(By Mani)
Life Technologies, Inc.'s (NASDAQ:
LIFE) next generation sequencing (NGS) business has become a significant investor focus, primarily for its potential as the next major growth driver.
The Ion Proton launch has been greatly anticipated due to its promise of the elusive $1000 genome. Early demand has been significant as management has indicated booking more than 100 system orders.
Coincident with the launch, the company will be hosting Ion World 2012 in San Francisco on September 13-14. Ion World 2012 will feature a number of high profile geneticists. Adoption in size of the Proton would represent significant commercial validation.
Investors remain skeptical of the ability of the company to deliver Proton II ($1000 genome) by year-end despite meeting/exceeding every Ion Torrent-related promise. However, presentation of Proton II data at Ion World 2012 would be a significant stock catalyst.
"We expect the symposium to serve as a catalyst for shares as the program will detail both the research and clinical potential of the platform. We believe our 2013-16 Proton estimates to be conservative, and note that a launch trajectory that mirrors either the HiSeq (ILMN) or PGM (LIFE) could add up to $0.06 and $0.39 to our EPS estimates in 2013 and 2014, respectively," Oppenheimer analyst David Ferreiro said in a client note.
Widespread clinical utilization of NGS remains the Holy Grail opportunity. Ion World 2012 focuses on the application of Ion Torrent technology to clinical research. The Proton, with the potential for the $1000 genome, could hasten clinical advancement of NGS technology as cost is one hurdle for clinical implementation.
The Ion Proton launch is garnering significant attention for a number of reasons, including the potential for a $1000 genome, short runs (few hours), and a list price that is substantially below that of comparable systems from Illumina, Inc. (NASDAQ:ILMN)
Life Technologies is offering the Proton with a $50k discount to current customers. The Proton will launch in September with the Proton I chip (exome), while the second chip, Proton II (genome) is slated for release by year-end.
On the second quarter earnings call, the company indicated that they had already received 100 system orders. In addition, a number of clinical centers, namely Boston Children's and the Hospital for Sick Children in Toronto have indicated they would adopt the Proton for clinical applications.
"Despite the significant early customer interest, we have maintained modest expectations for the Ion Proton in 2012 and 2013. We model 140 and 200 placements for total revenues of $35M and $75M in 2012 and 2013, respectively. Given the wildly successful launch of the Ion Torrent, we believe the Proton has the potential to vastly exceed our expectations," Ferreiro said.
Life Technologies is a life science tools company created by the Applied Biosystems/Invitrogen merger in 2008. Core strengths include sequencing technologies, PCR, and cell culture. Life Technologies is fully integrated and remains focused on growing its core molecular biology and genomics portfolios through acquisition and internal discovery.
"If the Proton launch mirrors the HiSeq (~1000 placements/2 years) or the PGM (~800 placements/1 year), we see $95-190M and $110-280M of revenue upside, translating into $0.03-$0.06 and $0.17-$0.39 of EPS, in 2013 and 2014, respectively," the analyst added.