Illumina at Bernstein Conference: Strategic Insights and Challenges

On Wednesday, 28 May 2025, Illumina Inc. (NASDAQ:ILMN) took center stage at the Bernstein 41st Annual Strategic Decisions Conference 2025. CEO Jacob Tyson discussed the company’s strategic direction, highlighting both achievements and hurdles. While expressing pride in Illumina’s innovative strides, Tyson acknowledged challenges in China and academic funding. Despite these hurdles, Illumina remains committed to operational excellence and aims for high single-digit revenue growth by 2027.

Key Takeaways

• Illumina targets high single-digit revenue growth and 500 basis points of margin expansion by 2027.
• Challenges include China-related issues and academic funding pressures.
• Transition to the X platform is a key growth driver, with over 50% revenue expected from it later this year.
• CEO Jacob Tyson described his recent stock purchase as a top investment decision.
• Illumina focuses on innovation in single-cell analysis, proteomics, and spatial genomics.

Financial Results

• Revenue Growth: Aiming for high single-digit growth by 2027, excluding Greater China.
• Margin Expansion: Targeting a 500 basis point increase by 2027.
• Cost Reduction: Implemented reductions of approximately $100 million this year, continuing into next year.
• Clinical Market Share: Strong Q1 growth with good X placements and mid-single-digit growth in consumables.
• Academic and Government End Market: Lowered guidance by 15% for the US market.
• China: Accounts for less than 5% of revenue.
• Volume Growth: Expected to be in the mid-twenty percent range long-term.
• Price Decline: Anticipated in the mid-teens.

Operational Updates

• Strategy Focus: Committed to "highest insight with the lowest end-to-end cost."
• Operational Excellence: Emphasizing resilience and efficiency.
• China: Listed as an unreliable entity by Chinese authorities.
• Transition to X Platform: Over 50% of revenue expected from the X platform in the latter half of the year; currently, 65% of volume is on this platform.
• Innovation Roadmap: Providing customers with more visibility on future innovations.
• Spatial Genomics: Commercial release anticipated in 2026.

Future Outlook

• Growth Drivers: Transition to the X platform and new product introductions in key areas.
• Academic Funding: Expected to remain subdued through 2025, with growth potentially resuming by 2026 or 2027.
• China Strategy: Aims to improve current challenges but plans to meet targets with or without China’s contribution.
• Innovation Focus: Emphasizing perturbed seq, spatial constellation, and base genome advancements.

Q&A Highlights

• Academic Funding: Growth expected to return to 6%, but timing remains uncertain.
• Clinical Market Share: Tyson confident in customer satisfaction with Illumina’s offerings.
• Competitive Landscape: Commitment to innovation and customer differentiation.
• Stock Valuation: Tyson and CFO Ankur view current stock prices as an attractive investment opportunity.
• Market Undervaluation: Attributed to uncertainties like China, NIH funding, and tariffs.

For more detailed insights, readers are encouraged to review the full conference call transcript below.

Full transcript - Bernstein 41st Annual Strategic Decisions Conference 2025:

Eve Burstein, Analyst: All right, thank you so much everyone for joining. Let’s go ahead and get started. My name is Eve Burstein, no relation to Bernstein of Bernstein Research. I cover U. S.

Life Science tools and diagnostics and it’s my pleasure to have Jacob Tyson from Illumina with us today. Jacob, let me make sure we got this right, so joined Illumina as CEO in 2023 and previously served as the president of both the Life Science and Applied Markets Group and the Diagnostics and Genomics Group at Agilent, who reports tonight incidentally.

Jacob Tyson, CEO, Illumina: So

Eve Burstein, Analyst: glad you don’t have to be there for it. Before that, he was the corporate vice president of r and d at DATCO, and he spent more than sixteen years between the two companies.

Jacob Tyson, CEO, Illumina: That’s correct.

Eve Burstein, Analyst: Alright. I got it. Great.

Jacob Tyson, CEO, Illumina: Thanks, Eve.

Eve Burstein, Analyst: Well, thank you. Thanks for being here. I have a lot of questions, and I am excited to jump in. But a quick reminder to you guys, the Pigeonhole app is open. Please submit questions.

We wanna make sure that we answer what’s on your mind and not just what’s on my mind. So with that, let’s get started. So you’ve now been in your role for a little bit over a year. What are the things that you’ve accomplished in this time that you are the most proud of? And how do you think the company is different from the way it was when you inherited it?

Jacob Tyson, CEO, Illumina: Yeah. No, that’s a really good question. And yeah, I think I looked it up the other day and I think it’s now twenty months. So time flies. And sometimes it feels like only maybe twenty days.

Other times it feels a little longer than that. But first and foremost, I’m excited to be a part of Illumina. I think it’s a great company. It has had a fantastic history and being able to change how we think about genomics. And I think the future is even bigger.

