In something of an understatement, Illumina CEO Francis deSouza said a 78% increase in second-quarter sales over 2020 “significantly exceeded expectations” and has pushed the sequencing giant to raise its financial guidance for the remainder of the year.
That amounts to revenues of about $1.13 billion, as DNA-based cancer screening and population genomics testing efforts return to full swing—plus small but unanticipated gains from COVID-19 surveillance programs, which rely on genetic sequencing to trace the spread of new coronavirus variants.
Illumina’s sales (PDF) of consumables alone were up 82% year-over-year, totaling $704 million, with oncology testing showing three consecutive quarters of growth and the National Institute of Health’s All of Us program moving forward at full scale toward its goal of sequencing the genomes of at least one million people in the U.S.
About $189 million in Instrument sales set a new record, up 7% compared to the first quarter of this year, including about $20 million from COVID-19 tracking initiatives. This year also saw Illumina pledge $60 million to help launch a global outbreak surveillance network in partnership with the Gates Foundation, donating hardware and training support.
“Our clinical markets, including oncology, reproductive health and genetic disease testing are expanding as reimbursement coverage increases, patient awareness grows and more sequencing applications enter the clinic,” deSouza said on a call with investors.
“Ramping population sequencing programs are contributing to the robust growth in our research business,” he said. “Additionally, genomic surveillance has emerged as a critical tool in the global fight against the pandemic, with over 70 countries now using Illumina platforms for COVID‐19 surveillance.”
Strong growth was also seen across all international regions, versus the same three months in 2020.
The company raised its guidance for 2021: after previously forecasting revenue growth between 25% and 28%, Illumina nudged up the range to between 32% and 34%, excluding any potential gains from its stalled acquisition of the cancer blood test developer and its former spinout, Grail.
That $8 billion deal is in limbo after international antitrust regulators said they would challenge the transaction. In July, European competition watchdogs launched a full-fledged probe of the acquisition—which could take months—while the U.S. Federal Trade Commission said it would wait to see the outcome from across the pond before potentially launching its own legal review.
And the clock is ticking. First announced in September 2020, the deal’s original terms are set to expire in mid-December at the latest. Meanwhile, Illumina has sued the European Commission, saying it has no jurisdiction over the deal as Grail does no business on the continent.
Grail launched its long-awaited, multi-cancer test in June. The Galleri liquid biopsy diagnostic searches for small pieces of DNA shed by as many as 50 different tumor types into the bloodstream and traces them back to the organ site where they developed.
“We made this test available to our employees and are encouraged by the positive feedback we’ve received,” deSouza said on the call while repeating Illumina’s commitment to the deal.
Regulators have expressed concern that Illumina’s potential ownership of a clinical cancer screening test such as Grail’s could tempt the company into throttling the access of potential competitors to its DNA sequencing technologies. In response, Illumina has pledged to ink new standard contracts guaranteeing oncology test developers access to products and made a commitment to lower prices over the coming years.
Meanwhile, the FTC said it’s currently being inundated by “a tidal wave of merger filings,” according to the agency’s acting director of the Bureau of Competition, Holly Vedova, and that it may not be able to fully review each multimillion-dollar deal by their deadlines.
However, a lack of response from the agency doesn’t equate to a green light, Vedova said in a statement. The FTC can determine a merger is illegal even after a deal is completed, and warned that companies that “proceed with transactions that have not been fully investigated are doing so at their own risk.”