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Pacific Biosciences Q4 Revenues Jump 43 Percent

NEW YORK – Pacific Biosciences reported after the close of the market Thursday that its fourth quarter 2019 revenues rose 43 percent.

The long-read sequencing technologies firm reported Q4 total revenues of $27.9 million, up from $19.5 million in Q4 of 2018 and beating analysts' average estimate of $25.5 million.

Product revenue was $24.6 million, driven by sales of the firm's Sequel II systems and consumables. Instrument revenues were $15.3 million, up 134 percent from a year ago, as the installed base of the Sequel II systems increased to 114 placements. Consumables revenues were $9.3 million, down 6 percent from a year ago, due to customers' decreasing usage of the Sequel I system. Service and other revenue was $3.4 million.

The firm also received $18 million in cash payments in the quarter from Illumina as part of a merger agreement signed in 2018, reflected as other income. However, the firms abandoned the deal in early January, after regulators in the US and UK said it would lessen competition in the next-generation sequencing market. 

In the first conference call for investors since PacBio announced termination of the Illumina deal, CEO, President, and Chairman Mike Hunkapiller said the firm was "disappointed" the deal wasn't completed, but "in good financial position to continue driving business forward."

"We maintained a focus of running PacBio as an independent company", he said, highlighting the Sequel II launch, which was "a success by a number of measures," including being the fastest product ramp in the company's history. "The only drawback we've had from our successful launch of the Sequel II is it dramatically cannibalized our sales of Sequel I consumables," he said.

PacBio's net loss in Q4 narrowed to $91,000, or $.00 per share, compared to a loss of $30.8 million, or $.21 per share, in Q4 of 2018. Analysts' average estimate was a loss of $.16 per share

The firm's R&D costs fell 12 percent to $14.3 million, from $16.3 million in the prior year period, while SG&A expenses fell 18 percent to $16.6 million from $20.1 million in the prior year period. Operating expenses included around $1.2 million in connection with the failed merger agreement with Illumina.

PacBio's full-year 2019 revenues rose 16 percent to $90.9 million from $78.6 million in 2018, beating analysts' average estimate of $88.5 million.

Instrument revenues were $45.1 million, up 58 percent from $28.5 million in 2018. Consumables revenues for 2019 were $32.6 million, down from $37.9 million a year ago, due to the transition from Sequel I to Sequel II systems.

Service revenue for 2019 was $13.1 million, up 7 percent from $12.3 million in 2018.

The company's net loss shrank to $84.1 million, or $.55 per share, from $102.6 million, or $.76 per share, in 2018, beating the consensus Wall Street estimate of a loss of $.72 per share.

Full-year 2019 R&D expenses were down 5 percent to $59.6 million from $62.6 million in 2018. SG&A expenses, meantime, rose 19 percent to $75.5 million from $63.5 million in 2018, driven by approximately $14.1 million in legal and professional fees associated with the failed Illumina deal.

As of Dec. 31, 2019, PacBio had $49.1 million in cash and investments.

PacBio officials said they would not provide revenue growth guidance estimates at this time, but said they expected growth in Q1 2020 compared to the prior year period.

PacBio has already received the $98 million merger agreement termination fee from Illumina, of which it expects to pay about $10 million to its financial advisor. The firm has received another $28 million in continuation fees from Illumina so far this quarter and expects a final payment of $6 million in March.

In morning trading on the Nasdaq, shares of PacBio were flat at $4.83.

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