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Pacific Biosciences Posts Q4, FY2012 Revenue Decline; Expects 2013 Uptick

NEW YORK (GenomeWeb News) – Pacific Biosciences reported after the close of the market Tuesday that its fourth-quarter revenues fell 52 percent year over year but were up sequentially as product revenue jumped from the third quarter.

The Menlo Park, Calif.-based single molecule sequencing technologies firm reported total revenues of $5.9 million for the three months ended Dec. 31, compared to $12.4 million for the fourth quarter of 2011. The firm beat analysts' consensus estimate for revenues of $4.4 million, and though its sales were down sharply year over year, its revenues more than doubled from $2.8 million in Q3 2012.

PacBio reported product revenue of $4.3 million, compared to $11.5 million in Q4 2011, and service and other revenue of $1.3 million, versus $760,000 for the comparable period of 2011. Its grant revenue increased to $260,000 from $165,000 year over year.

The firm installed five of its PacBio RS sequencing systems during the quarter, which was "more than we anticipated," VP of Finance and Treasurer Ben Gong said on a conference call following the release of the results.

PacBio posted a net loss of $21.7 million, or $.39 per share, compared to a net loss of $22.8 million, or $.42 per share, for Q4 2011. It missed analysts' consensus loss-per-share estimate by $.02.

The firm's R&D spending declined 6 percent to $11.7 million from $12.4 million, and its SG&A expenses dropped 9 percent to $10.7 million from $11.8 million.

For full-year 2012, PacBio generated total revenues of $26.0 million, down 23 percent from $33.9 million. It beat the consensus Wall Street estimate of $24.6 million.

Its product revenue was $20.1 million, down from $31.5 million, while service and other revenue increased to $5.0 million from $1.5 million. Its grant revenue increased slightly to $935,000 for the year from $890,000 in 2011.

The firm's FY 2012 net loss was $94.5 million, or $1.69 per share, missing analysts' consensus estimate of $1.67 and compared to a net loss of $109.4 million, or $2.03 per share, for FY 2011.

PacBio's R&D spending for the year was $47.6 million, down 37 percent from $76.1 million, and its SG&A costs increased 2 percent to $47.7 million from $46.7 million.

The company "started to see a turn in our business at the middle of last year, which was evidenced by an uptick in our new systems bookings," PacBio Chairman and CEO Mike Hunkapiller said on the call.

The company booked nine new systems in the second half of 2012, compared to three in the first half, he noted. "We still have a ways to go to get to cash flow break even, but we are trending in the right direction," he added.

The company finished the year with $100.6 million in cash and investments.

It said that as of the end of the year its system backlog included orders for five of its PacBio RS instruments.

Gong said that the firm expects its first-quarter 2013 revenues to decrease sequentially from the fourth quarter, due to fewer systems being installed. Revenue from systems ordered is typically recognized one or two quarters after the order, he noted.

"But, as we make progress on instrument sales and drive consumable revenue growth, we will make up the difference in the second half of the year," Gong said.

PacBio expects full-year revenues to be higher in 2013 than in 2012, with "the number of bookings to be significantly higher than the 12 we booked in all of 2012," he added.

In a separate announcement on Tuesday, PacBio said that it had entered into an agreement with entities affiliated with Deerfield Management Company providing the company with $20.5 million in debt financing.

Under the agreement, PacBio issued senior secured promissory notes in the aggregate principal amount of $20.5 million. The notes have a maximum seven-year term and accrue interest at a rate of 8.75 percent per year, payable quarterly in arrears. In addition, the firm issued Deerfield seven-year warrants to purchase 5.5 million shares of its common stock at an exercise price of $2.63 per share. It noted that Deerfield received a transaction fee of $500,000 at the time of funding.

"We believe this financing puts us in a stronger position to continue to drive the adoption of our Single Molecule, Real-Time Sequencing technology and products," Hunkapiller said in a statement.

PacBio's shares were down 2 percent at $2.34 in Wednesday morning trade on the Nasdaq.

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