We’re just getting started and the opportunity is vast out there. As you also said, there is a lot of things that has happened over the last twenty months I’ve been in the company. So, if I just look step back and look a little bit about what I’m most proud of. I think number one, I continue to be proud of being a part of a super talented team and absolutely the most innovative team that we have in the industry or even that I’ve ever worked with. So I’m excited about that.

Me as a scientist as a background is excited to be a part of such a team. I’m also very proud of the team’s ability to as I said we have changed a lot of things. We have really been focusing operational excellence, really challenging the way that we operate, the way we organized. And I’m actually very pleased to see how comfortable the team has been to change themselves and change the way you operate to something that is even better. And when you think about that operational excellence always sounds like cutting costs.

But in my view, it’s all about running and it’s resilient and effective company. It is wrong when you just hire people in run on wrong processes or unoptimized processes. And just if you have a problem instead of fixing the problem you just add more people to it. So, changing the mindset over and saying because before when we were growing very quickly you just add more people to change the way you are improve the way you operate. Now, we continue to have discipline around actually challenge the things that we do and optimize them to become even better.

And I think that’s a big change in our philosophy. But in the end the only way in my world to be both successful on the top line and on the bottom line. And in the end this is what good companies are doing and I think we are on a great trajectory on that. If you look at a few other things, mean the strategy we put in place this summer, I think is was very important for everyone in this room also to understand what is the model for alumina going forward, but really starting to focusing on what we call the highest insight with the lowest end to end cost, where we have been for the last many, many years been focusing on driving down the cost of sequencing. And every time we have driven down the cost there has been many more applications.

So that’s kind of the elasticity logic in it. And while I still believe in elasticity, the proxy was always to drive down the end to end cost. But the only thing that mattered for a long time was the cost of sequencing because that was a dominant factor in the end to end workflow. Now, in a different position where the cost of sequencing for many applications actually is not the driving factor of the cost of the workflow. So, we need to work much more on the end to end.

And we can talk more about that, but I think really it’s challenging to change both how we think about and how we talk about it internally, but more importantly externally. So that would be my last dimension that I’m very proud of is that, I felt coming into the company and maybe that’s back to how I think we have changed this that in a company that is so successful as alumina and have such a strong position in the market as alumina, it’s also natural over time to get a little bit too much insights out looking. You focus on what we are good at and expect our customers will follow. Some will call it complacent. I don’t think that’s the right word, but I think it’s just you lose a little bit that customer intimacy because, yes, we are the one you come to anyway.

So really changing that in the company to really open up have much deeper conversation and interaction with our customers on a day to day basis inviting our customers in to have a deeper understanding on what we’re working on to help them be successful out the gate and not just come and surprise them with new launches. I think has driven a completely different at least from when I speak to customers a different intimacy and thereby long lasting relationship that I think is beneficial for running a successful company not only today, but also in years to come. So these things I’m successful about. I’m sure that he will come back and tell me about all the things I didn’t remember to tell you. Mean, great separation and all that, but these are a lot of things that we have been proud of being part of.

Eve Burstein, Analyst: Well, that’s a pretty good list. Yeah. Thank you. On the flip side though, looking back, I’m sure this year has not played out the way you expected or the way that pretty much anyone has expected. Knowing what you know now, is there anything that you would have done differently either as it relates to the macro environment or independent of the macro environment?

Jacob Tyson, CEO, Illumina: Yes, that’s a good question. It’s always easy to be the Monday morning quarterback here and look back and say what we could have changed. And clearly, I knew taking the job that this was of course a transformation I stepped into. A lot of change that needs to happen both from as we talked about also a little bit before the GRAIL decision that we had to make, but also how to get the company back to growth, how to improve the margins and so on and thereby change the culture and the way we operate within the company. So coming into that that I knew.

What of course so coming out of 2024 where we had put the strategy in place, we started to show execution and we started to show operational excellence that even in quarters where we didn’t grow that we will continue to expand our margin. Think we started to show the world that our operating model was starting to play out. Now granted we still knew that the top line had to grow, but we also were very clear and transparent in our communication that that would be a part of the transition to the X. So all that was you can say we were we had actually achieved in 2024. Now we needed to really focus on execution.

So if 2025 was an execution year in our mind going into 2025. Well, turns out as I think you also framed it that the cart turned out the big was stacked a little differently. And but I think the point of just saying that in that analogy is that it doesn’t really matter what happens. You have to play the cards that you get. And the cards that we got of course was that in the beginning of the year we were notified by the Chinese authorities that we were put on the unreliable entity list.

There was also of course competition coming out. There were NIH funding challenges. And now of course also the tariff situation as everybody’s dealt with. So clearly a lot of unexpected challenges that we had to deal with. And obviously, can choose to do two things.

