkowski, chief business officer, 23andMe

4:45 pm: Closing keynote chat. The big medical and societal implications of the $1000 genome.

Thomas Goetz, executive editor, Wired (moderator)

Sue Siegel, general partner, Mohr Davidow Ventures

John Wilbanks, senior fellow, Kauffman Foundation; director, Sage Bionetworks

5:30-6:30 pm: Networking Reception.

As with all Xconomy events, we make special discount tickets available for people in startup companies, and for students (which applies to undergrads, graduate students and postdocs at any of the institutions around the Bay Area like UCSF, Stanford, and UC Berkeley). There is still time to get tickets for this opportunity to learn about the state of the art in genomics, and meet the personalities who are driving progress. I’m looking forward to seeing lots of readers there on Monday, and posing a few questions to these folks myself.

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What do 10,000 people with autism, 50,000 people in some remote islands in the North Atlantic, and 1,000 healthy old folks in southern California have in common? They are on the front edge of one of the most exciting stories in science today, and their contributions will have a huge impact on our long-term understanding of biology and medicine.

The headlines from just the last couple weeks in genomics are jaw-dropping. Experiments are being announced almost every week which would have been unimaginable even a year ago when sequencing a whole genome cost around $10,000. Suddenly an individual’s entire genome, the complete 6 billion letter signature of DNA units in each human, can be had for $4,000 or less, in a few weeks. And that has enabled scientists and business people to dream some pretty big dreams, like these:

—BGI, formerly known as Beijing Genomics Institute and the world’s largest genomic organization, said last week it will sequence the entire human genomes of 10,000 people from 2,000 families who have at least two children with autism. The project, in collaboration with the patient advocacy group Autism Speaks, will look to unravel the complex interplay between genetics and environment that is thought to contribute to this developmental brain disorder.

—The Faroe Islands are a remote speck in the North Atlantic Ocean, where about 50,000 people live under a self-governance agreement with Denmark. The local ministry of health has exercised some of that self-governing authority by teaming up with DNA sequencing leader Illumina (NASDAQ: ILMN) to capture the genomes of all 50,000 people in the Faroe Islands. Only 100 people will get their genomes sequenced in the pilot phase of the project, but this experiment has big promise. Like Iceland, home of the well-known scientists at deCODE Genetics, the Faroe Islands are a place with a relatively homogenous population, good genealogy records, and medical records. This is the kind of place that can help scientists connect the ever-elusive dots between genetic abnormalities and various diseases.

—Mountain View, CA-based Complete Genomics (NASDAQ: GNOM) said earlier this month it will work with Scripps Health in San Diego to sequence 1,000 genomes of healthy people in their 80s and up, to look for the secrets to long, healthy life. The trial, known as the “Wellderly Study,” will include 1,000 people who are “well” without any major diseases or long-term health complications, and “elderly,” from the ages of 80 through 108.

The size of these experiments does matter. While having individual genomes like those from Craig Venter or Jim Watson are nice to have, their main use is as a reference for all that work mentioned above. By sequencing many, many genomes and looking carefully for the subtle differences in them that make everyone different, suddenly there’s potential to generate all sorts of new ideas about what causes various diseases.

Many of these ideas will go nowhere. But the opportunity to gain fundamental knowledge is enormous. Biologists today don’t really know what causes lots of society’s common diseases—autism, Alzheimer’s, rheumatoid arthritis, to name a few—where the complex symphony of genes and environment gets out of kilter. Once those genomes are stashed in databases, then scientists can start looking more seriously for patterns that will offer clues to what’s going wrong.

“We’re still really at such an early stage of sequencing,” says Alex Dickinson, a senior vice president at Illumina. “We have maybe 10,000 genomes or so sequenced right now. It’s statistically unlikely that we would have gotten profound data out of that. But as the number of people goes up, we’ll have an avalanche of information coming out. It’s driving a huge amount of activity in the industry.”

