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PacBio Q2 Revenues Down 31 Percent; Booked One Sequencer During Quarter

NEW YORK (GenomeWeb News) – Pacific Biosciences saw its second-quarter revenues fall 31 percent year over year, the company reported after the close of the market on Thursday, but the firm beat consensus Wall Street estimates on the top line and the bottom line.

For the three months ended June 30, PacBio took in $7.3 million in revenues, down from $10.6 million a year ago. Revenues beat analysts projections, however, which averaged $6.9 million for the quarter.

Product revenue slipped to $5.8 million from $10.1 million a year ago; service revenues increased to $1.3 million from $192,000, and grant revenues slid to $180,000 from $290,000.

The Menlo Park, Calif.-based sequencing technology firm said that its system revenue backlog was less than $1 million as of June 30, representing an order of one PacBio RS instrument received during the second quarter. Installation has been completed for all instruments that had been on backlog as of the end of the first quarter, it said.

"Therefore, for our third quarter, we expect our revenues to be primarily comprised of recurring service and consumable revenues," PacBio Vice President of Finance and Treasurer Ben Gong said on a conference call following the earnings release.

"As we are entering the seasonally slower summer months, we expect our recurring revenues to be fairly flat compared with the second quarter. With little revenue contribution from instruments, and relatively flat recurring revenues, we expect our third quarter revenues to decrease sequentially from Q2," he said.

CEO Michael Hunkapiller added that in the near term the company is "not expecting to book many new systems," but that "will improve in the quarters to come."

R&D costs were cut 42 percent to $11.3 million from $19.5 million a year ago, while SG&A spending rose slightly to $11.6 million from $11 million.

Net loss for the quarter was reduced to $22.5 million, or $.40 per share, bettering the consensus analyst estimate of $.46 per share. A year ago, PacBio posted a loss of $22.5 million, or $.42 per share.

The company finished the second quarter with $137.1 million in cash and investments.

In early morning trading today shares of PacBio on the Nasdaq were down 10 percent to $1.88.

William Blair analyst Amanda Murphy said in a research note following the earnings release that "a difficult funding environment likely weighed on the company's ability to close sales in the quarter."

The company has sold three instruments in the first half of 2012 and will probably would not meet her previous instrument placement target for 2012 of 24 platforms, she said. As a result, she lowered her estimated instrument placements to 22 for the year, and lowered 2013 instrument placement estimates to 11 from 14.

She also lowered 2012 revenue estimates to $23 million from an earlier estimate of $25 million, and decreased 2013 revenue estimates to $15 million from $18 million.

Murphy added, though, that PacBio management remains focused on increasing adoption of its platform with the introduction of new applications, such as methylation, and technical improvements, and "there is growing excitement around use of the PacBio RS to assess methylation, particularly given the recent software launch,"

Earlier this week, PacBio and Imec announced a collaboration to develop advanced microchips in order to scale the capacity and throughput of PacBio's single-molecule real-time technology.

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