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Pacific Biosciences Posts Q3 Revenues of $10.5M, Lowers Revenue Guidance

NEW YORK (GenomeWeb News) – Pacific Biosciences reported after the close of the market Thursday that its third-quarter revenues fell 1 percent sequentially but beat analysts' consensus estimates on the top and bottom line.

The firm also lowered its revenue guidance for the year based on its current backlog of instrument orders.

The single-molecule, real-time sequencing instruments maker brought in total revenues of $10.5 million for the three-month period ended Sept. 30, down from $10.6 million for the second quarter, but above analysts' consensus estimate of $9.8 million. The firm reported revenues of $220,000 for Q2 2010, before it launched its first product, the PacBio RS system.

PacBio reported product revenues of $9.8 million versus $10.1 million for Q2 2011. Service and other revenues were $535,000, up from $192,000, and grant revenues were $165,000 versus $290,000. All of the revenues in Q3 2010 were from grants.

On a conference call following the release of the results, PacBio President and CEO Hugh Martin said that the firm placed a total of 15 RS systems during the third quarter. Of those 15, seven were new placements. The company now has an installed base of 31 systems, he added.

Martin said that the company has been successful in placing instruments with early "adopters and innovators," but added that many mainstream customers are still "waiting on the sidelines." He also acknowledged that the company "overestimated the speed" at which the transition from early adopters to the mainstream market would occur.

The firm posted a net loss of $29.3 million, or $.54 per share, compared to a net loss of $40.7 million, or $39.70 per share, for Q3 2010, before the firm went public. Its Q2 2011 net loss was $22.5 million, or $.42 per share. PacBio beat the Wall Street estimate for a loss per share of $.59.

It R&D spending was $20 million, compared to $32.9 million for Q3 2010 and $19.5 million for Q2 2011. Its SG&A expenses were $12.8 million, versus $8 million for the third quarter of 2010 and $11 million for the second quarter of 2011.

PacBio recently laid off 130 employees, or 28 percent of its workforce. At the time it said that the job cuts were the result of "uncertainties associated with the economic environment" and to put the company in a position for success in the long term.

The firm recorded charges of $4.9 million for the quarter tied to the staff reductions.

According to Martin, the layoffs cut the firm's burn rate to $20 million per quarter. It had spent around $32 million in the second quarter.

PacBio finished the quarter with $193.7 million in cash and investments.

Ben Gong, VP of finance and treasurer, said on the call that PacBio has trimmed its 2011 revenue forecast to a range of $30 million to $33 million from a previous expectation of around $35 million. He said the current backlog is 27 RS units, representing $18M in system revenue backlog, and the firm would need to install 19-20 units in Q4 to meet the earlier $35 million guidance.

Instead, PacBio intends to "stagger" the installations into Q1 in order to "smooth" the installation process and spend more time with customers, since new customers require a great deal of support, he said.

Martin added that PacBio has begun the early-access program for the C2 chemistry upgrade, which will increase the read length and improve the accuracy of the system. The firm initially targeted the commercial launch for the fourth quarter of this year but has pushed that into Q1 2012. Martin said PacBio is looking for early-access customers to "validate that the release is ready" before it become more broadly available.

Separately, PacBio announced that Michael Hunkapiller has been named executive chairman of the firm's board of directors. Hunkapiller is a general partner at venture capital firm Alloy Ventures and former president and GM of Applied Biosystems, which is now part of Life Technologies. He's been a member of PacBio's board since 2005.

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