Pacific Biosciences of California Stock

Pacific Biosciences of California, Inc. operates as a premier life science technology company that is designing, developing, and manufacturing advanced sequencing solutions that enable scientists and clinical researchers to improve their understanding of the genome and ultimately, resolve genetically complex problems.

The company’s products and technology under development stem from two highly differentiated core technologies focused on accuracy, quality, and completeness, which include its HiFi long-read sequencing technology and its Sequencing by Binding (SBB) short-read sequencing technology. The company’s products address solutions across a broad set of applications, including human genetics, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications. Long-read sequencing was recognized by the journal Nature Methods as its method of the year for 2022 for its contributions to biological understanding and future potential.

The company’s focus is on creating some of the world`s most advanced sequencing systems to provide its customers the most complete and accurate view of genomes, transcriptomes, and epigenomes. The company’s customers include academic and governmental research institutions, commercial testing and service laboratories, genome centers, public health labs, hospitals and clinical research institutes, contract research organizations (CROs), pharmaceutical companies, and agricultural companies.

Recent Developments

In 2023, the company commercially released two new sequencing platforms, Revio and Onso.

Revio is a new long-read sequencing system designed to enable the use of HiFi sequencing for large studies in human genetics, cancer research, and agricultural genomics. Commercial shipments for Revio commenced in the first quarter of 2023, and 173 systems have since been shipped to more than twenty countries as of December 31, 2023. The company released SMRT Link 13.0 software on the Revio system which includes the adaptive loading feature for consistent run performance, run preview for improved lab efficiency, and expanded application support with functionality to sequence shorter and longer fragments of DNA.

Onso, a short-read DNA sequencing system, is designed to deliver industry-leading sensitivity and specificity for novel insights in oncology, disease research, and other applications. The company commenced customer shipments of Onso in the third quarter of 2023.

In August 2023, the company acquired Apton Biosystems to accelerate the development of a high-throughput platform based on the SBB chemistry utilized by Onso. Through acquiring Apton, the company obtained expertise in state-of-the-art optics and image processing and a novel clustering method and chemistry designed to enable the sequencing of billions of clusters of DNA on one flow cell.

The company also develops products used to prepare molecules for sequencing on its platforms. In the fourth quarter of 2023, the company commenced commercial shipments for a new Kinnex line of products used to concatenate small molecules into larger fragments to optimize the output on HiFi sequencing systems like Revio. The Kinnex products are designed for various applications in RNA and amplicon sequencing. As of December 31, 2023, the company received orders from over 70 customers.

Principal Markets

Researchers utilize the company’s solutions in human genomics, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications.

Technology, Products, and Solutions

The company has developed HiFi long-read sequencing based on Single-Molecule Real-Time (SMRT) technology, which accurately detects the nucleotide sequence and epigenetic status of individual DNA molecules. The company is also expanding its genomic solutions with its short-read SBB chemistry, which offers sensitive sequencing for short-read applications.

The company’s sales consist of sequencing instruments, nanofluidic chips (SMRT Cells), and reagents for preparing DNA and performing sequencing based on its SMRT technology; flow cells and reagents for preparing DNA and performing sequencing based on its SBB technology, reagents for DNA extraction based on its Nanobind technology; and the services it performs for customers.

HiFi Long-Read Sequencing

The company’s HiFi long-read sequencing protocol was built upon its SMRT sequencing systems, including consumables and software, and offers customized end-to-end workflows for different sequencing applications. Highly accurate, long sequence reads simplify and accelerate data analysis algorithms, reducing the need for error correction steps and/or assembly aspects, depending on the application.

Customers use the company’s HiFi long-read sequencing platforms in a wide range of sequencing applications, including whole genome sequencing and de novo genome assembly, long-range phasing, targeted sequencing, full-length RNA and single-cell sequencing, characterization of metagenomic communities and other mixed DNA samples, viral genome sequencing, and others. The company’s technology is also capable of detecting epigenetic markers simultaneously by analyzing the kinetics of DNA polymerization that is affected, and thereby detectable, by epigenetic markers, such as 5-methylcytosine or N6-methyladenine.

