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as it builds up a sales force will be to win more repeat business, and more big orders, Reid says.
The company had built up a backlog of orders for 800 complete genomes as of Sept. 30, which represents an estimated $9 million in orders. Reid didn’t offer an update on how big the backlog is today.
The market is still full of guesstimates, because it’s hard to say how researchers will want to use all this genomic data. PacBio, in its IPO prospectus this fall, said the DNA sequencing market is expected to grow from $1.2 billion in 2009 to more than $3.6 billion by 2014, citing figures from Scientia Advisors, a market research and product development consulting firm.
Complete Genomics isn’t providing a financial forecast for 2011 for investors, Reid says, because the market is still at too much of an unpredictable stage. While his company bled lots of cash during its technology development years—$108 million from inception through June 30—the burn rate is going to come down now that the company is generating its first real revenues, Reid says. The $54 million in IPO proceeds will last at least through 2011, he says.
There are three big hurdles Complete Genomics needs to clear in its early days in the marketplace, Reid says. It needs to reduce the number of errors in its datasets, continue to bring down the cost, and boost its productivity so it can increase capacity.
Right now, the company’s genomes come with errors once every 100,000 data points, meaning that there are about 30,000 mistakes in each genome. “We are working very hard to reduce the errors to virtually zero,” Reid says.
The average cost per genome is still hanging around $10,000, although Complete Genomics does offer discounts for high-volume customers, Reid says. The market will open up even more when the cost comes down a bit further, he predicted. Reid noted that the BRCA1 and BRCA2 diagnostic tests for breast cancer cost around $3,000, and complete genomes will have to get down to that level and below to make genomes “a ubiquitous medical tool.”
The third thing is capacity. There is potential to increase the productivity of the company’s existing technologies, and buy more high-throughput machines, so long as there’s revenue coming in or investment capital to support that kind of expansion.
Both Complete Genomics and PacBio have seen their shares decline in their early days, which doesn’t exactly suggest that we’re living in a Genomics Bubble 2.0 in which they will have limitless budgets with which to dream big. But almost on a daily basis we are seeing startups—like San Francisco-based Sequenta yesterday—that would have been truly impossible to start in the era of high-cost DNA sequencing, of, say, two years ago. I asked Reid what kind of interest he saw on this fall’s IPO road show, and at least to hear him talk, there’s more enthusiasm than can be seen on his new public stock ticker.
“There is enormous interest in human genome sequencing as people realize. The people in the investment community that we talk to are fully cognizant of what a game changer this is,” Reid says. “It’s a key driver of personalized medicine and the entire diagnostics industry, and one of the key changes that will happen throughout healthcare for coming decades. The interest in this category of technology couldn’t be higher.”