Illumina ups investments as its stock drops on lower sales | April 25, 2016 Issue - Vol. 94 Issue 17 | Chemical & Engineering News
Volume 94 Issue 17 | p. 12 | News of The Week
Issue Date: April 25, 2016 | Web Date: April 21, 2016

Illumina ups investments as its stock drops on lower sales

Next-generation sequencing leader invests to advance technology use, despite seeing its own sales growth slow
Department: Business
Keywords: genomics, gene sequencing, instrumentation, investment, genomics
Illumina’s HiSeq gene sequencer.
Credit: Illumina
Photo of Illumina’s HiSeq 4000 gene sequencer instrument.
Illumina’s HiSeq gene sequencer.
Credit: Illumina

As part of its efforts to expand the use of gene-sequencing technology, the sequencing equipment maker Illumina has committed $100 million over 10 years to a new venture capital fund. To be run by Nicholas Naclerio, a former Illumina executive, Illumina Ventures will invest in start-up genomics companies.

The new fund is only the latest move by Illumina to promote the technology. Early this year, it joined with Arch Venture Partners, Bezos Expeditions, Bill Gates, and Sutter Hill Ventures to invest more than $100 million in a new company called Grail. Majority-owned by Illumina, Grail will use sequencing technology to screen for multiple cancers using a single blood test.

And last August, Illumina, Sutter Hill, and Warburg Pincus set up the genomics firm Helix with more than $100 million in financing. Through partners such as LabCorp and the Mayo Clinic, Helix provides genetic sequencing analysis and education for individual consumers.

However, as Illumina tries to expand the sequencing field, its own growth has been slowing down. On April 18, the firm reported that first-quarter revenues were up 6% to $572 million, well below stock analyst expectations. Notably, sales of its HiSeq sequencers were lower than predicted. The news disappointed investors, and Illumina’s share price fell about 24% in one day.

With the slow start, Illumina now pegs its growth for 2016 at 12% rather than the 16% it forecast in February. Just a couple of years ago, the company’s sales had been growing as much as 30% per year.

Slowing growth and improving competitors have made Mizuho Securities USA analyst Eric Criscuolo neutral about Illumina’s stock. However, he and other analysts see the problem as company-specific, rather than an issue for the instrumentation industry.

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