ILMN

Illumina, Inc. (ILMN)

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Illumina, Inc. (ILMN)

UBS Global Healthcare Conference

May 20, 2013 11:30 am ET

Executives

Marc A. Stapley - Chief Financial Officer and Senior Vice President

Analysts

Daniel Arias - UBS Investment Bank, Research Division

Presentation

Daniel Arias - UBS Investment Bank, Research Division

Okay. Welcome again. I'm Dan Arias. I'm the life sciences analyst at UBS. I'm going to ahead and introduce our next company to present, Illumina. We're happy to have Marc Stapley, the CFO; and Rebecca Chambers from Investor Relations. So why don't I turn the podium over to Marc for some comments. And then immediately following the presentation, we'll have breakout Q&A across the hallway in [indiscernible].

Marc A. Stapley

Good morning. Thank you, Dan. We really appreciate your having us here again this year, the UBS Conference. So I'm going to spend maybe 20 minutes or so, 25 minutes, just giving a quick update on Illumina, our markets, our products and our business and some of the areas of focus for the company in the recent period.

So firstly, I'd like to reference our Safe Harbor statement on Slide 2. Just to remind everyone that we have the Safe Harbor, I may be making some forward-looking statements today. If you have any questions or concerns, I would ask you to look at our SEC filings, including our 10-K, 10-Q, et cetera.

So I'm sure many of you are familiar with Illumina. But for those of you who don't know the company, let me maybe spend just a couple of minutes giving you a quick update and a little bit of background on Illumina. As the tagline says here on the chart, we are the worldwide leader in genomic analysis.

2012, we had revenue of $1.15 billion, which was a growth rate of 9% year-over-year despite the very difficult economic environment. We have over 2,400 employees globally. We are truly a global company with locations all around the world, but our headquarters is in San Diego, California. As I mentioned, we are the recognized leader in next-gen sequencing, with over 90% of the world sequencing data generated on Illumina equipment. And in addition to our sequencing business, we're also very successful in the microarray genotyping business, with approximately 80% share in DNA genotyping.

We have recently focused more on the diagnostics, trying to expand in our business, and I'll spend some time telling a little bit about our success in reproductive health and talking a little bit about our future focus and our current focus on the cancer aspects of the diagnostic business.

All of this, the sequencing success and the microarray success, our good revenue growth, is really underpin by a very robust history of innovation and a very strong R&D pipeline. We talk about our pipeline today being really exciting for us, and I'll share with you some of the enhancements to our product line that we've disclosed recently and just spend a little bit more time chatting about those.

First of all, let me spend a few minutes here on our markets. We believe we have over $12 billion opportunity today, and that's broken down in the following way: firstly, life sciences research, which is about a $4 billion market, is by far the majority of our revenue. It goes back to our more traditional parts of our business. But as you can see from this chart, there is some really interesting growth areas that we're focusing on. Let me start with the consumer market.

The consumer market is starting to really take off for us now, and I'll spend a few minutes on that on a subsequent slide. But we believe that's a market that's over $50 billion today. The applied market, which would include forensics and agrigenomics, is around $1 billion market. Reproductive health, which is a very key focus of ours, is about $1 billion today. And then, by far, the largest market opportunity is in the clinical and translational space, which would include cancer, genetic disease, molecular disease, for example. All of these markets, really, there's something that's very consistent and common to these markets. And it's really underpin the our mission, which is to improve human health by unlocking the power of the genome. So whether we're focused on consumer, applied reproductive life science, clinical, translational, it's all consistent with our mission of improving human health.

So I'll now turn to our platforms. We have -- as I mentioned before, we have a sequencing and an array business. The revenue split is about 70% sequencing, 30% microarray. We also have a PCR business, which is based on our Eco instrument.

If I start on the sequencing part of our business, our flagship product is the HiSeq family, as you can see on the left of the chart here. The HiSeq family, the HiSeq instrument is the highest output, lowest cost per base and highest accuracy sequencer. We recently implemented or introduced and implemented, an upgrade to that instrument, the HiSeq 2500, which is the only instrument that can sequence a genome in about a day, 27 hours for the instrument with the most recent or most updated cameras. And we've had a lot of success with that instrument recently. MiSeq is our desktop instrument. We shipped over 1,000 units to date by the fourth quarter of last year, so we're very happy with the way MiSeq is going. Genome Analyzer is our previous generation. We also have the HiScanSQ. And then on the array side, we have the HiScan and the BeadXpress.

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