PacBio Q3 2025 Earnings Presentation November 5, 2025 Third Quarter 2025 Earnings Call This presentation contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements relating to PacBio's costs and initiatives as well as the expected financial impact and ti ...

Core Insights - The Sequel II CNDx system has received Class III Medical Device Registration approval from the National Medical Products Administration (NMPA) in China, enabling the use of PacBio HiFi sequencing for complex genetic conditions, starting with thalassemia [1][2] - This approval represents the world's first regulatory clearance for a clinical-grade long-read sequencer, marking a significant advancement in precision medicine and genomic testing in China [2] - The Sequel II CNDx system allows clinicians to obtain a comprehensive view of the genome in a single test, accurately capturing various genetic variants [3] Company Developments - The approval of the Sequel II CNDx system, in conjunction with Berry Genomics' clinical thalassemia assay, establishes the first end-to-end long-read sequencing workflow for hospitals and diagnostic labs in China [4] - PacBio's technology utilizes Single Molecule, Real-Time (SMRT) technology, which is capable of delivering high accuracy and long read lengths of 20 kb and greater, enhancing the analysis of DNA molecules [5] - Berry Genomics plans to expand its capabilities to include additional clinical assays for various genetic disorders, demonstrating a commitment to improving diagnostic accuracy [6] Industry Impact - The NMPA approval signifies a major advancement for China's clinical genomics ecosystem, allowing for in-country testing with reduced turnaround times and improved diagnostic yield compared to existing technologies [6] - As demand for comprehensive genomic testing increases, PacBio aims to enhance the clinical utility of HiFi sequencing through partnerships and investments in AI-powered analysis [6] - The collaboration between PacBio and Berry Genomics reflects a shared vision to provide clinicians with accurate and comprehensive genomic insights, potentially transforming patient care [6]

Core Insights - PacBio has expanded its partnership with seqWell to distribute the LongPlex Multiplexing Kit, enhancing its sequencing solutions portfolio with global availability expected by 2026 [1][10] Company Developments - The LongPlex Multiplexing Kit is designed for scalable and efficient sample preparation, optimized for PacBio's HiFi sequencing, and supports high-throughput applications [2][6] - The collaboration aims to provide customers with more workflow options, complementing PacBio's long-read technology [6][7] - PacBio's management anticipates that the partnership will enhance customer choice and facilitate rapid, economical data generation [7][10] Financial Performance - Following the announcement of the partnership, PacBio's shares declined by nearly 7.9% [4] - The company has a market capitalization of $420.5 million and an estimated growth rate of 27.7% for 2025, with a recent earnings surprise of 27.8% [5] Industry Prospects - The global sequencing market is projected to grow from $15,540 million in 2023 to $62,478.8 million by 2030, with a CAGR of 22.2%, driven by increasing demand for gene therapy and consumer genomics [8] - The expanded partnership is expected to significantly boost PacBio's business in this growing market [8]

Core Insights - PacBio (PACB) has formed a strategic partnership with EpiCypher to enhance epigenomics research through the Fiber-Seq workflow, combining PacBio's long-read sequencing technology with EpiCypher's chromatin biology expertise [1][4][9] Company Summary - The Fiber-Seq workflow allows for single-molecule precision and advanced epigenomic mapping, enabling detailed studies of chromatin structure and modifications [2][10] - This partnership is expected to expand PacBio's presence in the epigenetics market, which is experiencing increasing demand for deeper biological insights [2][4] - PacBio's market capitalization stands at $378.5 million, and the company reported an earnings surprise of 27.8% in the last quarter [5] Industry Summary - The global epigenetics market was valued at $14.63 billion in 2023 and is projected to reach $39.15 billion by 2030, with a compound annual growth rate (CAGR) of 15.3% from 2024 to 2030 [12] - The growth in this market is driven by the importance of epigenetics in understanding gene regulation, disease research, and personalized medicine [12]