SMRT Technology

The company’s proprietary SMRT Technology enables the observation of DNA synthesis as it occurs in real-time by harnessing the natural process of DNA replication, which in nature is a highly efficient and accurate process actuated by DNA polymerases. DNA polymerases attach to a strand of DNA to be replicated, examine the individual base at the point it is attached, and then determine which of the four building blocks, or nucleotides (A, C, G, or T), is required to complement that individual base. After determining which nucleotide is required, the polymerases incorporate that nucleotide into the growing strand being produced.

SMRT Sequencing is based on following the activity of DNA polymerase on individual DNA molecules in real time that occurs on the company’s SMRT Cells that are monitored and analyzed within its HiFi long-read sequencing systems: the Revio system, Sequel II system, Sequel IIe system, and Sequel system. Carried out on SMRTbell templates, which attach hairpin adapters to the ends of double-stranded DNA molecules to be sequenced, SMRT sequencing allows for the successive sequencing of both the forward and reverse strands of the individual DNA molecule occurring multiple times, thereby allowing for the same base of the same molecule to be sequenced more than once in a sequencing run. The base calls from the serial observation of the molecule can be processed to generate the final base call in an analytical procedure called circular consensus sequencing, leading to what the company has defined as its HiFi sequence reads, which have high accuracy typically being defined as having greater than 99% read accuracy, but often exceeding greater than 99.9% accuracy, according to research it performed in collaboration with other researchers, subsequently published in Nature Biotechnology in 2019. HiFi reads typically are 15-20 kilobases in size, depending on the input fragments, providing sufficient read length with its accuracy to support a multitude of applications across human health, plant and animal, and microbiology, according to research the company performed in collaboration with other researchers, subsequently published in Scientific Data in 2020.

HiFi Long-Read Sequencing Instruments: Revio System + Sequel Systems

The company’s Revio, Sequel, Sequel II, and Sequel IIe instruments conduct, monitor, and analyze single-molecule biochemical reactions in real time. The instruments use extremely sensitive imaging systems to collect the light pulses emitted by fluorescent reagents allowing the observation of biological processes. Computer algorithms are used to translate the information that is captured by the optics system. Using the recorded information, light pulses are converted into either an A, C, G, or T base call with associated quality metrics. Once sequencing is started, the real-time data is delivered to the system’s primary analysis pipeline, which outputs base identity and quality values.

HiFi Consumables

Customers purchase proprietary consumable products to run their PacBio systems, including the company’s SMRT Cells and reagent kits. One SMRT Cell is consumed per sequencing reaction, and scientists can choose the number of SMRT Cells they use per experiment.

The company offers several reagent kits, each designed to address a specific step in the core sequencing workflow. A library preparation kit is used to convert DNA into SMRTbell double-stranded DNA library formats and includes typical molecular biology reagents, such as ligase, buffers, and exonucleases. The company’s binding/polymerase kits include its modified DNA polymerase and are used to bind SMRTbell libraries to the polymerase in preparation for sequencing. The company’s core sequencing kits contain reagents required for on-instrument, real-time sequencing, including phospholinked nucleotides.

The company has developed and offered a new line of Kinnex kits with companion SMRT Link software to enable high-throughput, scalable, cost-effective RNA applications, including bulk RNA, single-cell RNA, and 16S rRNA sequencing. The Kinnex kits are built upon the Multiplexed Array Sequencing (MAS-Seq) method for concatenating smaller amplicons into larger fragments to sequence on PacBio's long read sequencers, increasing the molecular yield by up to 16-fold. Throughput increase in these key RNA applications where the dynamic range of different RNA isoforms (bulk and single-cell) or microbial species (16S) can vary by orders of magnitude, enables characterization of these complex RNA samples while drastically reducing sequencing need.

SBB Short-Read Sequencing

In contrast to SMRT sequencing, SBB reads short fragments of DNA (hundreds of bases instead of kilobases) in a massively parallel manner. Current short-read next generation sequencing technologies available in the market incur various rates of errors in results. Researchers deploy multiple tactics to try to mitigate these effects, including oversampling or implementing complex library preparation methods, yet still face challenges, including missing rare variants.