You can sit down and complain to the world that this was not something you were it was not on your I mean, it’s not your fault and you should feel sorry for us. You can go on and say let’s control what we can control. And I think that we went very quickly in and I’m very proud with the team also is that we have made some tough decision during the last few months that we didn’t anticipate that we had to make to really saying look these are the situation that is now being the hand we’re being dealt. We need to deal with the China situation. We need to make sure that independent of what happened in China we will still continue to execute on our strategy and our commitments.

We made some choices to eliminate cost out of approximately $100,000,000 this year and beyond next year, which I think is now getting us back at least from a P and L perspective in a really good place. We also use the opportunity to shift around some of our priorities based on what we have learned from entries from competition and so on. But the strategy have completely stayed the same. We truly believe in the end to end highest quality insight with the lowest end to end and that we will continue to focus on over the next period of time. So, yeah, things are changing and maybe they’ll change tomorrow again.

I think that’s just the world we live in right now, but what our commitment is that we will deal with what we can control.

Eve Burstein, Analyst: You mentioned that you chipped it around priorities a little bit. I just picked up on that. Can you talk a little bit more about what you mean there?

Jacob Tyson, CEO, Illumina: So, what my philosophy is that when you sit down and look at a strategy and what the right strategy is for a company, you look at many dimensions. But just to make it very simple, you look at the opportunities out there and then the quality you have or the strength you have as a company. And that should be the main part of course also culture of the team. Those would be the three parts that defines what a good strategy is. And that I’m saying in the end what we believe was to really drive genomics to the next level and into multiomics also by really focusing much more on the workflow end to end and deep insight rather than sequencing and the sequencing consumables and box itself.

So, the way you should always think about your what changes your priorities and you set the priorities accordingly. If there’s a market headwind, if that makes you change the strategy you have the wrong strategy out the gate. If there is a so but you should always change your priorities based on new information. And of course, a market headwind is a new information. Competitive dimension is a new information and so on and so forth.

So clearly, all this require you as a company to look at that new information saying what does it mean to you and what would you do differently? So of course, you would always and it doesn’t matter whether it’s competitor or market or something else or even new team members coming in with different type of strengths, you will adjust priorities after that. If you don’t do that, you’re not really listening to your own organization and to the market and you’re not responding thereby to the dynamic in the market. And you need to do that as a company. It doesn’t matter what the size you are.

Eve Burstein, Analyst: Okay. We’ve used the word strategy a lot. So a question about your strategy. Clearly a lot of things have changed in the last year and you just said if you have to change your strategy when things when the market conditions change it was the wrong strategy. So I’m guessing I know the answer to this.

But but just very simply, you said in your one q earnings call that you are continuing to execute on that strategy to deliver high single digits revenue growth and 500 bps of margin expansion by 2027,

Jacob Tyson, CEO, Illumina: excluding

Eve Burstein, Analyst: the Greater China region, should we take it to mean that all of these headwinds including all of these headwinds, that is still intact?

Jacob Tyson, CEO, Illumina: Exactly, yes. So we went out this summer and presented that with the focus on the highest quality inside with the lowest end to end that we still believe that there’s a lot of room to grow. And we actually believe that Illumina will be a very strong growth company going forward. But we also felt like look we also recognize that our growth over the past year had not been past few years has not been where we wanted it to be. So we need to show also the world that we can start to step into growth again before we commit to even more.

And so, a big you can say the strategy on the commitment was to saying we will step into grow again growth again. And the way to do so is it was driven by three dimensions. Dimension number one is the transition on the X. As you know, we launched the X a few years ago. And with that, we took down the cost on the price of sequencing substantially again.

And so we reduced two third of the price point. And when you do that, you actually have to have 100% more volume in order actually to just make up top line. So, we also and we see that elasticity moving, but we also see that customers are still transitioning towards CX. So that’s where we see the growth has come back, because we continue to see a lot of volume out there. But of course also when you transition, you also see some price erosion.

And what we were also already explaining is that when we start to have 50% of the revenue, we have more than 50% of our I think we have 65% of our approximately 65% of our volume sitting on the X, but we have still less than 50% of the revenue, which we expect to happen here to get to that what we think is a very important point here in the second half of this year. When you get that growth is going to be easier because the denominator is very different than before. And therefore, we see that growth will come now based on we are finishing up that transition work here over the next period of time. And thereby ’25 would be stronger growth and ’27 would be even stronger growth just based on the transition we’re going through. And on top of that is that all the fantastic NPIs that we’re coming with and in this summer we primarily spoke about our single cell our proteomics, but now we also have talked about spatial constellation five based genome that we all believe is going to help on the top line also.

So that would add probably another point on top of. But the main point will still be transition to the XL lease over the next few years and then we’ll start to add the new product introduction that will drive growth even further. So we’re excited about that. We truly believe that’s still in the model. The margin expansion is of course helping or coming also along with the growth.

