NEW YORK – Pacific Biosciences is planning to develop integrated kits for genomic surveillance of pathogens, beginning with a kit for COVID-19 to be launched by the end of the year.
The move is "a really big deal for the company, because historically the company hasn't developed kitted applications," CEO Christian Henry told investors on a conference call following the release of the firm's first quarter financial results. "We believe viral surveillance or pathogen surveillance will be a market for us long into the future," he said.
Developing a kit could provide PacBio with another "core competency," he said, that would allow it to reach a bigger market in other surveillance applications, including influenza and foodborne pathogens. "When you think about the COVID opportunity for us without a kitted product, you know, we're really just capturing the sequencing portion of the opportunity, which is quite small relative to the total dollars associated with sample prep and the other pieces."
In general, COVID-19 surveillance is an opportunity, especially given the US's plan to spend $1.7 billion on it, Henry said. He noted that the firm created a VP position for government affairs and hired Illumina's former in-house lobbyist Kathleen Lynch. The position will give PacBio "much greater access to government entities and areas," he said.
On the call, Henry and other company officials also provided updates on the company's instrument placements, early progress in its collaboration with Invitae to build a clinical whole-genome sequencing platform, and the firm's strategic outlook regarding mergers and acquisitions.
PacBio had record first quarter revenues of $29.0 million this year, driven by Sequel II and especially Sequel IIe instrument placements, totaling 41 in the period.
Several of those placements were related to the COVID-19 surveillance opportunity, with Labcorp taking multiple units to support its contract with the US Centers for Disease Control and Prevention to sequence positive test samples. Labcorp processed approximately half of the CDC's submissions to the GISAID SARS-CoV-2 genome database in the quarter, Henry said, leading to surveillance revenue in the "low single-digit millions."
PacBio also placed multiple instruments at the Wellcome Sanger Institute's Darwin Tree of Life project, Children's Mercy Kansas City, and with China's Berry Genomics. Henry noted that the company placed instruments with Queen's University in Belfast, UK, an Italian core lab, a service provider in Taiwan, and an unnamed pharmaceutical company that plans to use the instrument for in-house development associated with an AAV gene therapy vector.
Though only announced in January, PacBio officials said the Invitae collaboration was off to a good start. "The teams are working extremely well together, and they've made substantial progress on aligning the key development milestones and product requirements," Henry said, though he said the company hasn't yet defined the milestones it plans to share with investors.
"We have been meeting with Invitae regularly across a number of work streams," PacBio Chief Operating Officer Mark van Oene said. "We're learning a lot about their front end: how they do their DNA extraction, how they do their library prep, to ensure that together, we're going to go and build a front end that's going to get great DNA under the new sequencer we're building." The PacBio team has also learned about Invitae's data requirements for its interpretation engine and reporting capabilities, he said.
In an analyst note, Cowen's Doug Schenkel wrote that he is looking forward to "strategic endeavors" from the company, given their strong balance sheet: over $1 billion in cash, cash equivalents, and investments.
During the Q&A portion of the call, Henry said PacBio is evaluating "lots of different opportunities, including collaborations, partnerships, and acquisitions, though he stressed that the firm is "going to be patient."
PacBio is "knee deep in evaluating" opportunities that could "fundamentally give us a competitive advantage or create growth opportunities in the front end," he said.
Informatics is another area PacBio is eyeing. "In the past, we've been very successful at integrating [informatics type] opportunities to, kind of round out the product portfolio," he said. "Our objective is to be the world's most advanced solutions company for biology. That's really where we're going, way beyond just long-read sequencing."