I know what quite a few biotech readers are thinking about now—haven’t I seen this movie before? Scientists sequenced the first human genome a decade ago, a couple scientists had their photo op on the White House lawn, and some overhyped biotech companies cashed in … Next Page »

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Illumina CEO Jay Flatley memorably called the bioinformatics industry “road kill” in an interview with Xconomy about 18 months ago. But have new opportunities started to emerge for genomic software startups now that scientists are really, Really, Really! crying out for better software to manage the data deluge?

After all, isn’t the genomic data going to become truly overwhelming for scientists to sort through when whole human genomes, at 6 billion DNA data points apiece, can be obtained for a few thousand bucks and a few days of work?

This is one of the fascinating questions we’re going to dive into on October 24 at Xconomy’s next big public event in San Francisco, titled “Computing in the Age of the $1,000 Genome.” It will be part of a half-day forum hosted by QB3, the biotech startup incubator at UCSF’s Mission Bay campus, in Genentech Hall.

We have an awesome lineup of entrepreneurs who will appear smack in the middle of this conference, after we plan to kick things off with a keynote chat with Complete Genomics CEO Cliff Reid and PacBio CEO Hugh Martin. Here’s who you can expect to hear talking about the new opportunities in bioinformatics.

—Rob Arnold, the general manager of the Geospiza division of Waltham, MA-based PerkinElmer (NYSE: PKI). Rob was previously the president of Geospiza, one of the longstanding survivors from the previous genomics/bioinformatics bubble period of the early 2000s. Geospiza made it through some lean years, competing against open source software, and built a big enough customer list to get acquired in May by life sciences tools giant PerkinElmer.

—Andreas Sundquist, the co-founder and CEO of Mountain View, CA-based DNAnexus. Sundquist, who cut his teeth in computational biology during his grad school years at Stanford, has brought a decidedly Web 2.0, easy-to-use style to its offerings that are supposed to make it easier for average biologists to interact with all their genomic data. This year, he’s found a way to make DNAnexus software relevant to two of the Valley’s emerging sequencing players—Complete Genomics and PacBio.

—Doug Bassett, the chief scientific officer of Redwood City, CA-based Ingenuity Systems, will be able to talk about his company has found a niche in crunching not just genomic data, but in connecting the dots with all the other relevant ‘omics data—proteomics, metabolomics, etc, and how it all might be useful for pharmaceutical R&D. Bassett knows what it’s like to try to separate the signal from the noise from the customer’s side of things—he was previously the executive director molecular profiling for Merck’s Rosetta Inpharmatics division.

—And last but not least on this panel is Ilya Kupershmidt, the co-founder and vice president of products for Cupertino, CA-based NextBio. This company has found a way to turn a profit by finding a way to pool genomic data from free public databases like those kept by the NIH, along with the private, proprietary data generated in-house at pharma and biotech companies. NextBio has assembled a prominent group of customers for this service, including Merck, Johnson & Johnson, and Pfizer, as well as academic leaders like The Scripps Research Institute, Stanford University, and the Sanford-Burnham Medical Research Institute.

I expect these guys to have lots of insights into how the market has changed for bioinformatics in just the last six months or so as sequencing has gotten much cheaper, and demand has gotten higher. And this is really just one aspect of the overall event, which will feature other great speakers on the medical and societal implications of all this work to generate genomic data and analyze it. You can get tickets here at the registration page. See you on the 24th.

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What was the biggest life sciences news over the past week? It might be that five San Diego companies landed financing deals, grants, and payments. Here are our highlights.

—The U.S. Food and Drug Administration outlined a new strategic initiative intended to address industry criticism that the agency has been thwarting life sciences innovation through its bureaucratic reviews and overall unpredictability. “The number of new products in the development pipeline is not where we’d like it to be,” FDA commissioner Margaret Hamburg told reporters last week in releasing a 40-page overview. “Timelines are long, costs are high, and rates of failure are distressingly high.”