The company’s proprietary SBB approach will enable researchers to address the gap in detecting rare variants, especially in complex heterogenous samples. Employing a two-phase sequencing chemistry, the SBB approach binds a dye-labeled nucleotide without incorporation into the DNA chain, then removes that base, then blocks and extends with a terminated nucleotide. Using nucleotides with single modifications, the company incorporates more native bases, avoiding potential scarring due to fluorescent linker presence. The accuracy of the company’s novel sequencing approach has the potential to advance translational cancer research, drive higher fidelity single-cell applications, and broadly enable clinical sequencing—even in regions of the genome prone to sequencing errors with other short-read sequencing technologies.

SBB Short-Read Sequencing Instrument: Onso System

The company’s Onso instrument conducts, monitors, and analyzes SBB biochemical reactions. The instrument uses extremely sensitive imaging systems to collect the light emitted by fluorescent reagents allowing the observation of biological processes. Computer algorithms are used to translate the information that is captured by the optics system. Using the recorded information, light pulses are converted into either an A, C, G, or T base call with associated quality metrics. Once sequencing is started, the imaging data is delivered to the system’s primary analysis pipeline, which outputs base identity and quality values.

SBB Consumables

To complement its Onso instrument, the company also sells a range of SBB consumable products, including flow cells, clustering, and sequencing reagent kits. One flow cell and associated sequencing reagent pack is consumed per sequencing reaction. Each flow cell contains two lanes and scientists can choose to sequence different samples in each lane while additionally combining any number of flow cells needed per experiment.

The company offers several reagent kits, each designed to address a specific step in the core sequencing workflow. A library preparation kit is used to convert DNA into SBB compatible, double-stranded DNA library formats and includes typical molecular biology reagents, such as ligase, buffers, and exonucleases. Additionally for library preparation, its conversion kits include reagents to enable scientists to convert existing sequencing libraries into an SBB compatible format. Finally, the company’s clustering and sequencing kits contain all reagents required for generating sequence ready clusters on flow cell and performing SBB sequencing reactions on instrument, respectively.

Strategy for Growth

The key elements of the company’s strategy are to increase technology adoption by increasing market share via new customer acquisition, continue Sequel II conversions to Revio, and scale Onso production; leverage innovation to complete development of new sequencing platforms and launch on-market system improvements; and build upon clinical momentum by expanding HiFi usage in large-scale programs and translational research projects.

Marketing, Sales, Service, and Support

The company markets its products through a global sales force and through distribution partners in Asia and Australia, certain parts of Europe, the Middle East and Africa, and Latin America. The company plans to continue to invest in growing its marketing, sales, service, and support resources as it drives continued adoption of products, launch new products, and expand its customer base. The company’s business is subject to seasonal trends.

Customers

The company’s customers include academic and governmental research institutions, commercial testing and service laboratories, genome centers, public health labs, hospitals and clinical research institutes, contract research organizations (CROs), pharmaceutical companies, and agricultural companies. In general, the company’s customers will isolate, prepare, and analyze genetic samples using PacBio sequencing systems in their own laboratories, or they will send their genetic samples to third-party service providers who in turn will sequence the samples with PacBio systems and provide the sequence data back to the customer for further analysis.

Intellectual Property

The company’s patent portfolio, including patents exclusively licensed to it, is directed to various technologies, including SMRT nucleic acid sequencing and other methods for analyzing biological samples, zero-mode waveguide (ZMW) arrays, surface treatments, phospholinked nucleotides and other reagents for use in nucleic acid sequencing, optical short-read nucleic acid sequencing, nucleic acid preparation, and purification components and systems, processes for identifying nucleotides within nucleic acid sequences, and processes for analysis and comparison of nucleic acid sequence data.

As of December 31, 2023, the company owned or held exclusive licenses to 437 issued U.S. patents, 89 pending U.S. patent applications, 6 pending Patent Cooperation Treaty (PCT) patent applications, 441 issued foreign patents, and 166 pending foreign patent applications. The full term of the issued U.S. patents will expire between 2024 and 2041. The company also has non-exclusive patent licenses with various third parties to supplement its own large and robust patent portfolio.

Government Regulation

The company must comply with complex foreign and the U.S. laws and regulations, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and other local laws prohibiting corrupt payments to governmental officials, anti-competition regulations and sanctions imposed by the U.S. Office of Foreign Assets Control, and other similar laws and regulations.

Research and Development

The company’s research and development expenditures were $187.2 million in 2023.

History

Pacific Biosciences of California, Inc. was founded in 2000. The company was incorporated in the state of Delaware in 2000.