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Pacific Biosciences Q1 Revenues Soar 86 Percent

NEW YORK – Pacific Biosciences reported after the close of the market on Thursday that its first quarter 2021 revenues rose 86 percent year over year, attributable to higher instrument revenue.

For the three months ended March 31, the Menlo Park, California-based company recognized total revenues of $29.0 million, compared to $15.6 million in Q1 2020, beating analysts' average estimate of $25.6 million.

Instrument revenue was $14.9 million, compared with $4.0 million in Q1 2020, driven by multiple multi-instrument orders delivered to customers around the world, including Labcorp, the Wellcome Sanger Institute, and China's Berry Genomics. Consumables revenue was $10.4 million, compared with $8.3 million for Q1 2020. Service and other revenue was $3.7 million, compared with $3.3 million for Q1 2020.

The company placed 10 Sequel II systems and 31 Sequel IIe systems in the quarter, bringing the total installed base to 244 instruments as of March 31, compared to 125 instruments at the end of the year-ago quarter. Customers upgraded another dozen Sequel II instruments to the IIe, bringing in approximately $500,000 in revenues; about a third of all instruments are now Sequel IIe systems.

On a conference call following the release of results, PacBio CEO Christian Henry said the company's performance exceeded expectations. CFO Susan Kim noted that sequencer utilization levels were at "record highs," driven by some service providers in Asia working through a backlog of projects. She said that 82 percent of consumables sold were for the newer Sequel II and IIe systems, a proportion that she only expects to grow. Annualized consumables pull-through was down due to stocking in Q4 2020, she said.

PacBio ended the quarter with 435 employees, with growth across its R&D, sales, marketing, and service and support teams.

PacBio's net loss for the quarter was $87.4 million, or $.45 per share, compared to net income of $1.3 million, or $.01 per share. In the prior year period, PacBio recorded $34 million in continuation payments from Illumina as a result of their abandoned merger; in Q1 2021, PacBio repaid $52 million of those continuation advances as a result of a $900 million investment from SoftBank. PacBio's Q1 loss per share beat the consensus Wall Street estimate of a $.46 loss per share.

The firm's R&D expenses in Q1 2021 were $20.5 million, up 35 percent from $15.3 million in Q1 2020, including $1.1 million in expenses related to the firm's collaboration with Invitae to develop a clinical whole-genome sequencing platform. Its SG&A expenses rose 5 percent year over year to $26.1 million from $25.0 million in Q1 2020. Kim noted that the firm had a $6 million advisory fee a year ago related to the dissolution of the Illumina deal.

As of March 31, 2021, the company had $1.16 billion in cash, cash equivalents, and investments.

Kim said the firm expects second quarter revenues to be flat to moderately higher compared to Q1. Under the terms of its deal with SoftBank, PacBio incurred an interest expense of $1.8 million and the company expects to incur about $3.5 million in interest expense every quarter going forward until the notes either mature or are converted.

PacBio received $4.1 million from Invitae related to its collaboration, Kim said, which it will report as a liability under deferred revenue. Expenses will be recorded as they are incurred; Kim said she expects them to be between $20 million and $25 million for 2021.

In Friday morning trading on the Nasdaq, shares of PacBio were down 10 percent at $30.30.

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