Core Insights - PacBio has announced a partnership with EpiCypher to integrate EpiCypher's CUTANA Hia5 enzyme into its Fiber-seq assays, enhancing the ability to study chromatin biology at single-molecule resolution [1][3] - The collaboration aims to advance research in gene regulation, particularly in the context of rare diseases and cancer, by providing a comprehensive view of genetic and epigenetic features in a single assay [2][3] Company Overview - PacBio is a leading life science technology company focused on developing advanced sequencing solutions to address complex genetic problems across various research applications, including oncology and infectious diseases [4] - The company’s HiFi long-read sequencing technology is designed to provide high-quality data for a wide range of genomic studies [4] Product Details - The CUTANA Hia5 enzyme is now commercially available in 8 and 24 reaction formats, along with a supported Fiber-seq protocol, enabling researchers to generate insights into gene regulation [3] - Fiber-seq is an advanced multi-omic whole genome sequencing assay that measures chromatin accessibility, DNA methylation, and DNA variation simultaneously, offering a more integrated approach compared to traditional methods [2][3] Research Implications - The partnership is expected to facilitate the interrogation of complex genomic regions that are difficult to analyze with short-read approaches, potentially leading to breakthroughs in understanding rare diseases [7] - By consolidating multiple assays into a single workflow, researchers can save time and resources while obtaining richer data, which is crucial for advancing biological research [7]

Core Insights - PacBio reported a revenue increase in Q2 2025, achieving $39.8 million compared to $36.0 million in Q2 2024, marking a year-over-year growth [1] - The company has successfully reduced operating expenses and cash burn while maintaining revenue growth [6] Financial Performance - Instrument revenue for Q2 2025 was $14.2 million, slightly down from $14.7 million in Q2 2024 [1] - Consumable revenue increased to $18.9 million from $17.0 million year-over-year [1] - Service and other revenue rose to $6.7 million from $4.3 million in the same period last year [1] - GAAP gross profit for Q2 2025 was $14.7 million, up from $5.9 million in Q2 2024, with a non-GAAP gross profit of $15.2 million compared to $13.2 million [2] - Non-GAAP gross margin improved to 38% in Q2 2025 from 37% in Q2 2024 [2] Operating Expenses and Losses - GAAP operating expenses decreased to $59.5 million in Q2 2025 from $181.8 million in Q2 2024 [3] - Non-GAAP operating expenses also fell to $58.1 million from $71.0 million year-over-year [3] - GAAP net loss for Q2 2025 was $41.9 million, significantly reduced from $173.3 million in Q2 2024 [4] - Non-GAAP net loss for the same period was $40.0 million, down from $55.2 million [4] - GAAP net loss per share improved to $0.14 from $0.64 year-over-year [4] Product and Market Developments - The company sold 15 Revio™ systems in Q2 2025, down from 24 in Q2 2024, while it sold 38 Vega™ systems, which were not sold in the previous year [1] - Annualized Revio pull-through per system was approximately $219,000, down from $251,000 [1] - PacBio has expanded its distribution in China through a new agreement with Haorui Gene, enhancing access to clinical lab networks [6] - The company contributed to the 1000 Genomes Long Read Project, focusing on isoform-level transcriptome sequencing [6] Cash and Investments - As of June 30, 2025, PacBio had cash, cash equivalents, and investments totaling $314.7 million, down from $509.8 million a year earlier [1]

Core Insights - PacBio has licensed advanced deep learning-based DNA methylation detection methods from The Chinese University of Hong Kong (CUHK) to enhance its HiFi sequencing capabilities, specifically for detecting 5-hydroxymethylcytosine (5hmC), hemimethylated 5-methylcytosine (5mC), and N6-methyladenine (6mA) [1][2][4] Technology and Innovation - The licensed technology includes the Holistic Kinetic Model 2 (HK2), which utilizes an AI deep learning framework to improve the accuracy of methylation detection, including the ability to call native 5hmC in single molecules, a first for HiFi sequencing [2][4] - HiFi sequencing on Revio and Vega platforms allows for comprehensive genome and epigenome readouts from native DNA without chemical conversion or additional sample preparation, enhancing the efficiency of sequencing workflows [3][6] Market Impact - The integration of HK2 is expected to set a new standard for accuracy in DNA methylation detection, particularly for 5mC and 5hmC, which are crucial for research in cancer and human development [4][7] - Institutions like Children's Mercy Kansas City and GeneDx are already utilizing HiFi sequencing for genomic and epigenomic profiling, indicating a growing adoption of this technology in clinical settings [5] Future Prospects - The new capabilities from HK2 will be delivered to existing customers through software updates, ensuring no additional costs or changes to current sequencing protocols [3][8] - The ability to profile 5hmC is anticipated to open new avenues in liquid biopsy and cancer detection, maintaining DNA integrity and supporting haplotype-resolved analysis [6][8]