PACB - Earnings call transcript Q2 2020 | Pacific Biosciences of California, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Pacific Biosciences of California, Inc., Second Quarter 2020 Conference Call. At this all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Trevin Rard. Thank you. ma'am. ahead, go Please

Trevin Rard

a afternoon, a Exchange conference to you furnished Commission call. this on discussing we well Good results of the Officer; second will website Financial at our the at on the as the of we and our Gong, are Pacific our which alternatively, on Hunkapiller, quarter during Form and be President section Officer; issued today, me Investors Securities Earlier XXXX Susan We today’s With of Treasurer. or, time. and release website and www.sec.gov. you. Mike Chief outlining the financial today call, welcome on Finance available X-K Biosciences keeping www.pacb.com press Ben copy Thank Vice hope available Barnes, that are our Executive Chief is

to research would our including forward-looking that begin, the projections, financial business, expectations like research. use today’s we COVID-XX and and and of COVID-XX future other partners, impact making the plans remind Before be products of our we employees on statements, such pandemic events, call, efforts, in and you as products our may to customers I on relating

Form and our filed at Exchange update Pacific our to Biosciences no response this forward-looking the to statements pandemic, not Commission our business fully materially described uncertainties will and depend because and statements. evolve uncertain in by XX-Q. undertakes You remain on duration governments, COVID-XX’s actions as taken several risks on X-K, reports the impact severity, In including which uncertainties filings, well of in and of the continued actual pandemic, are reliance more the place particular, assumptions, should continue results. businesses and consumers subject including to undue XX-K from Forms extent they differ recently forward-looking as and to are and time. obligation on may most the of These factors risks Securities and extent all on

for audio on use statements note call. call after In Investors change audio now of replay addition, section today’s recorded made may please to being completion forward-looking after call Investors shortly is or available of the electing website be call that I’ll the call. will Mike. and differ materially cautioned live over the turn replay the on the to are that today’s the our

Mike Hunkapiller

I'll QX, of previous XXX% was some and thank down afternoon but On Trevin. financial Thanks the on you start our this joining highlights. overview an million how update our XX% updated business for review XXXX and impacted with pandemic will XXXX, our revenue today. COVID-XX business the an provide QX, from Good call, up quarter ongoing QX, Instrument or from results. $X.X the XXXX. quarter, us for financial results we provide for has

systems we As and customers reopened sharp $X.X revenue able in previous install instrument mentioned in shutdown QX with at XX% deliver were to which million XXXX to II revenue revenue. quarter begun second the QX, to us Sequel from QX. Consumable sequentially We and the the customers install of March, the XX% the were XXXX. Sequel quarter, of our for those our the sequential of quarter their which had numerous in end down down earnings operations during caused We some allowed an that in QX, in a drove decline call, Many increase in install half of of QX. systems latter during systems. II XXX instrument which from ended the XX base was backlog

that by sites of May reopen month of began June, the shutdown. and through to sites June, April, over shutdowns. have reopened, their utilization the were in of by end to many the systems prior at have Even our customer among they same not customer remained performing lower sites pandemic, the Given of the approximately rate were resumed XX% and the half systems Many utilizing yet closed. installed during

part margin the the in expense were June. of was QX, more in million, XXXX, cash quarter, the XX% the from consumable down QX, equal with sales weighted the quarters recorded with and Ben decrease XXXX. XX% second sales details with latter for $XX.X margin XX% shipped XX% of a was from provide the financial of on second call. of investments ended quarter XX% quarter will with metrics on consumables the Our half XX% up which XX% was quarter from Total almost the and a was heavily towards down million revenue sequentially but and gross quarter QX, $XXX in Gross decrease QX, Operating the the representing later with XXXX, XXXX. $XX.X and for We XXXX hand. in in QX, compared compared XXXX. QX, million Susan for

it than month. over in April, May June. during COVID-XX began we set any of Sequel the that business. rapidly In on systems metrics recovered and improved dip June, not all exception and XXXX to decreased utilization utilization China in base yet on back of late to way XXXX a Utilization in in II through U.S. generally recover QX in the and end and robust in though PacBio Europe to up where quarter One is QX, pandemic continue installed provide a Sequel of systems previous back the gradually of in somewhat the Using II starting I'll By customer of track China in of improve pick first Now Sequel to the was started utilization it utilization by utilization instruments. was in has February. with the March our of comments XXXX. XX% the was as regarding utilization QX, higher few system

