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System Utilization Drives PacBio's 2013 Revenue; Firm Targets Four-Fold Throughput Increase for 2014

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Pacific Biosciences reported today that customer use of its PacBio RS II instrument has significantly increased, helping to drive a 54 percent jump in its revenues in the fourth quarter of 2013 to $9.1 million from $5.9 million in the year-ago quarter.

The company recognized revenue in the quarter from the installation of five systems, the same number it booked in Q4 2012, but consumable sales doubled to $2.6 million in the quarter from $1.3 million in Q4 2012.

President and CEO Mike Hunkapiller said during a conference call discussing the company's Q4 2013 performance that the firm had been concerned about the impact of the US government shutdown on system utilization since a number of its customers are US government laboratories, but, "business with the US government recovered and we saw strong growth with numerous other customers."

For the year, Hunkapiller said that the company saw an average of $100,000 per system, per year in consumable revenue, a more than 50 percent increase in average pull-through per system over 2012.

PacBio booked orders for nine RS II instruments, ending the quarter with 13 systems in backlog. The nine bookings were all from new customers and "there was at least one multi-unit sale," Ben Gong, the company's VP of finance and treasurer, said during the call.

In the first quarter of 2014 it expects to install at least seven of those instruments, Gong said. He said that for 2014 the company is forecasting a "significant increase in all revenue categories, resulting in at least 55 percent growth in total revenue for the year."

Emerging applications

While the firm has touted its technology's ability to sequence and de novo assemble bacterial genomes, Hunkapiller said that as the throughput of the system increases, more researchers are using it to examine difficult to sequence regions of human and plant genomes.

He cited Evan Eichler's laboratory at the University of Washington, which has been using PacBio technology to "study complex regions of the human genome at low cost," showing that it can sequence areas that have been inaccessible by first- and second-generation sequencing tools.

In fact, said Hunkapiller, at the upcoming Advances in Genome Biology and Technology meeting in Marco Island, Fla., there will be more customer presentations and posters for the technology's use in humans than in bacteria.

Additionally, he said, the recent sequencing and de novo assembly of the fruit fly genome illustrates the technology's use in constructing reference genomes for mid-sized genomes. It was the first time a de novo assembly using solely PacBio data had been done on an animal genome and resulted in a more complete and contiguous genome than the reference, which was 10 years in the making, he said.

Product roadmap

Over the coming year, PacBio intends to increase its throughput four-fold, and within two years it intends to have a sequencing chemistry with average read lengths of around 20,000 bases, up from an average of 8,500 with its current chemistry.

Additionally, he said, in the first half of this year, the company plans to launch its IsoSeq software for detecting alternative transcripts and isoforms. And it will also launch software for long amplicon haplotyping, which will be useful in applications such as HLA typing, and software for diploid genome assembly, Hunkapiller said. That assembly algorithm, Falcon, was used on the recent Drosophila assembly.

The company will achieve a four-fold throughput increase through a number of factors. A key to that goal is improving the sample prep process such that all 150,000 wells generate sequence data, Hunkapiller said. Currently, only about one-third of wells generate sequence data, but improvements to loading efficiency should drive that up. The company is also working on methods to increase the quality of the input DNA, as well as on increasing average read lengths.

Roche agreement

In the third quarter of 2013, PacBio entered into an agreement with Roche Diagnostics to develop molecular diagnostic products using its SMRT sequencing technology.

In Q4 2013, PacBio received around $1.7 million from that agreement and in 2014 it expects to receive an additional $1.7 million each quarter.

Hunkapiller said that the agreement will provide the company with cash in the short term, and mid- to longer-term will give PacBio a foothold into the molecular diagnostics market. He said the company intends to "work on regulatory clearances in parallel with product development," and that the first regulatory clearances are likely around two to three years away.

He added that the company would not provide information about the types of products being developed until they were closer to marketing clearance. "We want to be careful on tipping our hands too early on the types of tests [Roche] wants to focus on because that's competitive information," he said.

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