But also we recognize that with the challenges we would have with China and the margin challenge we would have that we had to do something more. That’s why we accelerated some of the cost reductions that we did this year. So with all that, that’s why we feel comfortable that we can that we’re still on track to deliver on our commitments.

Eve Burstein, Analyst: One of the pushbacks that we often get from investors when we’re talking about that transition, one of the concerns we hear is, yeah, growth has been great, but it’s been great because there’s been this price discount. That’s what’s catalyzing it. And as people transition, that volume growth will slow down. How do you respond to that?

Jacob Tyson, CEO, Illumina: Well, I think I’m a numbers guy, a data guy also, so I can look at our own numbers and see customers have fully transitioned and how they behave. And we can see that the volume continues to grow for these accounts. So we think that we have a lot of evidence to show that that will continue. We of course also in that space to so but data doesn’t tell you the whole story. You also need to speak to your customers and speak to what is happening and what their expectations are and the market they are entering into.

And from those conversations especially in the clinical space lists out there, we continue to see that there’s a lot of opportunities in that. I mean you saw most of our many of our customers actually did upgrade there for this year the guidance, but also moving into Multiomics, which has required substantially more sequencing going forward that with these end to end solutions we have for these applications that we will continue to see a lot of growth there. So, feel very comfortable is volume growth will continue. Now, what we also have said and what we have modeled out is that if you looked at the volume growth that happened over the last few years, it’s been elevated over where we expect it to be long term. So I think it’s been sitting in the 30% up to 40% volume growth over the past few years.

We in our model, are saying longer term it should probably be more in the mid-twenty percent growth of the volume. That we feel is a more steady state perspective. Now, we also expect that there will be some price decline on that. So maybe right now we are modeling that in the mid teens. So with that combination you will end up in high single digit growth.

Eve Burstein, Analyst: So I think it’s certainly the case that there’s a lot of excitement about sequencing applications and people want to sequence a lot, but you need money to do that. So let’s talk about the end market. Obviously, one of the pressures on your LRP is the outlook for academic funding. And research is 50 ish percent of your revenue. Know that’s not all academic.

Some of that’s pharma, but that’s under pressure as well. And so if I just think back to your strategy, you shared that you expect the market here to grow 6% long term. But this year, you also lowered your guidance for The U. S. Academic and government end market by 15%.

Jacob Tyson, CEO, Illumina: Correct.

Eve Burstein, Analyst: So two parter. One, do you think that academic growth ever gets back to that 6% that you expected? And two, if so, do you think it’s feasible to get back there in the next four years?

Jacob Tyson, CEO, Illumina: Yes. So let’s look at first and foremost how think about our markets is that and how we see how we split our clinical versus academic research academic and research is that more than 50% today is clinical and less than 50%, so 45% -ish is in the academic research space. And then you have to look at that saying half of our revenue approximately half is from Americas. So then you’re down to less than 25% and half of that is exposure to academia. So you’re sitting there between 10%, twelve % maybe in that order maybe plusminus in that range that is exposed to where we see the real challenges right now in NIH.

But if you then look at so that’s kind of the exposure to that market. If you look into the that particular part of the market, yes, I mean there’s no doubt right now with the challenges or with the new administration coming in want to set the new agenda. And there’s clearly a part of the grants that is being challenged right now that sits in one specific segment of the grants, but there are other grants that actually flows very nicely. And I think that and we see that in the genomics space. Some of the agendas that are the focus areas that the new administration have clearly also require a lot of sequencing to understand better autism and other things that they are really focusing on.

But I think the overhang right now is less so the actual grants, but the uncertainties. And uncertainties is always challenging. As soon as we have certainty, it’s much easier to navigate the system both for our customers, but also for us. And so I think within the next maybe over summer here that the uncertainties will dissipate a little bit. That’s my hope.

We are not planning for that in our new guides. We expect that the market will be subdued actually all the way through 2025. But if I also look at it and saying with the new tools we’re coming out with, with the new solutions we’re coming out with both from proteomics for single cell, for spatial what we do in constellation for the base genome and that will open up a whole epigenetic market. I think there is a lot of opportunity even within the grant money to shift that where I think there will be priorities. And thereby I do think that that in our specific area that we I think that there’ll be growth opportunities going forward.

I can’t predict today whether it’s going to be a 2026 or 2027 event, but I do think that there’ll be a lot of investment. And I’m not only talking U. S. But globally into the areas that we’re addressing the multiomics going forward. If you look into the pharma space, yes, it’s certain there’s some uncertainties also about especially in U.

S. With pharma. But some of the products that we are very excited about perturbed seq and all and aspects of that is something that has a big focus on pharma because it can really change the way they think about drug discovery and thereby reduce their time to market. So, even though overall pharma might be challenged, I think you will still see PERTURP, SEEK and some of the other things big huge cohort programs that will get a fair share of the available funding, because there’s a lot of opportunities to not only understand diseases, but also reduce your time to market.

