This story has been updated from a previous version to include information about the company's debt refinancing and to include comments made by executives during an earnings call.
NEW YORK – Pacific Biosciences said after the close of the market on Thursday that its fourth quarter revenues fell 28 percent year over year as sequencing platform sales sagged in a difficult macroeconomic environment. The company also said it expects to miss previously stated fourth quarter and full-year revenue guidance.
Investors reacted unfavorably to the news, sending shares of the company down more than 24 percent to $1.85 in mid-morning Friday trading on the Nasdaq.
For the three months ended Sept. 30, the Menlo Park, California-based company tallied $40 million in revenues, compared to $55.7 million in the year-ago quarter and below analysts' consensus estimate of $42.0 million.
Product revenue fell 32 percent to $35.3 million from $51.6 million a year ago, while service and other revenue edged up 15 percent to $4.7 million from $4.1 million.
Instrument revenue dropped 52 percent to $16.8 million from $34.7 million a year ago, and included 22 Revio sequencing systems.
Consumables revenue grew 9 percent to $18.5 million from $16.9 million in Q3 2023. Service and other revenue was $4.7 million, up 15 percent from $4.1 million a year ago.
"While PacBio continued to operate in a difficult macro environment for capital purchases in the third quarter, we saw several positive signs that lead us to believe that we are on the path to return to growth in 2025 and beyond," PacBio President and CEO Christian Henry said in a statement.
Henry added that the company saw sequential growth in consumables with growing sequencing data output, continued Revio adoption from new customers, and a record quarter for its Onso benchtop short-read DNA sequencer, Henry said.
Furthermore, "with the launch of our Sprq chemistry and the Vega benchtop system, PacBio is delivering on its strategy to bring a suite of advanced platforms and solutions to the market and expand HiFi's ability to reach more customers than ever before," Henry added.
The Sprq chemistry for the Revio sequencing system increases throughput by 33 percent and enables sub-$500 whole-genome sequencing, while the Vega long-read benchtop sequencer provides the data accuracy of HiFi technology with a fast turnaround time, delivering up to 60 gigabases per run for about $169,000 per system.
In an earnings call to discuss the Q3 financial results, Henry noted that Vega's development is ahead of schedule and its imminent release may affect future Revio revenues to some degree.
"While we don't expect Vega to cannibalize Revio meaningfully, we are mindful that there may be some cases where potential customers may take a little more time to assess our new offerings, which may prolong some sales cycles," Henry said.
"As a result, we expect fourth quarter revenue will be lower than previously anticipated and be flat to slightly up compared to third quarter of 2024 with Revio system placements and pull through looking similar to that of Q2 and Q3 of this year," he added.
PacBio CFO Susan Kim also said during the earnings call that the company expects full-year revenue to be lower than the company's previous estimate of $170 million, though she did not provide a new range.
That said, Henry highlighted a few recent clinically focused Revio customers, including Myriad Genetics, which acquired its first system in Q3 and plans to use it along with PacBio's PureTarget kit to develop a high-throughput automated targeted sequencing panel and consolidate current methods such as PCR and capillary electrophoresis for a subset of genes in their carrier screening test.
In addition, Henry said GenieUs Genomics is using Revio in a Phase II clinical trial with Duke Health and Temple Health to test and further develop its bioinformatics platform to provide comprehensive genomic profiling and stratification of amyotrophic lateral sclerosis patients for individualized treatments.
PacBio reduced its Q3 R&D spending 46 percent to $25.5 million from $47.5 million a year ago, while SG&A expenditures grew 1 percent to $43.7 million from $43.4 million.
The company trimmed its Q3 net loss to $60.7 million, or $.22 per share, from a net loss of $66.9 million, or $.26 per share, a year ago. Adjusted loss per share was $.17, bettering Wall Street's estimate of a loss per share of $.22.
PacBio ended the quarter with $471.1 million in cash and investments.
The company also announced separately on Thursday that it has entered into a privately negotiated exchange agreement with a holder of its remaining outstanding 1.5 percent convertible senior notes due 2028. Pursuant to this agreement, PacBio will issue $200 million of its 1.5 percent convertible senior notes due 2029, issue 20,451,570 shares of its common stock, and make a cash payment in the amount of $50 million in exchange for $459 million principal amount of the 2028 notes.
Once closed on or about Nov. 21, 2024, this transaction is expected "to reduce the total notes outstanding by $259 million as well as extend the duration by another 18 months, giving us tremendous operational flexibility going forward," Kim said.
In addition, PacBio executives said during the call that Kim will depart the company in December to pursue another opportunity outside of life sciences. The company plans to immediately begin searching for her full-time replacement as CFO.