—Mountain View, CA’s Complete Genomics said it has agreed to generate the whole genome sequences of 1,000 healthy senior citizens for a study underway at the Scripps Health system in San Diego. The trial dubbed as the Wellderly Study is enrolling people from 80 through 108 years old who are without long-term health complications. Scripps cardiologist Eric Topol, who is overseeing the Wellderly Study, wants to identify factors that have enabled them to live such long, healthy lives.

—It’s clear that the kind of fast and inexpensive genome sequencing to be used in Scripps Wellderly Study is provoking widespread attention. Xconomy is convening an Oct. 24 conference in San Francisco on the implication of fast and cheap genome sequencing and the role computing will play in this big story over the coming decade. In San Diego, Biocom has organized an Oct. 26 event to discuss how life sciences organizations can take advantage of advances in fast and cheap sequencing.

—Cyberonics (NASDAQ: CYBX) said it’s making an investment in ImThera Medical that could eventually total as much as $12 million if ImThera meets certain milestones. ImThera, which initially got $4 million in funding, has been developing an implantable neurostimulation device for treating obstructive sleep apnea. Cyberonics makes a neurostimulation device used to … Next Page »

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Nobody a year ago could have realistically imagined sequencing 1,000 genomes of old, healthy people just to see what might be their secret to long and healthy life. But Mountain View, CA-based Complete Genomics and the Scripps Health system in San Diego are looking to take advantage of the advances in super-fast, super-cheap sequencing to run exactly that kind of audacious experiment.

Complete Genomics (NASDAQ: GNOM) said today that it has agreed to generate the whole genome sequences, on the company’s dime, for this experiment at Scripps. The trial, known as the “Wellderly Study,” will include 1,000 people who are “well” without any major diseases or long-term health complications, and “elderly,” from the ages of 80 through 108. The prominent cardiologist Eric Topol, the chief academic officer at Scripps, has spent the last four years recruiting these healthy senior citizens to study what it is in their genetics and their environment that has enabled them to live such long, healthy lives.

Whole genome sequencing for a study this big would have been cost-prohibitive a couple years ago when each genome cost $20,000 to sequence at Complete Genomics. It’s now possible because whole genomes can be produced now for $5,000 apiece in small batches, and $4,000 apiece for bulk orders, the company said.

“There have been a significant number of longevity studies, but the Wellderly Study is the first one focused specifically on healthy aging,” Topol said in a company statement. “We anticipate that by employing Complete Genomics’ sequencing service, and being able to study participants’ entire genome for the first time, we will gain valuable insights into the genetic variants that have helped protect the health of our Wellderly population.”

Investors weren’t so enthused by the news, which isn’t surprising since the sequencing will be done at the company’s cost. Complete Genomics dropped 7 percent in mid-day trading today to $5.44, near its 52-week low. The company, like others in the industry, has been hit by negative sentiment over looming cuts in the federal research budget, which are making it increasingly difficult for researchers to sequence all the genomes they might want to do.

Complete Genomics CEO Cliff Reid will be able to speak about some of the big trends in genomics on Oct. 24 at the next Xconomy San Francisco event, “Computing in the Age of the $1,000 Genome.“

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There just aren’t that many rich people who want to do scientifically adventurous things like fly in outer space or get their entire genomes sequenced. Fortunately for Cambridge, MA-based Knome, it has found a way to keep its genomic analysis business alive by doing something more than appealing to the curiosity, or vanity, of the mega-rich.

Knome, co-founded in 2007 by Harvard genomics ace George Church, made headlines in its early days when it said it sequenced and analyzed the genomes of three wealthy people for the cool sum of $350,000 each. A year later, the price dropped to $100,000, which meant that a few more folks with genetic diseases in their families were able to afford what it took to scrutinize their genomes. But only now that commercially available sequencers can blaze through an entire 6-billion letter human genome for less than $5,000, Knome has been able to branch out its business to appeal to a whole lot more people.

