Francis deSouza: So thanks for the question, Tejas. Let me take some, and then Joydeep will chime in if he has anything to add. So let me start with the GRAIL question and around how much of that $670 million is associated with the NHS trial and is there a chance that the readout is delayed or the next phase is delayed. So a portion of it is, so we haven’t actually broken out that $670 million. A portion of it is, but it’s not the majority of it. So there are a number of things going on at GRAIL. In addition to the NHS trial, there is also the studies they’re doing for the FDA submission, and they are looking to have the final submission done towards the end of next year. And so they’re sort of in the thick of things with the FDA.
However, there is the part associated with that NHS trial. And as you point out, that moves from being a pure cost to GRAIL right now for this 140,000-person trial to next year being a paid rollout, starting next year over 2 years to 1 million people. So a pretty significant shift in economics positively for GRAIL next year. In terms of the time frame, the NHS did a very thorough sort of diligent job with GRAIL in terms of planning out this trial. And because GRAIL has done so many studies of such significant size before, they really had a good handle on how to analyze the data coming in and sort of what you would need to get to get to the decision that they’re looking for. And so we don’t expect and we haven’t seen at this point any delays associated with the analysis that’s happening of the data.
And so we fully expect them to be getting to that readout at the end of this year, beginning of next year. And then similarly, because of the power of this test and the NHS being so keen to really use this test as a core component in their war on cancer, their intent is to get through the readout as responsibly and quickly as possible. And once the demonstrated meets the performance criteria, to get to that rollout as quickly as possible. And so there’s a huge motivation on the side of the NHS again because of the potential life-saving benefits of this test. And obviously, there’s motivation on the GRAIL side, too. And so I don’t expect there to be any delays that pop up between the readout and then rolling out the test. In terms of the 6000 pull-through then, what we have said, and you’ve seen this before, is really we expect some time likely between the first and second year for us to get to a stable point in terms of pull-through.
And you pointed that out that we got there on the 6000 in that kind of time frame. And so one, we do expect that to be the time frame and we’ll keep you updated as we work through the process. And as you know, but for everyone else, before that, the numbers are still too volatile for it to be a useful modeling metric because as you put out a whole bunch of new instruments and people start to ramp up, the pull-through can move pretty significantly from 1 week to the next, 1 quarter to the next. And so it takes that year for you to get enough instruments out there for the number to be significant. Now also, as you pointed out, as we get to a stable number for the X, we feel really confident that the ultimate pull-through number on the X will be comfortably above what we had with the 6000 because of the power of the X and the quick turnaround time and the ability to run just so much more on an X over a year.
Operator: And we’ll go ahead and move on to our next question with Sung Ji Nam with Scotiabank.
Sung Ji Nam: Another one on GRAIL. Would love to get your thoughts, Francis, in terms of you talked about the FDA Breakthrough Designation for the Galleri test kind of — I know — but it’s still kind of an uncharted territory to get it going through the FDA process and also maybe gaining broader reimbursement from Medicare. So could you kind of talk about kind of what efforts are being made in order to move forward with those — in that direction?
Francis deSouza: Yes, sure. So let me talk about a few things. One, as you pointed out, GRAIL has been able to get Breakthrough Designation from the FDA. And they have been working now with the FDA for a number of years on designing the studies that will be part of the ultimate submission. And so they’ve been working collaboratively with the FDA. And although they’ve been working with them, they’ve already submitted some of the modules associated with the FDA submission, and they are planning to do the final module submission at the end of next year, maybe extending into the beginning of the year after. So they’re making good progress. The other big step with the FDA, which really breaks new ground, is that they’ve been talking to the FDA about submitting data from the NHS trial as part of the FDA submission.
Now that’s really powerful because that’s a very large trial. And so that continues to add to the bolus of evidence that GRAIL was able to get and submit into the FDA. And so I think it’s — we’re starting to see the benefits of that good working relationship between GRAIL and the FDA. And as you know, when you have the FDA approval, that’s a pretty significant step forward in terms of getting broad reimbursement in the United States, which is a really, really big value creation point from a GRAIL perspective. So you’ll see both things play out in the next couple of years. You’ll see the big NHS move from going from a trial to a rollout, a population rollout, starting with the 1 million people and then going population-wide after the 1 million people rollout in the first 2 years.
And at the same time, you’ll see the progress in the U.S. with the final FDA submission at the end of next year and then the path towards broad reimbursement in the U.S.
Operator: We’ll go ahead and hear from David Westenberg with Piper Sandler.
David Westenberg: Congrats again to Joydeep. So 2 I’ll just ask upfront. Many of the lab companies that we cover are talking about reduced cash burn, and they’re really excited about NovaSeq X and how even some of them are kind of excited about going from NovaSeq from NextSeq. So can you help us reconcile their desire to reduce cash burn and your expectation of increased spend with you? And then just my second one is just continuing on some of the price stuff. Why should we not be concerned about the new $99 Complete Genome — Complete Genomics thing today?
Francis deSouza: Thank you for the question, Dave, so let me go through them in order. So first, we’re hearing just like you’re hearing from lab companies that are really excited about the — again, it’s the power, the performance, the turnaround time, but also the economics associated with the X. And I talked about the fact that increasingly, people are going to see those economics as table stakes for applying for and winning new grants. But for lab companies, too, especially in this environment, as they are looking to squeeze the most out of their operations, they see the X as a path to get there, and the superior economics will help them as they lower cash burn and reduce their capital needs going forward. And so we fully expect that to be part of the conversation with our customers.
Similarly, we’re seeing that on the NextSeq side, right? So we’re seeing customers that are seeing more demand come in. And the question for them is do they buy the next NextSeq or do they fundamentally transform their cost structure and move to the X? And that’s part of the reason why we’re seeing a higher-than-expected demand from 2 segments: one, from the clinical segment, and we talked about the preorders coming in represent a higher percentage of clinical customers than we expected; and two, from new to Illumina and new to high-throughput customers. And so that dynamic is already showing up in the preorder number. In terms of the competitive dynamics. One of the things that we’re really excited about is that when we talk to customers, they get very quickly that when they’re comparing what system to buy, they really look at — they need to look at the total cost of ownership in terms of running these sequencers.
And that’s one of the unique things about the Illumina portfolio around that, started with the NextSeq 1000/2000 but now with the NovaSeq X, is that we have built in capabilities like the compute associated with the primary, secondary and, in some cases, even parts of the tertiary pipelines that are baked into and built into the instrument, that we’ve built into the instrument capabilities like lossless data compression. And so when they start to compare prices, it’s not just the cost of sequencing that they need to look at but it’s also the associated compute costs, the storage costs that they would need if they had any other sequencer in the market. And one of the things that I talked about when we talk about the X is that just the compute savings you get associated with the NovaSeq X will save you over $1 million over a 4-, 5-year period.
And so that’s really exciting for them. Forget about the real estate requirements, forget about the time it would take to post process your data. All of those are important, but they also see that the total cost of ownership of the X is so much superior because of those built-in capabilities.
