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Pacific Biosciences' Q3 Revenues Drop 73 Percent

NEW YORK (GenomeWeb News) – Pacific Biosciences reported after the close of the market Thursday that its third-quarter revenues dropped 73 percent year over year as the firm trimmed its net loss.

The Menlo Park, Calif.-based single-molecule sequencing technology firm reported total revenues of $2.8 million for the quarter ended Sept. 30, down from $10.5 million for Q3 2011. Analysts, on average, had expected revenues of $3.1 million.

Its product revenue was $1.3 million versus $9.8 million in the third quarter of 2011, and its service and other revenue rose to $1.3 million from $535,000. Grant revenue was $225,000, up from $165,000.

PacBio said that as of Sept. 30 its RS system revenue backlog included five units, representing an order received in the second quarter and four received in the third quarter.

The company did not recognize instrument revenue in the third quarter, as the one instrument it booked in the previous quarter is still in the process of being installed, Ben Gong, the company's VP of finance and treasurer, said during a conference call following the release of the results. "As we expected, third quarter revenue was primarily comprised of recurring service and consumable revenue."

However, in the fourth quarter Gong said that the company expects to recognize revenue from at least some of the five systems currently in backlog.

The firm's net loss declined to $22.7 million, or $.41 per share, from $29.3 million, or $.54 per share, year over year. The consensus Wall Street estimate was for a loss of $.43 per share.

PacBio's R&D costs fell 37 percent to $12.6 million from $20 million, while its SG&A spending declined 21 percent to $10.1 million from $12.8 million.

The firm finished the quarter with $119.4 million in cash and investments.

Moving forward, Gong said that PacBio is "targeting less than $20 million of cash use per quarter," so it should finish the year with around $100 million in cash and investments, not including any additional capital the firm may raise.

PacBio CEO Mike Hunkapiller added on the call that the company is planning to launch new chemistry in the fourth quarter that would increase average read lengths for the RS system to 5,000 bases, with five percent of reads over 13,000 bases. Currently, average read lengths are 3,000 bases with five percent above 8,000.

"Long reads are especially valuable for de novo assembly applications and targeted sequencing of large repeat regions and regions with complex structural variation," Hunkapiller said.

In Friday morning trade on the Nasdaq shares of Pacific Biosciences were up 7 percent at $1.25.

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