Molecular biologists and biochemists, for starters, are increasingly becoming curious about using the new tools of genomics for their experiments. But they typically don’t have the math and statistics background to make much sense of the data. People who are trained in bioinformatics who can help analyze and visualize these massive piles of raw data, as you might imagine, are in short supply and high demand these days. As academics start dreaming up all kinds of questions they can realistically ask through sequencing genomes for $5,000 a person, and Big Pharma companies even start to mull whether to sequence patients in their clinical drug trials, it’s created a broader base of interest in the kind of more automated genomic analysis and interpretation that Knome was built to provide.

“We are really working on two fronts now,” says Jorge Conde, Knome’s CEO and co-founder. “We’re trying to make bioinformaticians more efficient, to make it so they can do more with the data. And we are aiming to make the data more accessible to a non-bioinformatician.”

This, of course, is easier said than done. When you start talking to a biologist, or a physician for that matter, about various ways of looking at genomes, transcriptomes, exomes, and the increased or decreased probabilities of disease that might (or might not) stem from those results, eyes glaze quickly. “It’s a foreign language,” Conde says.

Knome is a private company, and doesn’t say much about its finances, but it is showing signs of gaining traction in its fourth year of operations. The company has built up a team of 30 employees in Cambridge, plus another 10 in India. It has recently come out with a version 2.0 of its software. Researchers from Harvard Medical School, the Mayo Clinic, the University of British Columbia, the University of Seoul, have started using the service, among others, Conde says.

Jorge Conde

Knome, financed by the founders in the beginning, has now pulled in a total of $12 million in investment capital from the founders, angels, France-based bioMerieux, and one more unnamed strategic investor. The latest strategic investment, worth $5 million, arrived in July, according to a regulatory filing. Knome now plans to “hire aggressively,” Conde says, and currently lists seven openings on its company site.

Conde wouldn’t disclose actual revenues, or Knome’s growth projections, but he did say in the first quarter of 2011, the company generated more revenue than it had in its cumulative history to that point.

The founding idea in 2007, Conde says, “was to make genomics accessible to the public.” But the cost of the sequencing in the first three years was still so high, there was no way it could be truly accessible, and only a select few genomics experts and bioinformaticians were able to use the Knome service. But now that Illumina, Life Technologies and Complete Genomics have all developed commercial sequencing technologies that can go for less than $5,000 a genome, Knome has found more interest in its software (called kGAP 2.0) that can compare new genomes sequenced on the various instruments vs. what is known in the scientific literature about relationships between DNA and disease.

Now that cost is really less of a barrier, there’s another one standing in the way of making genomics accessible—lack of expertise. Researchers in Big Pharma companies, and academic … Next Page »

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Complete Genomics and PacBio are two of the companies pumping out huge volumes of DNA data that needs to be kept on computers somewhere. So I figured it would be cool to get the leaders of both companies to sit down and talk about what they are doing to deal with one of their big challenges—how to use software to make sense of all this new DNA data.

Complete Genomics CEO Cliff Reid and Pacific Biosciences CEO Hugh Martin will be on hand to talk about this emerging issue on the opening panel at Xconomy’s October 24 half-day forum in San Francisco, titled “Computing in the Age of the $1,000 Genome.“

These two companies are taking very different approaches to the world of gene sequencing, and it’s shaping up into a good old fashioned rivalry. Both companies went public a year ago, and have been competing for investors’ money, technology supremacy, and buzz in the scientific marketplace. And both of them have felt the pain from budget cuts that are coming to the National Institutes of Health, meaning scientists may not be able to do everything they want with the cool new toys.

For those not following this every day, Menlo Park, CA-based PacBio (NASDAQ: PACB) is pursuing a traditional business model of selling instruments and consumable products to research labs, while Complete (NASDAQ: GNOM) has a centralized service operation in which labs ship biological samples in to get sequenced. Both companies are thinking hard about how to best appeal to scientists with software that helps them come away from the experience with something more than what looks like a random jumble of billions of A’s, C’s, G’s, and T’s.

