Illumina Inc. (NASDAQ:ILMN) Q2 2015 Earnings Conference Call - Final Transcript

Jul 21, 2015 • 05:00 pm ET

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Illumina Inc. (NASDAQ:ILMN) Q2 2015 Earnings Conference Call - Final Transcript

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Presentation
Executive
Jay T. Flatley

in services. Shipments to clinical and translational customers grew 45% year-over-year to approximately 40% of total shipments further demonstrating the expanding utility of Genomics.

Oncology was a significant driver of this mix as use of NGS expanded in hospital laboratories and commercial molecular diagnostic settings. Shipments to all segments of oncology grew approximately 35% year-over-year. Over the past several quarters, we've shared some of our strategies to penetrate this market which include our onco panel and liquid biopsy programs. We're on track to deliver -- release one of the onco panel as an RUO product by the end of the third quarter. This initial release includes 15 genes critical in oncology and sets the groundwork for our onco panel products that will be CE-IVD marked and FDA approved.

We're committed to delivering the enhanced 170-gene version of the onco panel to address the needs of the research market early next year. We will also be providing this product for use by our pharma partners in their clinical trial. Our liquid biopsy program continued to make progress during the second quarter. As part of this effort, a study was recently published in the Journal of the American Medical Association which showed specific examples where discordant NIPT results were detecting maternal cancer.

Our development teams are optimizing assays and exploring their clinical power for use in this exciting frontier of genomics. Our market development strategies in reproductive health also contributed to the higher mix of clinical and translational customers in the second quarter. Sales to IVF reference laboratories increased 25% in Q2 with approximately 20% of sales now coming from VeriSeq PGS. As a reminder, VeriSeq PGS is our sequencing-based pre-implantation genetic screening solution used as laboratories transition from the older generation arrays.

Total NIPT revenue including products, services and test fees grew more than 50% versus the second quarter of last year. This result was due in part to a doubling of test send-out samples, as well as an increase in product sales to NIPT providers globally. Our partnership with Berry Genomics, the second largest NIPT company in China, is progressing well after the recent Chinese FDA approval of Berry's assay and the NextSeq CN500. This has resulted in an increase of shipments for resale to Chinese hospitals that are bringing NIPT in-house.

During the quarter, we signed a similar deal with Annoroad, the number three NIPT player in the region, and will jointly bring together Illumina sequencers with Annoroad's assay development capability. We believe the sustainability of NIPT revenue growth will come in part with the availability of our next-generation solution VeriSeq NIPT. We're in the final stages of the European regulatory process for the software and hope to have CE-marked shortly. We will follow with the CE mark on the VeriSeq NIPT product for distribution as an IVD solution.

During the second quarter, we signed five new partnerships outside the U.S. and now have a total of 19 VeriSeq NIPT customers working on installing the protocol in their respective