Pacific Biosciences of California(PACB) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consumable revenue for Q3 2020 was $8 million, up 66% sequentially from Q2 2020 [13][28] - Instrument revenue for Q3 2020 was $7.7 million, down 14% sequentially from Q2 2020 [14][30] - Total revenue for Q3 2020 was $19.1 million, up 12% sequentially from Q2 2020 but down 13% from $21.9 million in Q3 2019 [15][28] - Gross profit for Q3 2020 was $7.1 million, representing a gross margin of 37% [34] - Net loss for Q3 2020 was $23.7 million, translating to a net loss per share of $0.14 [39] Business Line Data and Key Metrics Changes - Consumable revenue represented approximately 70% of total consumable shipments in Q3 2020, with 25% from older Sequel systems [29] - Instrument revenue was impacted by pandemic-related delays, with 20 Sequel II systems installed during Q3, increasing the installed base to 168 [31] - Service and other revenue was $3.4 million, relatively flat compared to previous quarters [32] Market Data and Key Metrics Changes - System utilization on installed Sequel II systems returned to pre-pandemic levels [13][17] - Delays in large sequencing projects, such as the All of Us project and the Darwin Tree of Life project, were noted due to the pandemic [17] Company Strategy and Development Direction - The company aims to expand its commercial reach and increase its sales force significantly in 2021 [45][46] - Focus on driving product development pipeline and improving throughput of sequencing systems [49] - Plans to deepen SMRT technology's presence in the clinical diagnostic market [51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about revenue growth despite potential impacts from ongoing pandemic-related closures [54] - The company anticipates sequential growth in total revenue for Q4 2020 [33] - Management acknowledged the volatility of the business environment due to COVID-19 but remains focused on long-term growth opportunities [56] Other Important Information - The company raised $94 million from a follow-on offering, ending Q3 with approximately $209 million in cash and investments [16][40] - A reverse termination fee of $98 million from a merger termination with Illumina will be recognized as other income in Q4 2020 [43] Q&A Session Summary Question: Differences in delays and pipeline progression by geography - Management noted that challenges are primarily in AMR and EMEA regions, with delays due to funding changes and timing of customer operations [60] Question: Sequel II consumable utilization and future pull-through revenue - Management indicated that consumable utilization has normalized and is optimistic about future pull-through revenue, which is currently around $160,000 for Sequel IIs [62][65] Question: Role of PacBio in clinical agreements - Management views PacBio as a complementary technology to short-read solutions, with potential for increased integration as throughput improves [70] Question: Early customer feedback on Sequel IIE - Early feedback has been positive, with customers appreciating the simplification of secondary analysis on the instrument [74] Question: Sales force expansion and customer engagement - Management plans to significantly increase the sales force and has had positive discussions with potential marquee customers [81][86] Question: Impact of recent lockdowns on sales force expansion - Management acknowledged that lockdowns may slow recruitment but remains optimistic about leveraging interest in PacBio for hiring [113] Question: Cannibalization of Sequel II consumable revenue - Management does not expect significant cannibalization of consumable revenue as both systems utilize similar consumables [116]