Illumina (ILMN) to Enable Tertiary Analysis With New Launch

·4-min read

Illumina Inc. ILMN recently announced the launch of Connected Insights -- a new cloud-based software that enables tertiary analysis for clinical next-generation sequencing (NGS) data. Connected Insights is commercially available in a limited number of countries and is undergoing beta testing in the United States.

The recent launch will expand Illumina’s portfolio of oncology testing.

More on Illumina Connected Software

Illumina Connected Software is an end-to-end software system that standardizes analysis tools and connects data across the genomics workflow. The software is intended to streamline interpretation and reporting from a range of assay types, allowing labs to scale the use of NGS and reduce the turnaround time of clinical reporting.

The software’s initial release will support somatic oncology applications, matching the growing use of comprehensive genomic profiling (CGP) for advanced tumors. The software will also include whole-genome sequencing (WGS) for rare diseases soon.

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Further, Connected Insights enables labs to connect to a network of more than 45 third-party knowledge sources that provide digital directories for precision oncology, illustrating connections between cancer variants and therapies, citing evidence, and aiding analysis of complex cancer genomic profiles.

Benefits of the Connected Software

With the increasing demand for NGS testing in health care systems, the need for interpretation of large genomic data sets with complex health implications in a landscape of frequently changing guidelines and drug approvals has become critical. Per management, Connected Insights complements Illumina’s suite of NGS solutions to generate, analyze, annotate, and interpret data consistently today and into the future.

Connected Insights is the subsequent step in creating a fully-integrated software ecosystem that scales with the pace of discovery across NGS applications. Building on Illumina’s platforms of proven SBS technology with DRAGEN secondary analysis, Illumina Connected Insight allows its users to bring a variety of knowledgebases and data together to discover clinical relevance.

Industry Prospects

Per a report by Grand View Research, the global next-generation sequencing market size was estimated at $4.84 billion in 2021 and is expected to expand at a CAGR of 12.4%. Factors such as extensive adoption of NGS technologies in clinical diagnostics due to rapid result time and faster processing and rowing technological developments in NGS instruments and technologies are fuelling the market.

Strong Growth in Oncology Space

In 2022, Illumina’s oncology testing consumables grew 7% year-over-year from the utilization of MGS-based molecular profiling across early detection, therapy selection and minimal residual disease. The company witnessed increasing opportunities for its oncology products globally. For the TruSight Oncology 500 distributed therapy selection assay, sample volume grew about 60% year over year across more than 500 accounts. For 2023, the company expects more than $100 million in revenue for TSO 500.

The company is witnessing stronger-than-expected clinical adoption and orders from new to high-throughput customers who are bringing sequencing in-house due to NovaSeq X's ease of use and cost benefits. The NovaSeq X has had the strongest pre-order book of any Illumina instrument launch, and this demand will catalyze a multiyear upgrade cycle.

In oncology, GRAIL continues to have strong demand from consumers, physicians, health systems and payers. Galleri is the only multi-cancer early-detection test in a $40-plus billion market, and it had the fastest first-year revenue ramp in cancer screening test history. In 2022, more than 4,500 providers ordered the test, contributing to the more than 60,000 Galleri test orders that have been received to date. GRAIL expects this exciting momentum to continue and to translate into an expected revenue CAGR of 60% to 90% over the next five years.

Share Price

In the past year, Illumina has outperformed its industry. The stock has dipped 15.9% against a 39.3% decline of the industry.

Zacks Rank and Key Picks

Illumina carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Henry Schein, Inc. HSIC and Avanos Medical, Inc. AVNS.

Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic has gained 1.7% against the industry’s 17.5% growth in the past year.

Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.

Henry Schein has lost 12.4% compared with the industry’s 10.9% decline in the past year.

Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.

Avanos has lost 13.7% compared with the industry’s 17.5% decline in the past year.

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