Opiniomics

bioinformatics, genomes, biology etc. "I don't mean to sound angry and cynical, but I am, so that's how it comes across"

Nanopore wars

Update 15/11/2013 ONT have just announced that they have bought out Illumina’s remaining investment [link]. This ends their commercial relationship completely and Illumina will no longer have observer status on ONT’s board. Wow. Waiting to see what Illumina say about this. Meanwhile ONT continue with the MinION access programme.

The question has to be – why now?  Illumina’s original investment of $18m has now been bought out at closer to $90m, so they were mkaing money.  Perhaps they wanted to cash out their investment, but this seems very unlikely.  I doubt Illumina are interested in making this kind of money.

In 2009, CEO of Illumina Jay Flatley said “Oxford Nanopore’s technology holds tremendous promise to achieve the sub-$1,000 human genome” [2], yet back them ONT were little more than a dream; today they are a company who are about to launch a product.

We’ve also seen (below) how, perhaps, Illumina feel they were duped – they licensed the BASE technology and ONT went on to develop STRAND, and the relationship may have been strained since then.  We can also see below that Illumina may be about to develop their own, competing, nanopore technology [6].

The simple answer may be that Illumina had nowhere to go with this – as a market dominating company, and with their own nanopore tech in development, it’s very unlikely Illumina would ever be allowed to buy ONT outright;  as a 15% stakeholder they have little control over ONT, and they would only make a relatively small amount of money from ONT’s success; at the same time, watching ONT rise to become a genuine competitor for Illumina’s core business and the new, emerging clinical market.

Therefore this is probably the logical conclusion – sell the shares and compete, try and beat ONT at their own game.  Yet ONT are the closest of any of the nanopore technologies to market – Genia seem a long way off, and Illumina’s license of the Gundlach technology is unlikely to become a commercial product any time soon.  ONT’s IP situation appears strong.

I can’t wait to see what happens next!

———–

It’s often quite difficult to separate the facts from the fiction when reading press releases, so I am going to try and summarise here what we know about the intriguing relationship between two very different companies – Illumina, the next-generation sequencing heavyweight with a market-leading technology; and Oxford Nanopore, the tiny biotech company with a potentially disruptive DNA sequencing technology.

For many, ONT came to prominence after their presentation at AGBT in 2012 [1], but this story begins a long time before that.  In 2009, it was announced that Illumina and ONT had entered into a “broad commercialisation agreement” [2], with Illumina investing $18m in ONT.  Read between the lines though and you see that this is an agreement to license and commercialise ONT’s BASE technology (also called “Bayley Sequencing” in the press release, named after Hagan Bayley the Oxford University biochemist who pioneered the technique, where an exonuclease cleaves individual bases from a DNA template which are then measured by a nanopore).  However, what ONT announced at AGBT in 2012 was not a result of the BASE technology.  Instead, ONT had been focusing on their STRAND technology, which relies on the whole strand of DNA being fed through a nanopore and measured directly.

It rapidly became clear that Illumina were unhappy with the situation, and in 2011/12 the companies entered into arbitration [3].  The impact of these legal proceedings on ONT’s ability to bring a product to market should not be underestimated.  Finally, in 2013 it was announced that the two companies were to cut all ties [4] and the commercialisation agreement would end in 2016.  Note, however, that at this point time Illumina still has an investment in ONT, to the tune of $18m.  This exists with or without the commercialisation agreement.  Further evidence that the relationship had broken down completely ensued with the companies releasing conflicting statements about Illumina’s rights under the agreement [5].

Then, the story gets really interesting.  Recently, Illumina announced that they have licensed nanopore-based sequencing technology from the University of Alabama at Birmingham [6].  This technology is based on MspA [7], a membrane protein found in Mycobacteria, and a DNA polymerase which feeds a strand of DNA through the pore as it is processed.  Interestingly, ONT have filed a patent on the use of Msp nanopores [8] so the IP position around the use of MspA remains unclear.  ONT have also filed a patent on the use of Lysenin [9] a protein originally isolated from Earthworms.  The range of nanopores being worked on seems to back up Clive Brown’s claims in recent talks (e.g. at UK Genome Sciences, Nottingham, UK) that many different pores can be used for DNA sensing, each of which has different properties, different strengths and weaknesses.

From their website [10] we can see that ONT were formed in 2005, and doubtless have created and licensed a huge range of intellectual property on DNA sensing using nanopores over the last 8 years; indeed, they lay claim to an “intellectual property portfolio of more than 300 issued patents and patent applications”.  This appears to be a formidable position, and it remains to be seen whether Illumina can come close to challenging ONT in this space – at present, we are only aware of one license for Illumina, the license from Jens Gundlach at UAB on MspA.  Currently, the IP landscape appears heavily weighted in ONT’s favour.  There are interesting times ahead, and key battles may very well happen in court rather than in the laboratory.

  1. http://www.bio-itworld.com/news/02/17/12/Oxford-strikes-first-in-DNA-sequencing-nanopore-wars.html
  2. http://investor.illumina.com/phoenix.zhtml?c=121127&p=irol-newsArticle&ID=1242758&highlight
  3. http://www.bio-itworld.com/2012/11/05/oxford-nanopore-illumina-arbitration-regarding-sequencing-partnership.html
  4. http://www.genomeweb.com/sequencing/oxford-nanopore-illumina-cut-ties
  5. http://www.genomeweb.com/sequencing/oxford-nanopore-disputes-comments-illumina-ceo
  6. http://www.genomeweb.com/sequencing/illumina-licenses-nanopore-based-sequencing-technology-uab-uw
  7. http://www.nature.com/nbt/journal/v30/n4/full/nbt.2171.html
  8. https://www.google.com/patents/WO2012107778A3
  9. http://www.google.com/patents/WO2013153359A1
  10. https://www.nanoporetech.com/about-us/

1 Comment

  1. One aspect of Illumina’s investment in ONT is the access to information on ONT’s technology. Being on the board should give the investor a better estimate of the time of market entry and the competitive stance of the technology. The market leader can now adapt their mid-term strategy both in research and development, and even more relevantly the pricing strategies.

    So ONT’s other investors have an incentive to buy Illumina out to shut down this access. Much of ONT’s often criticized information policy could be explained with leaving the competitors in the dark about the competitive position. On the other hand Illumina’s exit might mean the value of this information flow has expired.

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