Illumina: Dollars and DNA

02/20/2015 7:00 am EST


Tyler Laundon

Editor, Cabot Small-Cap Confidential

You many not necessarily want to know your DNA sequence. But if you do, it's now possible to get it. And it is changing the way humans are screened and treated for a huge variety of diseases, explains Tyler Laundon, editor of Top Stock Insights.
Leading the charge in human genome sequencing is a company that has been public for a relatively scant 15 years.

But over that time Illumina (ILMN) has arguably done more than any other company to bring down the cost. And it's doing so while turning a healthy profit and generating huge returns for shareholders.

The first human genome took 13 years to sequence and cost $3 billion. But over the last decade, the cost has come down so far that an average person can almost afford it.

For around $1,000, you can now take a blood test and meet with your doctor a couple of days later to find out about your genetic strengths and weaknesses (though you'll need to find a doctor with the $1 million machine).
Illumina has become the hands-down best company in the space. Around 90% of all human genomes ever sequenced have been done so with Illumina's machines.

Illumina reported its 2014 financial results and, as expected, delivered record revenue growth of 31% (to $1.86 billion) and adjusted EPS growth of 52% (to $2.37).

Much of this growth was attributable to sales of the high-throughput HiSeqX machines to medical research centers, hospitals, and even countries.

England alone has plans to sequence 100,000 people by 2017 in an effort to make sequencing part of mainstream healthcare.

And President Obama is embarking on a project to invest hundreds of millions of dollars to track DNA sequences for 1 million volunteers and identify genetic drivers of cancer.
With new product launches ongoing right now and demand for oncology and reproductive health rising, even as costs fall, it appears that Illumina remains the clear choice in this highly specialized field. Given all the opportunities in front of Illumina, we'll have plenty of news to follow as this story unfolds.

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