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PacBio Prepares for Early-Access Program in ‘09; Firm to Focus On Research, Dx Markets

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Pacific Biosciences said last week that it plans to start an early-access program for its single-molecule real-time sequencing technology during the first half of next year.
 
The firm said that it is eyeing both the research and clinical diagnostics markets for its platform, which it plans to launch commercially in 2010. Later this year, PacBio plans to reveal the expected performance specifications for the first version of its instrument.
 
PacBio CEO Hugh Martin told investors and analysts at the UBS Global Life Sciences Conference in New York last week that the company currently has 12 early SMRT sequencing systems in house, and is conducting a proof-of-principle sequencing project on the 5.4 kilobase phi X 174 bacteriophage.
 
He said that his firm expects to launch an early-access program in the first half of next year that would allow select customers to run experiments on the company’s early in-house systems.
 
Then, during the second half of 2009, PacBio would move those customers onto its in-house production machines and work with them to optimize the commercial system, said Martin.
 
During a Q&A session following his presentation at the UBS conference, Martin mentioned several sequencing centers and companies by name that he said have expressed an interest in PacBio’s platform.
 
He said that the Broad Institute and the J. Craig Venter Institute would be likely candidates as early-access testers of the “circular consensus sequencing” method that PacBio has been developing for its system, where the same circular DNA molecule gets sequenced several times in order to increase the consensus accuracy. This method would be especially valuable for cancer research, he said.
 
Martin also mentioned that Genentech and Merck have approached the company about using the technology to sequence patients’ genomes as part of clinical trials. A Genentech spokesperson said the company does not discuss specifics of its business-development efforts or collaborations. Merck did not respond to a request for comment before press time.
 
More specifically, Martin said that Genomic Health, a company that offers a gene-expression based molecular diagnostic designed to help to predict the risk of breast cancer recurrence, has expressed an interest in acquiring several of PacBio’s instruments, initially for research use, but with plans to explore its potential for diagnostic applications. A spokesperson for Genomic Health declined to comment for this article.
 
In general, PacBio first hopes to stake a claim in the research sequencing market, Martin said, noting that this sector, long dominated by Applied Biosystems, is now “fragmented” due to competing second-generation platforms. This creates an “opportunity to coalesce around a new standard,” he said.
 
In addition, Martin said, PacBio will have “a shot” at the clinical diagnostics market, where he said the long read lengths, low price, and quick run time of his company’s sequencer should give it an advantage over existing platforms from Roche/454, Illumina, and ABI.
 
He said PacBio estimates the total market for sequencing will reach $1.4 billion in 2010 and $1.8 billion by 2012, though he did not say how much of that the company is hoping to capture. The market estimate is based on a UBS market report, according to a PacBio spokesperson.
 
Applied Biosystems recently said that it expects the market for second-generation sequencing to reach approximately $650 million in fiscal year 2013, of which $500 million would be captured by short-read sequencing platforms, and the remaining $150 million by long-read technologies (see In Sequence 8/19/2008).
 

The company will need to “eclipse the performance” of its competitors.

Noting that PacBio’s instrument will hit the market several years after rivals’ systems, Martin said that it will need to “eclipse the performance” of its competitors — a goal that he said he is confident the company can meet.
 
PacBio expects its instrument to ultimately be able to generate more than 100 gigabases per hour, although the first version that is slated for release in 2010 will have a lower throughput. The company plans to release a second version in 2013, according to the spokesperson. By contrast, Illumina and ABI are currently targeting tens of gigabases of data per run, each run taking several days.
 
The “cycle time” for the PacBio system is 30 minutes, Martin said. According to the spokesperson, this is the “minimum walk-away time” projected for the instrument and may comprise multiple runs, depending on the application and how the instrument is set up.
 
Martin noted that the short cycle time should be a benefit for the clinical market, where a run time of three days is “not acceptable.”
 