This will be the opening conversation in what will be fascinating afternoon that will also feature speakers from Microsoft, EMC/Isilon, Life Technologies, 23andMe, PerkinElmer, Stanford University, and Mohr Davidow Ventures. I’ll have more to say in this space over the weeks to come about the rest of the program. This is going to be a fun conversation about one of the very hottest topics in biotech over the next decade. For more information on how to reserve a seat, check out the registration page here.

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Sam Isaly, the founder and managing partner of OrbiMed Advisors in New York, will bring a breadth of investing experience and range of perspectives to Xconomy’s first New York event—Life Sciences 2031, a panel discussion on October 13. OrbiMed operates healthcare hedge funds, private equity funds, and mutual funds, including the Eaton Vance Worldwide Health Sciences Fund, which Isaly manages. In August, OrbiMed closed a new $600 million fund called Royal Opportunities, which will acquire healthcare royalty streams and provide structured debt capital to companies in the industry.

Isaly thinks of his approach to investing as “the endless pursuit of the new,” he says. He loves to describe his experience having his own genome sequenced, and likens himself as an investor who’s ahead of the curve when it comes to spotting innovations in health care.

The topic of genomics and personalized medicine is sure to be a hot one at Xconomy’s forum—and that suits Isaly just fine. “We have multiple interfaces with next-generation sequencing,” he says of OrbiMed’s investment portfolio. For example, one of the top 25 holdings in the Eaton Vance fund that Isaly manages is Illumina (NASDAQ: ILMN), a San Diego-based maker of research tools that boost the efficiency of high-speed gene sequencing, spot subtle variations in DNA, and analyze the various methods by which genes can get turned on or off. Although Illumina’s stock has faltered lately on concerns about slower-than-expected sales and profit growth, as a long-term holding, Isaly says, “Illumina has been great.”

Isaly believes advances in gene sequencing will ensure that the long-awaited promise of personalized medicine will come to fruition. As proof, he points to the new Roche drug vemurafenib (Zelboraf), which the FDA approved in August to treat … Next Page »

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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 … Next Page »

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The $1,000 genome is coming fast, whether society is ready for it or not. This field has moved so fast, reasonable people have estimated we will have sequenced millions of genomes within a few years. It’s even conceivable that individuals will get sequenced more than once in a lifetime, to track how their health is progressing.

As all this DNA data piles up into the stratosphere (or at least somewhere in the cloud for you computing geeks out there), how in the world will scientists be able to zero in on what’s really important to an individual’s health?

These are the kind of questions I’m getting ready to ask at Xconomy’s next big event in San Francisco, titled “Computing in the Age of the $1,000 Genome.” This event will be a half-day forum, from 2 pm to 6:30 pm on October 24. It will be graciously hosted by the folks at QB3, who are in the nerve center of SF biotech, at UCSF’s Mission Bay campus.

This event will feature an All-star list of speakers from Complete Genomics, PacBio, Mohr Davidow Ventures, Microsoft, EMC/Isilon, Life Technologies, 23andMe, plus a number of hot computational biology startups. But since this is only our second life sciences event in San Francisco, I figure it’s worth letting folks know how the conversation—and I really mean conversation—will unfold at this event.

First off, there will be no PowerPoint presentations (speakers, and attendees, you can exhale now). Instead, I’m planning this to be a series of moderated, interactive chats, in which speakers won’t be allowed to drone on to fill up airtime, and attendees will get plenty of time ask questions.

So, here’s how the afternoon will flow:

1 pm: Networking

2 pm. Welcoming remarks by Doug Crawford, QB3

2:05 pm. Opening keynote chat: How new DNA sequencing technologies are creating computing’s next big challenge.

