This article was originally published Aug. 2.
Pacific Biosciences booked seven orders for its PacBio RS II system in the second quarter of 2013, tying its previous record of systems booked in a quarter, and marking a sign that the company's "pipeline is starting to grow again," said President and CEO Mike Hunkapiller during a conference call this week.
Additionally, PacBio received 23 orders for upgrades to the RS II from existing customers, adding to the 31 upgrades it received in the previous quarter. Including the upgrade orders from the second quarter, around 70 percent of the installed base has now ordered the upgrade, which doubles throughput over the initial RS system to 500 megabases per SMRT cell. The company expects around 90 percent will order the upgrade by the end of the year.
The company reported second-quarter 2013 revenue of $6 million, about an 18 percent decrease from the year-ago second quarter of $7.3 million, but up from its 2013 first-quarter revenue of $5.6 million. It just missed the Wall Street consensus estimate of $6.1 million.
Its product revenue was $4.6 million, down from $5.8 in the year ago quarter, but up from $3.8 million in the first quarter of 2013. Service and other revenue was up year over year to $1.4 million from $1.3 million, and flat sequentially.
Additionally, Hunkapiller said that consumable revenue was up 60 percent year over year, which would put it at around $1.9 million for the quarter, up from $1.2 million in the year ago quarter and on par with the first quarter of 2013.
Revenue for the quarter was driven by the installation of three RS II systems, upgrades to 34 systems, consumables, and instrument service contracts.
RS II upgrades, which PacBio previously said were $20,000, brought in around $700,000 in revenue for the quarter, said Ben Gong, PacBio's VP of finance and treasurer. Consumable pull-through is still around $100,000 per year, per system, Gong said, with some customers generating around $300,000 in annual consumable revenues per system.
The company has 10 system orders and 20 upgrade orders in backlog, and expects to complete upgrades to "most if not all" of the 20 orders in the third quarter, according to Gong.
Of the new systems booked in the quarter, Hunkapiller said one order was from the US Food and Drug Administration — the agency's second system, which it is using as part of the 100K Genome Project to sequence 100,000 bacterial and viral genomes, at least 1,000 of which will be completely sequenced and assembled on the PacBio platform (IS 1/15/2013). Recently, the first 20 genomes generated with PacBio data were added to the National Center for Biotechnology Information's public database (IS 7/30/2013).
Another of the new system orders was from an undisclosed "major pharmaceutical company," Hunkapiller said — the first PacBio system sold to pharma. While Hunkapiller said that it was still too early to draw conclusions from these sales, he said it points to a "broadening of interest into areas that we [haven't] yet penetrated."
Nevertheless, Hunkapiller said that the PacBio system's niche continues to remain within bacterial, viral, and other small genomes.
In particular, Hunkapiller said that the system "enables users to generate finished [bacterial] genomes at a reasonable cost."
For example, Hunkapiller sited a user-group meeting at the University of Maryland in June, in which Adam Phillippy from the National Biodefense Analysis and Countermeasures Center presented on his work using the PacBio system to finish microbial genomes, where he said that 80 percent of draft microbial genomes in GenBank could be easily closed with the technology. At the same meeting, Marc Allard of the FDA presented on his work using PacBio to study epigenetic modifications of Salmonella strains, demonstrating that different strains have similar sequences but different base modification profiles that have an affect on their pathogenicity, Hunkapiller said.
With the increased throughput of the RS II, Hunkapiller said that researchers are increasingly using the system on larger genomes, including animal and human. And the technology may be especially well suited for notoriously difficult to sequence regions of the human genome, such as repetitive elements, he added.
Another "upcoming application" is cDNA analysis, said Hunkapiller. Currently with short-read technology, researchers can obtain quantitative information on the number of transcripts, but are struggling to get qualitative information, Hunkapiller said. PacBio technology could help because its "long reads can read through transcripts completely," he said, generating qualitative information that is "crucial for knowing what the genes are doing."
Moving forward, the company anticipates that it will at least double total instrument sales for 2013 over the 12 it sold in 2012. Additionally, it is forecasting higher total revenue in 2013 from the $26.0 million in revenue it reported in 2012.
PacBio reported a net loss for the quarter of $20.5 million, or $.33 per share, compared to $22.5 million, or $.40 per share, in Q2 2012. It beat analysts' consensus estimate for a loss of $.35 per share.
The firm's R&D costs for the quarter were $11.7 million, compared to $11.3 million in the second quarter of 2012, while SG&A expenses dropped to $9.4 million from $11.6 million in Q2 2012.
PacBio held cash and investments of $107 million as of the end of the quarter.