In addition, Martin said that the single-molecule sequencing system requires very little sample-prep time and “hardly any” reagents, which would bring the cost per run to within several hundred dollars, rather than several thousand dollars per run for competing platforms.
 
Read lengths for the PacBio system will be “significantly greater” than Sanger reads, he said. The company is currently getting traces of around 500 base pairs — comparable to the Titanium version of the 454 GS FLX, and much longer than the ABI SOLiD and the Illumina Genome Analyzer platforms, which are in the neighborhood of 30 to 100 base pairs.
 
Long reads are expected to be another advantage in the clinical market, Martin said, noting that read length is a “big deal” for potential customers that the firm has spoken to so far, which include molecular diagnostic developers, pharmas, biotechs, and academic research groups.
 
He argued that the raw accuracy of the reads will be less important than the fold-coverage required to obtain a certain overall accuracy. That fold-coverage, he said he believes, will be lower than for competing systems.
 
The company is currently working on several aspects of its technology. Martin mentioned that the polymerase it currently uses on its in-house machines synthesizes DNA at a rate of up to five bases per second. However, for its second-generation system, PacBio aims to get the speed up to 50 bases per second.
 
Martin also said that the firm is in discussions with several manufacturers of imaging amplification technology, which it needs for detecting signals from single molecules. Earlier this year, Martin said that a current bottleneck of the technology is the bandwidth of the output amplifier on the CCD camera (see In Sequence 2/12/2008).
 
In response to a question about other third-generation sequencing technologies that are currently in development, Martin said that nanopore technologies still have “a long way to go” in terms of reaching single-base resolution.
 
He also mentioned VisiGen Biotechnologies, a Houston-based company that, like PacBio, has been working on a single-molecule, real-time sequencing technology with an optical readout. The company has had technical problems, Martin claimed, because the label on the polymerase that it uses photobleaches. He also called VisiGen, which said in February that it plans to offer a sequencing service by the end of 2009 (see In Sequence’s sister publication, GenomeWeb Daily News, 2/12/2008), “massively underfunded.”
 
VisiGen CEO Susan Hardin told In Sequence via e-mail this week that VisiGen has addressed the technical hurdle mentioned by Martin, as well as its future funding, but did not provide details. “We are fully confident in our ability to be a major player in advancing the future of DNA sequencing,” she said.
 
VisiGen received an undisclosed equity investment from Applied Biosystems in late 2005, as well as undisclosed investments from sequencing service provider SeqWright in 2004 and 2005. In addition, as of May 2007 the company had obtained more than $8 million in government grants and contracts (see In Sequence 5/8/2007).
 
As for the price of PacBio’s instrument, Martin said that it could sell at “any price point” in the continuum of currently available sequencers, which range from around $400,000 for the Illumina system to $1.3 million for the Helicos platform. However, he said that the company is targeting the lower end of this scale because its market research indicates that $500,000 is a common price threshold for many potential customers, particularly in the research market.
 
PacBio currently employs around 200 staffers, Martin said, after increasing its headcount from about 100 earlier this year to 185 in July. The company, which has raised nearly $200 million in funding so far, including a $100 million Series E private-equity round announced in July (see In Sequence 7/15/2008), currently has a burn rate of around $5 million per month.
 
In response to a question about how many instruments the company will be able to manufacture, Martin said that this is one of the “biggest risks” that the company faces, and that it is probably “mis-estimating” the demand. He said that PacBio is currently looking how to build a “scalable manufacturing operation.”
 
Martin also mentioned that the company sees potential for the system “far beyond sequencing,” and noted that the technology was developed as a general platform for real-time single-molecule analysis, making it applicable to many types of molecules besides DNA. For example, he said that a research group in Tokyo is currently looking at placing a ribosome instead of a DNA polymerase into the wells of its chips in order to study protein synthesis in real time, and that a group at Harvard is considering adapting the system for protein-interaction studies.

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