different packaging, different lot tracking, different shelf life, different notification and supply agreements. They are priced appropriately.
X: So these customers have a different set of needs, and they are paying more?
JF: Exactly. And if they want to keep using our RUO reagents, they can continue to do that. We aren’t forcing them to take those new products.
X: What worries you the most when you look at the business landscape?
JF: In 2012, (federal budget) sequestration was clearly the biggest worry we had. It caused a lot of uncertainty in the business, and we didn’t know how customers would respond to it. We’ve come out of 2012 with much less impact than we might have anticipated. That’s probably less of a worry for us now. Now, it’s probably just tracking what the competition is doing, and making sure we are in the market with products that as are competitive as we can make them.
X: What’s the biggest problem your customers are facing, that you need to solve?
JF: It probably relates to interpretation of genomes. We’ve had great work done on the core sequencing engine, and made a lot of progress on sample prep. On the front end couple pieces of software, we’ve made lots of progress there, in terms of reducing file sizes and aligning genomes and call variants. Now the problems are moving into things like what the genome means, and what the variants mean. A lot of academic world is focused there, and we’re trying to help. Particularly around cancer.
X: Did you actually hit the $1,000 genome threshold by the end of 2012? I know that both you and Life Technologies, if memory serves, said at this meeting (JP Morgan Healthcare Conference) last year that you’d be able to sequence an entire human genome in one day for $1,000.
JF: That’s not quite accurate. What happened exactly a year ago at this meeting is that two companies announced they would have ability to sequence a complete human genome in a day. One company said they could do it for $1,000, and that was Life Technologies. We never put any pricing out in the market, but we said we could do the sequencing in a day. In February, we presented the first data on that. In the second quarter, we deployed the technology in our services operation. In the third quarter, we put it in the hands of customers. In the fourth quarter, we shipped it in volume. We delivered exactly on the program we promised.
X: So what does it cost now to do a whole genome, just the sequencing, on a HiSeq?
JF: It varies, depending on the volume of the customer. The discounts can vary, depending on what their usage rates are. If you look at the range of numbers, if you look at instrument depreciation and reagent costs, it varies from a couple thousand dollars up to $5,000. It depends also on what mode you run the instrument in, too. It’s a bit more expensive to run the instrument in rapid mode than in high-throughput mode.
X: How do you stack up on cost with Life Technologies at this point?
JF: We’re very competitive. Right now at least, they’re not doing whole human genomes.
X: With the SOLiD or the Ion Torrent?
JF: The SOLiD isn’t much of a factor in the market anymore. With Ion Torrent, to our knowledge, they aren’t at the output levels people will use for human genomes.
X: It’s more about targeted, regional sequencing, right?
JF: Yes.
X: Personally, this had to be a very intense year for you. How do you feel about what you’re doing. Triumphant? Vindicated? Do you feel good about what you’re doing?
JF: I’ve never been more optimistic about the company and the markets we’re in. I feel very good about how the technology stacks up right now. We’ve got a great management team, and a great overall team. It’s a lot of fun to do what we do. It was an intense year from a workload perspective. Particularly in that Roche (hostile takeover bid) window, there were three or four weeks when we did not much else. But after that was over, we spent our time doing the blocking and tackling it takes to run a business and produce more innovation.