Eve Burstein, Analyst: I have a lot of questions about your innovation and your products coming up, but let’s stick on the end markets and just stick through them a little bit. We have to touch on China. I know you said in your 1Q earnings call that we spend too much time talking about this. Absolutely. And I I know it’s only 5% of your revenue.

So I apologize. Just one question. We we were surprised to hear you say on that call that you’re still working with the Chinese government to try to come to a resolution that doesn’t include an outright ban of alumina instruments. Is there really a chance that your revenue doesn’t go to zero there? Have those odds improved at all as trade tensions seem to have eased a bit?

And then if China is missing from the picture in the future, does the high single digits top line growth in your LRP still hold?

Jacob Tyson, CEO, Illumina: Yes. So as I said, we spend a lot of many of you spend a lot of discussing China. And I think you should I’m pretty sure you do that with all the other companies in this industry. You should probably not spend too much time on talking China with us these days. I mean, it’s less than 5%.

We as we said, we did cost reduction also to make sure that fundamentally China is now an upside from a P and L perspective as how we see it. So we are we actually think we’re in a really strong position independent on what happens in China. And our key focus is continue to drive to our high single digit and 500 basis point improvements besides China. Should China actually come back that will be an upside to a lot of that. Now, let’s talk a little bit about China.

And I mean, first of all most we do we would love to stay in China. We think that even though it’s challenging right now, the size of the China, the population of China clearly going into a direction where more genomic testing from a healthcare perspective will be needed. So, we think that’s an attractive market to be in. And who knows how the world looks like in five years from now. And being in China therefore, I think is going to be could be a long term attractive environment.

Will that be in the next five years or next ten? I don’t know. But I think it’s important to keep the optionality so to say. So that’s one element. But the more important element right now is that many of our customers actually want us to our Chinese customers.

I had the opportunity to sit down and speak to some of our Chinese employees and Chinese salespeople here recently and they confirmed that and was very clear that many of their customers want us to stay there. They see us as the ones with the highest quality. And it’s not only clinical also many research customers wants us there. They see Illumina come out with a lot of innovations and they feel very comfortable or they feel very committed to what we have done over the last few years and also what we will do in the future. So I think they certainly a lot of customers want us to stay there.

But it’s also very clear right now with the current situation where we’re not able to place instruments that if that doesn’t change obviously we don’t have a future in China. And therefore, think it’s our job. It’s my job to go and trying to change those odds. And thereby having the conversations with the right regulators both in both countries actually, I think is what our job is to see whether we can improve the current situations. And we’ll continue to look from different angles to get that done.

Clearly, is this a could this be dealt with in a potential Chinese U. S. Trade agreement potentially, but it’s that is a little bit out of our hands. So we’re trying again to with the paths that have been dealt, we’re trying to control what we can control and that is have the conversation ensure there’s no misunderstandings between why we are in the situation and continue to prove our commitment into China and then we’ll see what happens. But should we not be able to get back and have a normal business in China, we’ve already taken care of as said and from a financial perspective that we can continue to deliver on our long range plan.

And to the level that we were not anticipating in the original long range plan with China, we’re not anticipating China actually to contribute to growth. So in that sense, you can argue without China it’s going be a little bit easier.

Eve Burstein, Analyst: All right. We can turn to one of your end markets. It’s much bigger. So clinical, 55 ish percent of your revenue. It was particularly strong for you in Q1.

You had good X placements. You had good mid single digits growth in consumables. But and I will speak for investors, think they worry that even if today’s tests aren’t moving off of aluminum machines and won’t move off of aluminum machines, tomorrow’s tests could, future tests could. And so at some point we see a sign of that and there won’t be a lot of warning. So a couple of questions related to the clinical end market.

First, back in your virtual Investor Day and your strategy, you estimated that low double digit market growth would underpin your expected high single digit company growth, so low double digit in clinical. What share of future clinical tests do you think you need to maintain to still be able to hit those numbers?

Jacob Tyson, CEO, Illumina: Well, let me address the first thing. I think investors worry too much. So and why I’m saying that is that look I mean this especially the clinical customer base needs a customer they can rely on for the years to come. They have built a lot of their capabilities. They have built a lot of their assays, a lot of our infrastructure around our platform, both the sequencing our sample prep, but also informatics backbone.

And just shifting that out because there is a new shining object that comes in and promising maybe a little bit better pricing, but a little bit different feature is I think customers recognize also we’re spending a lot of money on innovation. And the commitment from Illumina is that we’ll continue to innovate. So, you might get a better pricing for a specific assay, but now you need a completely new infrastructure in your laboratory, maybe a new pipeline, maybe new sample prep and now you need to have added people on top of that to run that separately from all your other things. And you got the only thing for that is to reduce pricing a little bit. The next few years, as I also mentioned, we’re coming out with a lot of innovations.

