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Pacific Biosciences CEO Discusses Q4 Results, New Sequencing Platforms at JP Morgan

NEW YORK – The upcoming year for Pacific Biosciences can be characterized in a word, "expansion," CEO Christian Henry said Thursday at the virtual JP Morgan Healthcare Conference.

The firm is expanding its global presence, plans to double its sales force, and is looking to broaden its portfolio of sequencers. In addition to the new clinical whole-genome sequencing instrument it will develop in collaboration with Invitae, Henry said the company continues to work on a successor to the Sequel II platform and is looking to improve "all aspects of our workflow" from sample preparation to computational analysis.

Menlo Park, California-based PacBio has also expanded its coffers: with $318 million in cash and investments at the end of 2020, the firm is in "probably the strongest [cash position] in our history," Henry said.

This, he noted, "gives us the ability to invest and expand as we go forward into 2021."

Expansion this year will build off a strong finish to 2020. PacBio's Q4 2020 revenues were approximately $27 million, down about 3 percent year over year, but up 44 percent compared to Q3 2020. Total revenues were "above internal expectations," Henry said, and beat the consensus Wall Street estimate of $24.7 million. The results were attributable to strength in both instrument and consumables sales, PacBio officials said; CFO Susan Kim noted that both higher utilization and stocking orders drove consumables sales. The company placed 35 Sequel II or Sequel IIe instruments, bringing the installed base to 203.

PacBio was not heavily impacted by the COVID-19 pandemic in Q4, Henry said, but noted that "COVID is still a big risk for us."

The Invitae instrument collaboration, announced earlier this week, will "get underway immediately" and the company will receive "substantial funding from Invitae," Henry said. Once the instrument is developed, the company will "set up a supply agreement where we will supply Invitae with the technology so they can implement it and really help change the future of medical genetics," Henry said. He added that PacBio will have opportunities to commercialize the platform more broadly, over time.

The Invitae deal is "completely incremental," Henry said and the sequencer is a "completely separate product than other products that we already had in development. And there's no plan at this point to slow any of that stuff down."

"When I took the job, I talked to a lot of folks about how we need to develop a multi-product portfolio, so we can provide the right product to the right customer in different parts of the market," he said.

To develop these new instruments, PacBio plans to improve nearly every aspect of its sequencing platform, including: reducing sample input amounts to access more sample types; sample loading; automation; the polymerase and nucleotide analogs in its chemistry; optical observation feature density; raw base calling; the algorithm involved in computing HiFi reads; secondary analysis; and cloud-based reporting.

Henry expects these advances to help PacBio provide a "clinical-grade genome that others can't provide" and suggested that genome will be more valuable than others. "We want to start talking about the value of the genome, not just the price," he said.

In Thursday trading on the Nasdaq, shares of PacBio closed up 5 percent at $37.72; shares were flat in Friday morning trading.