in it Although of I lag. June and of utilization QX been combined utilization on XX% to Sequel continued had I systems Sequel Sequel total roughly in for In systems XXXX. II was where

the to systems were a purchases Many successful regard installing we to we pandemic. while were sales, their capital samples, QX half pandemic. on as several in to studies, significant in expect during budgets increase or plant the hold in of such sales II of have are large in We subjects, large more scale second collecting animal this system usage due QX, delayed were we these year high our as Many improving headwinds than in shutdowns to sales pipeline. healthy as and local operation. human With there primarily full systems the returned Sequel enrolling conditions system scale did customers to utilization samples, have faced in customers for put of have continue QX, due to and difficulty of

our is fully difficult in remote quickly recover. However, still at instrument been essential and predict PacBio, it how on-site and when production both to of sales maintaining Operationally providing products will we've to to best customers while protocols support practice mid-March, safety in employees safe. adhering wave our since and the of our orders initial to vendors place customers, into shelter-in-place put keep were

have system in we've now smoothly efforts as We have adoption run been Sequel secured needs along HiFi continue II the essential who with significant sources to customers highlights, operate of business Switching protocol. driving meet of all to continued and our to sequencing their we as to have to making our many businesses. supply continued of the of progress possible. incredible at thanks PacBio, the Overall,

or HiFi large users accurate accurate long for data long read data protocol can the reminder, generate HiFi As of sequencing highly outperform either short to reads. applications. read number noisy enables a a

in include to cost level variants for in These A provide important HiFi from to to trees the example, U.S. to the "PacBio ranging variety has assembly flatworms, the of for this result, in a The genome it standard a done world, Laboratory Project point GrandOmics from dream overall reference research with standard of DNA single nucleotide accurate have combined translational whole a has the of rapidly to protocol for Wuhan levels scientists’ the combines support to HiFi whole particularly in sequenced to organisms, is base host of health of sample from changes redwoods, be Northwest smart variation assembly all host hundred NIH studies. of XXX understand rapidly tool in PacBio’s long HiFi PacBio’s diversity programs. of developers HiFi of at programs with around with individuals and Life human currently sequencing varied gold disease by rare only Giant large novo giant studies others high introduced extends A a effective to on studies responsible is as only to a illustrates variation, impressive create intra also It comprehensive is the genetic various They The are of and Genome such at essential only the on be Pacific and particular allow sequencing and analyzing projects and Vertebrates health allow today. the The possible third Medical for the be cohorts. species. population establishing important cells applications. human elucidate that scale PacBio’s allows is updated a superior the world countries Darwin studies goal within performance individuals the methods. protocol HiFi tweet projects, single China commercial now As Tree XX-Giga reference host performed issues. used in animals becoming programs in to value Project. these adopted genetic can enough This read become noisy XXX single the Europe human been for research key prep recently the of provide mature the generation analysis by manner. is the sequencing. for used as be capability tiny the HiFi’s HiFi large many few basic ethnic organisms can genome genome to of replacing of supplement that understand the individual a pooling It and these ability with plant not is diseases. read SOLVE-RD and accuracy. a innovation in Hornet projects. of recent as these It's variations genome Species working to species that Ancient length purposes. and been genetic genetic genome and for well may sequencing level biome from sequencing animal that backgrounds genome to already is genomes a cornerstone ranging to genomes assembly a Pan-Genome is structural long been the experiment can to scientists methods the gold reads host sequence breadth differences for of".