There’s nobody in the industry that will match us on the innovations coming out. And our commitment is that if you buy into our solutions, you will also be a part of our innovation roadmap. We will share with you what is coming up and we will make sure you differentiate it. And I can guarantee you that and you can see historically, nobody that made a decision going with Illumina has ever regretted it, even though they could maybe get a little bit different pricing out the gate. We committed.

We will make sure we hit also the price point that is needed to be successful in this industry. And we will make sure that our customers will always be more differentiated than anyone out in the industry. So I think that’s a commitment that we have. And I think that’s based on our history and what we have done. So look, will there be customers that decides to move over?

Maybe there will be. And that’s their choice. And again, we will welcome them back when they realize they made a mistake. And if not so, we will make sure all the others are very competitive versus those customers. So, I think that’s how we think about it.

I think that competition is great. It keeps us all up. It keeps us focused. I think a big part of my job description is to worry about everything that can happen to the company and deal with it. And that’s what we’re doing.

Eve Burstein, Analyst: Fair enough. All right, let’s talk about some of this innovation. So I’ve got some questions. I’ve got a question on pigeonhole about innovation that I’m going to stick in here too. And so just a reminder to everyone here, can submit questions and we’ll we’ll lob them over.

So obviously at at AGBT this year, you shared this innovation road map. It gives visibility much further out into Illumina’s pipeline than you usually share than you have historically shared. So let’s start with that. I’d imagine that some of the choice to share that roadmap was to try to keep customers from jumping ship to competitors. Right?

You you wanna kinda paint the vision of what’s coming down the pike. Is that fair? And how is early access feedback been so far? And do you have any examples of the strategy working?

Jacob Tyson, CEO, Illumina: Yes. So I think I would formulate it very differently saying that I think my philosophy is really to make sure you share as much with your customers. You want stay close with your customer. You want to make sure that they understand what is coming, so they can be successful. In the end, it’s about make sure that your customer is always successful.

And especially when innovation is moving fast, especially when many of our customers are highly dependent on innovation that’s coming out with us, it’s the right thing for us to do to share what we have as early as possible, so they can plan for that. And you can see that both for clinical customers and academic. The academic customer needs to know it early, so they can write the grants to get the money for those new technologies coming out. And the clinical customer needs that to prepare for the next assays and the next improvement they want to do. So not sharing up with our customers is not really customer centric.

So I felt that coming back and saying we want to be much more customer centric is that’s essential. If we wouldn’t do that, we would customer centric. So I think that is just a key pillar in the strategy about our cost of centricity. So I think have that played out? Yes, absolutely.

We have a wonderful place also on our campus that we can invite our customers in and have meetings. They can meet our whole R and D team and our marketing team. And we will sit down with many of our customers for a full day and then share our road maps many details that we haven’t shared also in the market here also, but also hear what they’re working on. Because that’s a great dynamic that will happen is that you now you share more with each other. And we learn both feedback on whether our innovations actually fit or whether we should adjust that so we have early insights on what we should do differently, but we also see what our customer wants to do, so we can make sure that our next level of innovation can actually address that.

So I enjoy that a lot and I think you see that that is driving a completely different customer intimacy than we had before. And then we look at the actual innovations where I think just to mention Constellation that we have talked about a few times which is this new way of using short read to actually get also what we would call long read insights. We have seen a tremendous interest from customers. They are super excited about that both from customers that wants to use that eventually for clinical applications, but also in the research environment where they see this can actually make a big change and a big insight that have never that have not been available before. So just to mention one, I think the five base genome with the epigenetic insights where you have a very simple workflow and suddenly get what we call the five base, which means that really getting the epigenetic or methylation insights on top of the normal base pair is now will open up for understanding epigenetic even more.

So you will see in the clinical space, you will see many more customers adding epigenetic insights into their assays, but you will see in research that fundamentally we truly don’t understand epigenetic and the epigenetic insights that will impact our health and potentially healthcare. So, think and because it was too complex, was too costly, the informatics workflow was too complex, we have to compare data from two different workflows. Now, we’ll streamline all that. So, I think you will see and there’s been a lot of interest to get access to this, just to mention two of them.

Eve Burstein, Analyst: So a couple of follow-up questions on Constellation. So first, clearly one of the benefits of it is that it’s improved the structural variant

Jacob Tyson, CEO, Illumina: performance for

Eve Burstein, Analyst: standard library prep. How much of the typical long read landscape do you think this technology could actually take?

Jacob Tyson, CEO, Illumina: Yes. We think it can actually take a lot, especially for we start in human, the technology is agnostic to species. So you can go also in meta and other places. So I think there’s a lot of opportunities there. I think our first focus will be resequencing some probably not de novo in the beginning, but I don’t think that necessarily that we will be hold back on that.

