08 August 2012

Complete Genomics is Bleeding to Death, $272 at a time

When Complete Genomics launched their 'services only' NGS business model, many in the industry questioned whether or not it would work. The answer appears to be 'no'.

In their latest quarterly report they state that they delivered data on 2200 genomes and that they recorded $8.1M in 'cost of services' expenses while pulling in $8.7 in revenue, meaning their services business netted ~$600k, or $272 per genome. That's pretty meager earnings, but it gets worse. A lot worse. In addition to their 'cost of services' expense, they also have R&D expenses and sales/marketing expenses, which add up to $13.5M.

"But they can make up for it in volume, right?"

At the current rate, they would have to sell nearly 50,000 genomes per quarter to break even.

And they would have to be at the current price of $4000 per genome.

And they would have to somehow generate 25-fold more business without increasing their sales/marketing spend.

Which is why they're seeking 'strategic alternatives'. But who would want to buy a money losing business in a cutthroat market? Buyers might be interested in the IP (like their new 'Long Fragment Read' technology or their data analysis workflow), but I think the days of Complete Genomics' service business might be numbered.