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PacBio Preps for Sequel Shipments, Expects Roche to be Largest Customer


NEW YORK (GenomeWeb) – Pacific Biosciences said that in the first two weeks since it launched its Sequel System, it has received as many requests for quotes as it did collectively in the prior nine months for its RS II system, and several of those requests have turned into sales.

In addition, the firm said that it will ship 10 Sequel systems in the fourth quarter, including several to Roche, thereby reaching its final $20 million milestone in its development agreement with the Swiss diagnostics and drug giant.

During a conference call this week discussing its third quarter 2015 financial performance, PacBio CEO Mike Hunkapiller said that although the firm will receive its final milestone payment from Roche this year, Roche will continue to play a big role in the firm's future and will be its "biggest customer" and contribute to "a substantial fraction of our sales."

PacBio launched Sequel — a single-molecule sequencing system with greater throughput, a smaller footprint, and at about half the price of the RS II — earlier this month.

It plans to ship several to Roche by the end of the year, and Hunkapiller said that Roche would "launch their version of the Sequel System for clinical research in the second half of next year, to be followed later with the launch for in vitro human diagnostic applications."

The instrument sold by Roche will be "similar to the Sequel System but with the Roche brand clearly designated and with modified software to recognize Roche-labeled consumables," Hunkapiller said.

Hunkapiller added that Roche would likely discuss its plans further at the Advances in Genome Biology and Technology conference in February.

Aside from Roche, PacBio plans to ship Sequel instruments to a handful of other customers, including the Icahn Institute for Genomics and Multiscale Biology at Mount Sinai's Icahn School of Medicine in New York, by the end of the year.

Because the interest in Sequel was stronger than the number of systems that will be available in the near term, Hunkapiller said that the company allowed some potential future customers to lease RS II systems.

PacBio's VP of Finance and Treasurer, Ben Gong, said that the firm does not expect the lease arrangements to be long term, but rather "more of a product transition." He said that the firm offered the option to customers who "needed the capacity" for SMRT sequencing and who are likely to be future Sequel customers but could "not get into the queue quickly."

Hunkapiller said that PacBio will initially sell the Sequel system to customers who are "comfortable taking on a new technology," rather than those who have not used PacBio's SMRT sequencing or other NGS technology. In general, after the first 10 systems are shipped in the coming quarter, US customers will begin receiving instruments in Q1 of next year while customers in Europe and Asia will begin receiving systems in Q2, but "it's a case by case basis" and there are some exceptions, he said.

Hunkapiller added that the main constraint in manufacturing capacity is the chip design. The firm has been working with Belgium-based Imec on chip design, but Hunkapiller said that the company will be switching to a "high-volume manufacturer" in the first half of next year.

Imec does research and development and "very early manufacturing," Hunkapiller said, "and when that's done, they help you transition to a high-volume manufacturing operation."

In addition, PacBio will also be moving its headquarters to a new facility that will have 20 percent more space, much of which will be devoted to manufacturing, Gong added.

Despite launching a higher-throughput, lower-cost instrument, Hunkapiller said that he still expected some RS II orders, particularly from commercial customers using the system. Customers who have validated assays and protocols on the RS II for commercial use will likely continue to "invest in the RS II first," until the Sequel has been vetted by the market. HLA typing firms HistoGenetics and GenDx both have RS II systems and have said they plan to incorporate them into their HLA typing workflows, for instance.

In 2016, Hunkapiller said that one major improvement the firm plans to make for both the RS II and the Sequel is more efficient loading of the zero-mode waveguides that will enable a "much higher percentage" of ZMWs to be loaded with a single molecule of DNA. He said that the firm is preparing to roll that out to some beta sites on the RS II and will expand eventually to the Sequel, as well.

In terms of future improvements to the Sequel, Hunkapiller said that he expected the same scale of upgrades as the company has been making on the RS II and that the improvements should not require new hardware.