But our focus is, of course, on more the resequencing application, which is in the end the biggest market. So we will see that and we are excited about that. That will be the first entry point. I know there is for example for applications into where you want to go into NICU and you want to do faster sequencing to get insights into a newborn to understand what is actually happening if there are some concerns about a disease or concerns about the newborn. Usually in order to get a good analysis you need both the child and the parents.

So you need trio. So first of all, have to do three times sequencing. Secondly, it’s not always that both parents are available for sequencing. So what you can actually do with constellation is that you only need the child or the patient itself and you can get all the right information out because you have facing also available. So that in itself is going to differentiate.

I know there is now a competition claiming they can do the fastest sequencing. True, but they still have to have three times sequencing. They still need to have the patients and the PAMs available. The constellation, you have very little sample prep. It’s easy workflow, it’s easy to do and you only need the patient to get it.

So I think actually if you look at true turnaround time, getting access to the patient and the parents and all that and analyzing all that data, it’s going to be much faster and much more simple to do it on a constellation, just to give one example.

Eve Burstein, Analyst: So speaking of this very limited sample prep, you guys wrote in a blog post that your first application of this technology is human whole genome sequencing, that multiple future applications are under evaluation. So like could there be a world where this on flow cell sample prep makes its way to many other workflows and many other sequences?

Jacob Tyson, CEO, Illumina: Yes. I think that certainly this is opening up for a completely new universe. I think first and foremost, what I’m more excited about than just saying for a lot of different workflows, think adding the five base genome on top of that, so also have epigenetic information in it is something that should excite a lot of people and it’s something that is on our roadmap. So we will definitely also be working on that. And then we look at all the applications.

Remember, I mean, no sample prep and or really just a few minutes sample prep. So on flow cell sample prep sounds super exciting. We actually had constellation as what now called constellation working a long time ago. We decided, but we didn’t understand that we could actually see this proximity read that we could actually get structural advances. And we started working on it because we wanted to eliminate workflow.

But what what hold us back a little bit saying look for most applications you actually are looking at there is the NICU application and others where you want to look at one and you need to do it immediately. But for many other applications, you’re likely going to use automation anyway because you are running batches. You’re running a lot of genome at the same time. So you’re actually going to sit and manually do that? You can still of course run the automation very, very efficiently.

But I think the verdict at that point of time saying just focusing on flow cell sample prep is not enough to make a big differentiating. You also need something else and that’s where the proximity we came in and which has changed everything we thought about that. So I think we need both elements on it and not just looking at one element. I mean there’s so many ways to simplify workflows. Automation is clearly a part of that.

So we should be thinking about that also.

Eve Burstein, Analyst: And then for spatial and connected multiomics, you said early feedback here has been really positive. Can you just say more about what’s been really resonating with customers? And given that your commercial release won’t be until 2026, what are the things that you’re still working on and seeking feedback on at this point?

Jacob Tyson, CEO, Illumina: Yes. So let’s just quickly take a step back and look at Moltionics itself and where we’re excited about the whole Multiomics world is that Multiomics there’s nothing new about that. You can always have taken a proteomics assay from immunoassay and combine that with NGS inside and maybe do another one for looking at a different mode. But the fact that you can now run it all on one platform and one software pipeline and fundamentally also a similar sample prep makes this first and foremost very simple to do. Secondly, it allows you to run on one platform, which also means it’s the same sample and you don’t have and thereby that’s so you have consistency and standardization around that.

But you also and we have developed the software, which allow us to look at the different modalities in the same software and actually combine them and compare them with each other. So you don’t have to go to 10 different software and trying to find out how you all get it together. We have the visual that’s a part of the Partech acquisition that we now have. That software that can look at both genomic, transcromic well, DNA, RNA, epigenetic and so on and so forth. All in the same and look at the different elements.

So and also all the way to spatial. So that’s what excite us that we have the power of putting it all together. So but then let’s zoom in again and look at the spatial and just look at it as a standalone saying that in VALITY spatial has been way too expensive to do so far, meaning that that’s been excitement about spatial, but if you look at it, if you look at the papers, it might be one or two or three samples and it might be one or two millimeters by one or two millimeters they’re looking at, because it has been very expensive and you’re only looking at a part of the whole transcriptome. So, we wanted to change that. We were looking at it and thinking if Illumina has to step into that, it can only be that we can really revolutionize this area.

And what we felt was going to be important is to do true science, you need to hit a price point where you can run hundreds of samples instead of one or two samples to get the statistical relevant number in order to actually see whether from a clinical perspective, a clinical trial perspective that you have enough. And I think at least if not 100 then at least in the forty, fifty, 60 samples you need to do that. So, we wanted to address that. We also wanted to look at the whole transcriptome at the same time with and looking at each cell, make sure you could look at each cell which is also very difficult to do. And finally, if you really want to look at real samples, you need to look at much bigger tissue types and samples.