Luke Timmerman, Xconomy national biotech editor (moderator)

Hugh Martin, CEO, PacBio

Cliff Reid, CEO, Complete Genomics

2:40 pm. The challenges big computing companies are wrestling with in genomics

Tim Hunkapiller, consultant, Life Technologies (moderator)

Paul Rutherford, chief technology officer, EMC/Isilon

Jim Karkanias, senior director, Microsoft Health Solutions

3:10 pm. Networking break

3:45 pm. Strategies from the new wave of bioinformatics startups:

Rob Arnold, general manager, Geospiza unit, PerkinElmer (moderator)

Andreas Sundquist, co-founder and CEO, DNAnexus

Doug Bassett, chief scientific officer, Ingenuity Systems

Ilya Kupershmidt, co-founder and VP of products, NextBio

4:15 pm. How will scientists use all these genomes for personalized medicine?

David Ewing Duncan, author, “Experimental Man” (moderator)

Atul Butte, associate professor, Stanford; co-founder, NuMedii

Ashley Dombkowski, chief business officer, 23andMe

4:45 pm. Closing keynote chat. The big medical and societal implications of the $1000 genome

Thomas Goetz, executive editor, Wired (moderator)

Sue Siegel, general partner, Mohr Davidow Ventures

John Wilbanks, vice president of science, Creative Commons; director, Sage Bionetworks

5:30-6:30 pm Networking Reception.

I’ve personally been covering biotech for 10 years now, and the $1,000 genome strikes me as having the greatest potential for the kind of impact that makes the history books. I think people will look back on this time as an inflection point in healthcare and wellness. Come join this fascinating conversation, and maybe have a beer with, the people who are working to make this happen today.

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There wasn’t a lot of news out of San Diego’s life sciences community over the past week, unless you count the executives at public companies who plan to give presentations at various financial conferences in coming weeks. We’ve got the best of the rest, and our briefing begins now.

—San Diego’s Apricus Biosciences (NASDAQ: APRI) says its NexMed subsidiary won FDA clearance for its third over-the-counter topical cream, a reformulated version of diphenhydramine hydrochloride and zinc acetate used to treat itching from insect bites, poison ivy, and other skin irritations. As with the company’s first two drug approvals, NexMed reformulated an existing treatment with a proprietary compound that helps increase skin absorption.

—Luke has recruited an incredible cast of life sciences futurists and genomics experts to discuss “Computing in the Age of the $1,000 Genome,” including Hugh Martin, the CEO of Pacific Biosciences, and Complete Genomics CEO Cliff Reid. Helping Luke moderate will be a few other all-stars, author and Wired magazine executive editor Thomas Goetz, and David Ewing Duncan, the author and Fortune.com columnist. Xconomy is holding the afternoon event on Oct. 24 at the Byers Auditorium on UC San Francisco’s Mission Bay campus. While that might seem a bit far to go, Luke says Illumina CIO Scott Kahn attended a similar event he held last February in Seattle.

—San Diego-based Aethlon Medical said it has arranged a series of tests at the Sarcoma Oncology Center in Santa Monica, CA, to study the effectiveness of its Hemopurifier blood filtration device in removing exosomes from the blood of advanced-stage cancer patients. The company says exosomes released by cancer have emerged as a novel therapeutic target in cancer, as they have been implicated in cancer survival, growth, and metastasis.

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Some amazing, and potentially disturbing, things could happen when scientists are able to sequence a person’s entire genome for $1,000 and in less than a day’s work. The technology is heading in that direction, fast. So I’m excited to announce today that a few more big thinkers on DNA sequencing technology and its societal implications have agreed to join Xconomy San Francisco for our next big event on Oct. 24.

Here are the new speakers that have agreed to join this half-day showcase we are planning, called “Computing in the Age of the $1,000 Genome.”

—Thomas Goetz, executive editor, Wired; author, “The Decision Tree.”

—David Ewing Duncan, columnist, Fortune.com; author, “Experimental Man.”

