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PacBio Plans Upgrades to Sequel as Demand Picks Up

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NEW YORK (GenomeWeb) – Pacific Biosciences' CEO Mike Hunkapiller said this week that demand for the company's Sequel single-molecule sequencing instrument has picked up, as demonstrated by several recent multi-unit orders.

In addition, he said the firm recently began shipping new chemistry and software that will improve the data quality, and is planning additional improvements to double throughput by the end of the year.

During a conference call discussing the company's fourth quarter and fiscal year 2016 performance, Hunkapiller said that the recently terminated diagnostic development agreement it had with Roche has not been a setback. The company has since engaged directly with clinical laboratories that had shown interest in using PacBio's technology for clinical and translational work.

"We've gotten positive responses almost universally from that group," he said. In some cases, conversations have translated to instrument orders, he said.

Chinese sequencing service providers Novogene and GrandOmics placed orders for 10 and five Sequel instruments in January and Q4, respectively. Demand in China is being fueled by the country's Precision Medicine Initiative.

The GrandOmics order was particularly indicative of the company's progress, Hunkapiller said, because GrandOmics had ordered one instrument early last year, which they had been working with. "And once we dealt with the major application that they were waiting for, de novo assembly, they quickly pulled the trigger and ordered five more," Hunkapiller said. "People are now willing to start placing multi-million dollar orders," he said.

Hunkapiller credited, in part, updates to the Sequel system with being responsible for the multi-unit orders and said that the firm would make additional upgrades this year.

In Q4, PacBio improved the loading efficiency of the Sequel, enabling customers to load long fragment sequencing libraries, which is key for de novo assembly applications. Last week, Hunkapiller said the firm began shipping new chemistry and software. The new chemistry will enable 8 gigabases of data from one SMRT cell and N50 read lengths of more than 20,000 bases, depending on the sample type and preparation, and the application. In addition, long genomic libraries up to 80 kilobases can now be loaded.

By the end of the year Hunkapiller said the company would double Sequel's throughput. This would be accomplished by increasing the number of zero mode waveguides (ZMWs) that can be loaded in one run as well as increasing the average read lengths.

The firm has started working on a new version of the SMRT cell that will have eight times the capacity of the existing chip, which will be accomplished by increasing the number of ZMWs on the chip. The new version will begin to be available by the end of the year, Hunkapiller said. Over the next two years, he said, the company aims to increase throughput by a factor of eight to 16.

Increasing the throughput of Sequel has helped to broaden the "applications we can add value to," Hunkapiller said, and "expanded the addressable market for our products."

He noted that the company has seen an uptick in interest from agbio customers as well as customers interested in de novo assembly and structural variant detection. "We've established our technology as essential in plant and animal research and development," he said. And, the agbio "market appears to be expanding."

In December, Roche ended its agreement with PacBio to develop and commercialize a clinical sequencing instrument for the diagnostic market.

While the decision was somewhat of a surprise, given that PacBio had completed all of its milestones with Roche, Hunkapiller said that it has had a "neutral" impact on the firm's business. Although the company had eventually expected Roche to be one of its largest customers, it had not been counting on significant business from Roche until the second half of the year. In addition, the end of the agreement will enable PacBio to work directly with potential clinical customers, whereas under the agreement customers wanting to use the Sequel for clinical purposes would have had to work with Roche.

"The response that we've seen from clinical labs that we knew were interested in Sequel has actually been positive," Hunkapiller said. In some cases, those labs are starting to run samples and even place orders, he said.

Hunkapiller said that the company had already started to build up its expertise with the regulatory environment and would continue doing that. In the future, he said, the firm may look at partnering with regional distributors to better address the clinical market in specific countries.

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