And so the tissue now is actually you can look to a whole slide and we can sequence that and we can do spatial image of a whole slide. You can decide to have one tissue sitting on it. You can decide to have multiple tissue sitting on it. But I think that combination of the right price point with the right resolution looking at the whole transcriptome and of course with the ability to look at large tissue is something that is very unique and I think it’s something that is going to change how we think about spatial going forward.

Eve Burstein, Analyst: So, you talked about some of the promises of spatial and how much data it generates. And the question from the audience that came up I think very much related to amount of data. Can you speak about the opportunities and threats to the bioscience R and D process presented by AI tools? And how can Illumina capture value implementing AI?

Jacob Tyson, CEO, Illumina: Yes. So first and foremost, I’m a big believer in that you need I mean, order to really drive science, but also in the clinical, the whole technology stack from an informatics perspective is needed. And actually there’s even though it sounds exciting, think very few companies and very researched environments actually want to spend their precious resources in building pipelines that we have hundreds and hundreds of people doing in their daily lives. So, if what we present and what we can do together with the Dragon and all our interpretation is much stronger than really any individual science our company can do. And I think you see more and more customers shifting over.

We see both large research institute, but also large academic medical academic centers all the ways to commercial customers that is shifting over to our technology stack. So but we’re not only providing that. We see with the big data as you’re talking about both for perturbed SEEK is one example, but also for spatial and others. You need both of course the end to end workflow to ensure you hit the right price point to address it. You need the right technology stack from informatics to being able to have the compute power and interpret the data, but you also need to analyze the data.

And that’s where AI there’s so much data coming out that without the right AI capabilities, it’s going to be very difficult for any customer to really get insights. We have allowed now with our NVIDIA relationship also, we have giving access, so you can get the NVIDIA tools that we can build foundational models. But we have also more than 40 people in the company that works on these foundational models and AI capabilities to really build out those tool sets to make it very simple to provide insights to our customers going forward. So we definitely believe there’s a huge opportunity here and it’s something that you need all these components, the right workflow, the right cost structure, the right informatics tech stack and of course AI to really capture that. And I don’t know any other company in this industry that have the capabilities to or the power to do so than Illumina.

Eve Burstein, Analyst: We’re coming up on time. So maybe one or two questions. If you have any others please throw them into the queue. I have a question. So investors were definitely pleased to see conviction from the company when they they put the share repurchase program into place, But we’re particularly pleased to see that conviction from you personally for the recent open market purchase.

Ankur, who wasn’t able to join us, had the same thing. So I’m not trying to get too nosy about your own personal financial decisions, but what prompted you to make those additional share purchases and why now versus a few months ago?

Jacob Tyson, CEO, Illumina: Yeah, why now is that there needs to be an open window and of course we were making some changes to the board and so on that kept us in a situation where it was would be inappropriate to purchase stock. So as soon as we could here after the open window started, I felt that this is probably one of the best investment decision I’ve ever made in my life. I think that our stock is now trading at a point where there’s a lot of upside and especially what we also are we’re committing to the long raised plan. So both Ankur and I felt that this was a great time to get in and we were very excited that we had the opportunity to go in and purchase at the price point we could. So, excited about that.

Eve Burstein, Analyst: So, then maybe last question. You think that the stock was underappreciated, was undervalued. Why do you think the market is undervaluing it? And what do you think is going to have to change to unlock that value?

Jacob Tyson, CEO, Illumina: Yeah. Look, mean, think there’s no doubt with as we go back to this analogy about the cards we’ve been dealt that there’s been there’s of course a lot of uncertainties right now. There’s been a lot of challenges that have been coming our way including the China, the NIH, the tariffs and so on and so forth that I understand why some investors think that there’s too much uncertainties on this stock. What we’re trying to position here is that first and foremost we have conviction in what we do. We are making the swift decisions to make sure that we will whatever happens we will make the right decision and make the very quick decisions to continue to ensure that we can grow both our top line and bottom line.

I think we are as we have talked about the long term opportunity in this space is vast, but also the clarity in our algorithm in getting to high single digit growth is intact and primarily based on the transition to the X that continues to drive as we expected and the new innovations we’re coming out will just continue to drive additional growth. So we feel like, yes, there’s a lot of uncertainties. And yes, I mean, there are of course competition that like to be a part of this also, but there’s nobody out there as I mentioned before that have such an ecosystem, such a moat that Illumina have and such a commitment to continue to innovate and help our customers to be successful and make sure that the customer that continues to desire to work and decide to work with Illumina will be very, very competitive in this space and we will commit to that both short term, but particularly also long term. As I mentioned before, there’s nobody has really ever regretted deciding that they went with alumina. And we’ll make sure that that’s also the case for the future.

Eve Burstein, Analyst: Fair enough. All right. I think we’re out of time.

Jacob Tyson, CEO, Illumina: Thank you.

Eve Burstein, Analyst: Thank you so much. Really appreciate having

Jacob Tyson, CEO, Illumina: you here.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.