I really appreciate your recent contributions in "Amazing lack of substance these days" thread. But I disagree with your view on MassArray: "..... and that they should sell off MassArray...". At least two years ago there was a comment from one of the big genomic, academic centers (may have been Brown) on what determined their choice of using of MassArray over ILMN instruments for sequencing. The lab head claimed that they would use MassArray when there were less than 50 samples due to reagent/setup costs. Otherwise, results were equivalent for their purposes. Sorry I don't have more to go on than that or references to site but that comment stuck in my head at the time. I'm surprised this has not been subject of conversion amongst those more knowledgable than I (and with more time on their hands).
The point I'm getting at here is that for personalized medicine apps., such as cancer diagnostics, where very few samples need to be run in specialized format, MassArray may be the instrument of choice. Especially as they improve the technology.
Your thoughts? Or anyone's thoughts? - except btommasino, because he has no thoughts - only mental flatulence.
Hi Joe-I don't have much specific knowledge about the massARRAY equipment and it's strengths and weaknesses. It seems pretty clear that this segment has stalled in the past year or two. Now that they have revised their segment operating profit disclosure, it's also contributing much less than they originally reported. It also seems like a very different focus, trying to sell and market equipment to research labs as compared with the sales focus of push LDT's to the MFM and OB/GYN community. This all seems to support the need for management to evaluate this segment and what it means to them long term.
They do use these machines in Grand Rapids and they have said this segment provides them a pipeline of potential new tests to eventually commercialize. Conceptually, this still seems like a valuable capability but it's hard to put much weight on it until they actually roll out a new test that came from this "pipeline".
Joe, MassArray is a nice tool. There are lots of papers doing interesting things using MassArray. On the other hand isn't it a bit telling that SQNM couldn't even use their own product for their NIPT test? The truth is management has to make a decision - do they want to be a niche market provider of a limited use sequencing tool - or do they want to be a major player in molecular diagnostics? I have no doubt that there is enough technical expertise for SQNM to work on developing more tools however from a business point of view that, imo, would be a foolish place to invest your money when you have a test selling like hot cakes that could propel you into a much larger market cap world. There are lots of examples of small companies that thrive selling equipment to a niche market. IMO SQNM is NOT an good example of this. Why? Two reasons: 1) They have never, ever made a profit with MassArray as their primary business, 2) Niche equipment makers thrive by making specialty equipment with few competitors - that is not the case with DNA sequencing.
Who knows about this - there is always the siren song of consumables with their huge margins luring one on in this business. MassArray is Cantor's baby, maybe he advocates very strongly for keeping it.
The MassArray system from what I've read has robust capabilities for many of the test being run on it, and these have improved significantly over the past year or so. In the last CC it was mentioned AGAIN that they are, as a goal for '13, submitting a form 510 to the FDA for the MassArray system. If I understand this correctly, this would allow SQNM to market the MassArray system to any labs wanting to use it for sequencing. At present without the 510 FDA approvals they can only sell the MassArray system and its panels for research uses only. With the ability to open the use of the MassArray sequencer to all labs as a testing tool, the potential revenue stream from system sales and especially panels would grow exponentially.
My hope is that they pursue this application with a vendence, because this could become their next major revenue stream imho.
I agree that "niche equipment makers" for DNA sequencing cannot profit on equipment sales alone and SQNM will probably never make any significant profit solely on MassArray sales, if ever. But they could (as you suggest) become profitable with consumables such as assay kits with clinical-grade, standardized reagents and procedures tailor-made for SQNM's gear. This is exactly what's been done in the industry I am most familiar with: flow cytometry. Flow is widely used in research and clinical labs for well over 20 years. Flow cytometry data is the gold standard in leukemia and lymphoma diagnostics. Big flow players are BD Biosciences and Beckman-Coulter (BC) but there are several other small companies such as Luminex and Sony recently got into the biz. Profit margins on flow cytometers are minimal at best, especially when you consider the costs associated with maintaining equipment.
I also agree that MassArray is Charlie's "baby" - that's exactly why I'm betting on SQNM.