—Doug Bassett, chief scientific officer, Ingenuity Systems

—Ilya Kupershmidt, co-founder, VP of products, NextBio

—John Wilbanks, vice president, Creative Commons

These new speakers will be matched up in a series of interactive chats throughout the day with the other speakers who were originally announced a couple weeks ago. I’ll have more to say about how these folks will be paired up as we get closer to the event. For now, here’s the rest of the lineup.

—Hugh Martin, CEO, Pacific Biosciences

—Cliff Reid, CEO, Complete Genomics

—Atul Butte, Associate Professor, Stanford University School of Medicine

—Sue Siegel, General Partner, Mohr Davidow Ventures

—Ashley Dombkowski, Chief Business Officer, 23andMe

—Sujal Patel, President, Isilon Storage Division, EMC

—Andreas Sundquist, CEO, DNAnexus

—Jim Karkanias, Senior Director, Applied Research and Technology, Microsoft Health Solutions

—Rob Arnold, General Manager, Geospiza business unit, PerkinElmer

—Tim Hunkapiller, Consultant, Life Technologies

This event will take place from 2 pm to 6:30 pm on Monday, Oct. 24. QB3, the group that spurs commercial applications of research from UCSF, UC Berkeley and UC Santa Cruz, has agreed to host this event at the Byers Auditorium on UCSF’s Mission Bay campus. The best deal on advance discount tickets is still available through tomorrow, and here’s where to go to get your tickets. See you there Oct. 24.

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Complete Genomics (NASDAQ: GNOM), the Mountain View, CA-based company that sequences entire human genomes as a service for researchers, said today it will determine the sequences of 1,000 genomes as part of the second phase of an ongoing pediatric cancer study sponsored by the National Cancer Institute. Scientists at SAIC-Frederick will compare samples of tumors, and normal tissues, from 500 kids with cancer, Complete Genomics said in a statement. This phase of the contract is worth $8 million to Complete Genomics, and is being paid for out of money from the American Reinvestment and Recovery Act of 2009, also known as the federal “stimulus” law.

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An amazing innovation story has been unfolding the past few years in the field of gene sequencing, which is creating one of today’s biggest computing challenges. New DNA sequencing tools are improving at such a rapid pace that scientists say it will soon be possible to generate the 3-billion-letter signature of an individual’s DNA for $1,000, and possibly in as little as 15 minutes. This is the essential stuff scientists say can help bring about the era of personalized medicine.

Much of this innovation is occurring here in the U.S., and few places other than Silicon Valley have the necessary computing and biotech chops to pull this off. So Xconomy is excited to announce that we are bringing together some of the world leaders in this emerging field for a half-day summit on October 24 in San Francisco, titled “Computing in the Age of the $1,000 Genome.“

We have a stellar lineup of entrepreneurs, scientists, and investors who will come together to discuss this challenge in a series of interactive, moderated chats. Here’s who is confirmed so far:

—Hugh Martin, CEO, Pacific Biosciences

—Cliff Reid, CEO, Complete Genomics

—Atul Butte, Associate Professor, Stanford University School of Medicine

—Sue Siegel, General Partner, Mohr Davidow Ventures

—Ashley Dombkowski, Chief Business Officer, 23andMe

—Sujal Patel, President, Isilon Storage Division, EMC

—Andreas Sundquist, CEO, DNAnexus

—Jim Karkanias, Senior Director, Applied Research and Technology, Microsoft Health Solutions

—Rob Arnold, General Manager, Geospiza business unit, PerkinElmer

—Tim Hunkapiller, Consultant, Life Technologies

There are still major barriers standing in the way of a future based on genomic medicine, and we will plan to cover that territory. For starters, the genomic data will need to be stored, secured, backed up, analyzed, and visualized for scientists to make much sense of it all. And we will be sure to touch on some important implications of all this genomics work, for medicine and society at large.

This event will take place from 2 pm to 6:30 pm on Monday, October 24, at the Byers Auditorium on UCSF’s Mission Bay campus. You can find more information on how to save a seat at the super saver discount rate by clicking here. I’m looking forward to this one. See you there on October 24.

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