The so called Next Generation Sequencing ("NGS") of DNAs is actually quite primitive. Traditionally it works in bulk methods, where every cell in a sample gets lumped together. Bioinformatic analysis of sequencing outputs thus essentially operate on averages.
This is obviously a problem as each cell can be vastly different from the next.
10x Genomics ("TXG") does single cell sequencing. Its technology partitions a group of cells into individual cells, tags them, and then feeds the single cell DNAs into NGS machines (mostly from Illumina). The outputs can then be tied back to individual cells.
Scientists can now analyze cells individually and figure out how they actually work. This is more like science!
The stock looks insanely expensive and I'm hoping valuation would come down.
For now though, I drew some diagrams below to show what I think the potential could be.
1. Pre-single cell era. Various assays feed into NGS machines.
2. Single cell era (now and intermediate term). The single cell platforms, such as 10x Genomics, comes along and increasingly act as an intermediate layer between assays and NGS.
This is mostly for research use, but can conceivably extend into clinical / diagnostics. In this diagram I have "Foundation Dx" on the right as an example of a diagnostic application that interacts directly with NGS without single cells.
Even within research, the single cell paradigm has a long runway ahead of it.
3. The ultimate upside for 10x Genomics, of course, is the bottom diagram, where every assay, including diagnostics, go through an intermediate layer that partitions into single cells before feeding into the NGS machines. In this scenario TXG can get a valuation as high as (or even exceed) that of Illumina's.
We should be close to TXG's IPO lockup expiration now. Between that and the current market melt down, I'm hoping TXG's valuation can become more reasonable.
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