High demand for genomic sequencing across the biotech industry drove Illumina to record revenues this past quarter, outperforming expectations and boosting the company’s stock price by over 7% in premarket trading.
Revenues were up 25%, driven mostly by the devices’ consumables, totaling $830 million compared to the $662 million brought in during the second quarter of last year.
In addition, the company now expects to see 20% growth in revenues over 2018 as a whole, Illumina President and CEO Francis deSouza said in a statement announcing the financial results.
“Sequencing consumables, array consumables, and lab and other services each grew more than 30% compared to the second quarter of 2017, highlighting the growing interest in genomic information and its application to research, clinical and consumer markets,” deSouza added.
The company reported a GAAP net income of $209 million, compared to $128 million for the second quarter of 2017, as well as a gross profit of $575 million. For the first half of the year, total revenues amounted to $1.612 billion.
In addition, growth was strong across all regions, systems and applications—including $13 million in purchases by Chinese customers stocking up ahead of potential tariffs, the company said. China reported record shipments even without the stocking order, up 42% compared to last year.
According to Leerink Partners' investment analyst Puneet Souda, Illumina "is increasingly becoming a consumables story longer term, as NovaSeq provides a path to a $100 genome—making flowcell upgrades far more frequently than instrument launches."
"And with every flowcell launch, cost per [gigabase] will come down, driving increasing sequencing volumes—which is expected to drive overall consumables higher," said Souda, director of life science tools and diagnostics, in a note to investors that raised Leerink's price target to $325 from $315.
“We're seeing robust growth as our customers leverage genomics to drive discoveries, connect data to insight and routinely apply genomic tests in clinical and applied markets,” deSouza said on a conference call with investors.
“Whether it is to uncover new insights in Parkinson's or diabetes or to establish the utility of circulating tumor DNA for early cancer diagnosis, our customers are increasing using sequencing as the primary tool to advance our understanding of the genome and improve patient outcomes,” he said, describing four of the company’s 10 largest buyers of sequencing consumables as primarily focused on research, either directly or as a CRO.
In January, Illumina launched its tabletop iSeq with a more accessible price tag of just under $20,000, and began shipping to customers late in the second quarter. The company hopes it will allow more researchers to study viruses, bacteria and other microbes, such as in hospital-acquired infections and other settings.
This past quarter, Illumina announced separate partnerships with Bristol-Myers Squibb and Loxo Oncology, to develop cancer tests and next-generation sequencing companion diagnostics. The company also acquired Edico Genome and its Dragen programmable gate array platform.
“Our acquisition of Edico Genome is a big step toward realizing the vision of reducing sequencing data acquisition and analysis to a push-button, standardized process,” Illumina’s Susan Tousi, senior VP of product development, said at the time.
Editor's note: This story has been corrected—in referring to drops in the price of DNA sequencing, the cost is per gigabase, or 1 billion base pairs, not gigabyte.