Life Technologies, Geospiza Form Cloud Computing Deal for Scientists to Dig Into Genome

Genome sequencing instruments have gotten so much faster and cheaper over the years that they have created a new problem for scientists—digging through mountains of data on DNA, and maintaining these stores of data. So today, Carlsbad, CA-based Life Technologies and its Applied Biosystems division have formed a partnership with Seattle-based Geospiza to help researchers store that information on someone else’s servers and get access to it anywhere via the Internet.

Financial terms of the deal aren’t being disclosed. But this is the first time a leading gene sequencing company has agreed to offer the whole package of the sequencing instrument, the consumable chemicals needed to run experiments, and the software needed to sort through and make sense of the data, says Geospiza president Rob Arnold. It’s also the first time a major sequencing company has taken the leap into cloud computing. In this case, that means researchers will agree to store their data on common servers that are maintained by another company (Amazon Web Services). Which means researchers don’t have to buy their own equipment or hire their own bio-IT person to manage all the precious data on the lab’s internal hard drives.

“This will provide a lot of important visibility for the importance of data analysis through Life Technologies’ sales force,” Arnold says. “This is a very important acknowledgement that the cost to collect and produce the data is continuing to drop, and that the cost to analyze the data is becoming a larger IT problem.”

The partnership means that Life’s sales staff will remind scientists who use the Applied Biosystems SOLiD system for next-generation sequencing that they can dump all of the vast genomic data that tool produces onto Amazon’s Web Services platform. The scientists will be able to use Geospiza’s tools to help visualize the data and spot useful patterns in them, like a common gene variation that might be linked with the spread of cancer. The Applied Biosystems instrument sells for $550,000, the chemical reagents needed to run experiments can cost more than $100,000 a year, and the Geospiza software for storing, and analyzing the data costs $30,000 a year, plus $2,500 per user for an added feature, Arnold says.

Life Technologies (NASDAQ: LIFE) has 9,700 employees in more than 100 countries around the world, and had $3.1 billion in revenue last year, so it has a lot more horsepower to spread word around the world than Geospiza does to get scientists to change their computing habits. Geospiza recently raised $750,000 in angel financing, which will help it add some sales and scientific staff to gear up for the increased demand it anticipates from the partnership with Life Technologies, Arnold says. By renting server space from Amazon, Geospiza is able to use the new capital to hire more people instead of spending money on more servers, he says.

Since Geospiza is private, Arnold doesn’t disclose sales or sales forecasts, but the company expects to see growth this year from this partnership. The makers of next-generation sequencing instruments—-Life Technologies, Illumina, Roche, and Helicos Biosciences—have largely ignored the computing needs of their customers, Arnold says. That’s changing now because labs are struggling so much under the weight of the data from these machines—which can produce 200 million data points per slide—to the point that it’s bogging down labs and hurting sales of instruments, he says.

“We really see this market as a three-legged stool,” Arnold says. “There’s instruments, chemical reagents, and software you need to do these experiments. Up to this point, Life Technologies has been dealing with just two of the three legs, and they understand they need to support their customers with all three legs.”

This has started to become a sore point with Wall Street analysts who follow the company, who have been urging Life Technologies to come up with an IT product offering for customers, Arnold says. Kip Miller, president of Life Technologies’ Genetic Systems division, said in a company statement that adding this kind of computing capability ought to boost sales for his instruments.

“The solution we’ve created in partnership with Geospiza on top of the Amazon Web Services platform is a strategic initiative to ensure that scientists in the life science industry have Web-based, affordable access to the advanced genomic analysis tools they need to be successful with the SOLiD technology. Taking significant steps to advance the bioinformatics structure to support next-generation sequencing will accelerate its use and unlock the full potential of this technology to bring about the era personalized medicine.”

Right now, many centralized labs at places like Harvard University perform these kinds of sophisticated genome experiments for researchers around campus or at other nearby universities, Arnold says. It’s common for them to buy their own equipment for $100,000, and then they need to hire a bioinformatics expert on staff to manage the data, at a cost of at least another $100,000 a year in salary and benefits. Then there are ongoing costs of air-conditioning the proprietary servers and other maintenance, he says.

This way, research labs take all the responsibility, and risk, upon themselves for storing and managing all the data from their experiments, Arnold says. By going with the cloud-computing model, they have to make a leap of faith that the data will remain secure on Amazon’s servers. The tradeoff is that they save a lot of money, and they can get easy access on multiple laptops, or even an iPhone, Arnold says.

Of course, this isn’t the greatest time in history to be selling $550,000 machines to academic research labs who are suffering from tight budgets, and a drop in charitable giving. Life Technologies has forecasted a “low single digit” percentage increase in organic sales in 2009, although that’s likely to be dragged down by unfavorable foreign currency exchange rates this year.

That said, President Obama’s economic stimulus program is supposed to boost the budget of the National Institutes of Health from $29 billion to $40 billion, and at least some of that is expected to help researchers purchase expensive new equipment like the genome-sequencing machines, Arnold says. Geospiza’s closest competitors are Bridgewater, NJ-based LabVantage, and St. Louis-based Partek, although neither does exactly the same thing, he says.

“We see the demand continuing to accelerate,” Arnold says.

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