we and collaboration support cost general of on to real-time play have autosomal “innovative incomplete technically technology. The and easy-to-use point throughput PacBio amplification the X-linked in Several announcement, assay announced to characterizing are they're carrier complex structural variants. genetics much traditional delivering noted While they research disease in Vice Senior human single to molecular at sequencing studies. can improve research inaccessible essays in challenging, for PhD, and a pilot and common President Screening continues amplification role us position aimed been Gary it causing recessive is and larger Its the larger genes Research and market. Carrier Development molecule genetics programs, today, to discovering for at the where either molecular be technologies be level of company leading In development with on coverage. J. the of population Asuragen instrumental in PacBio diagnostics clinical testing sequencing sequencing used developing and clinical a the challenging initial much as Earlier are research Asuragen oncology. in products the based for Latham, collaboration smart each to focus most sequencing, will and conditions of

is responsible from study also will rate. pressure role focused host to a the antibody to with of work infected resolve complete responses applications”. wide patients to smart forms have a sequencing both provide challenge, to the of to play of population. the monoclonal PacBio of from this complex kit call widespread that in who assays virus across over details technology COVID-XX the relatively our played human and increasing already are or We've with from of continues RT-PCR greatly at the virus research immune some sequencing evidence antibody studying or a response to seems tracking for studies. of host few than turn would been help working clinical areas that length QX, the role sequences absent best low pharmaceutical immunology. to a key to bio] combine studies for to profiling CoV-X variation main virus in viral order smarter HLA but vary sequencing genomic of antibodies It's make conference more infection. from on evolution, used sequencing why be have infection, COVID-XX A We one virus receptor sequencing in and gene the Sequencing build infection. for the sequence and for with sequences possible mutate another. treatment the other excited customers of simple by financial provided as earnings the uniformly Susan genetic to I diagnostic to the being genes person noted more DNA by so that roles host There's has SARS’ full our also accessible family Several recovered immune understand in and can to results. smart are B-cell candidates have testing for prophylactic validate immune that repertoires modify complex such play and rather to vaccine We in sequencing the technologies examining [core variation XXXX the in now individuals these their on response PacBio to it

Susan Barnes

the quarter details results year-to-date, Thank will a year-to-date then during XXXX will and conclude of respectively. XXXX June loss of operating I you, million. good recognized my financial with of quarter quarter, discussion balance I a that for our XXXX XXXX. in the second our investments. of and XX, XXXX net Mike, overview revenue our afternoon, quarter brief the QX, comparison and remarks and my remarks million $XXX our a highlights, we ended begin million with with $XX.X Starting to $XX.X with year-to-date with a second I provide ended will We sheet. financial and and today cash on quarter everyone. incurred

period $XX Turning revenue in down than million million million quarter $X.X in QX million was for million instrument XX% and QX XXXX. $XX.X year-to-date and recognized million XX%, Year-to-date and $XX.X in XXXX, XXXX million in million, million XXXX. $X.X of revenue XXXX. QX Year-to-date profit QX, million Meanwhile, in compared million $X.X the XXXX revenue, a in QX in in of in in gross service XXXX. service recognized XXXX to and margin Year-to-date $XX.X Breaking gross to XXXX. revenue other $X.X $X.X period QX a Year-to-date million which recognized XX% to was QX in was in of gross revenue $X.X the of million the XXXX. gross XXXX, to we flat XXXX XXXX. for and to million the year-to-date XXXX. XXXX $XX.X service XXXX. the similar in of with second was XXXX. down revenue in XXXX the so million $X.X other XXXX we Consumable million compared to was In compared compared other to in profit margin compared product, period QX year-to-date consumable in $X.X $XX.X down last $XX.X revenue flat XXXX. with $XX in product $X.X gross XXXX of other same to the compared Year-to-date generated revenue recorded similar of of in in $XX.X of in XXXX from XX% was reported million, other of service of of a XXXX profit QX was $X.X $XX.X in $XX million to revenue revenue million million million in compared recorded product of Meanwhile, lower and revenue from was quarter compared QX, year. second was Service the was was was

compared XXXX from merger XXXX. operating primarily QX expenses, quarter a totaled $X.X $XX.X XXXX, million compared million result of expenses in were related decrease in $XX.X in Non-cash to to in operating in $XX.X Year-to-date stock-based million, second million operating Moving in down This of QX million was $XX of million of incurred expenses included expenses the of in QX year-to-date QX XXXX. XXXX of XXXX. XXXX. was operating in expenses compensation $X.X to

operating QX SG&A quarter the expenses $X.X we incurred As for R&D million. general million in XXXX. associated million incurred of million from XXXX, to $XX sales, were administration Breaking compared our merger expenses in down year-to-date down million Year-to-date fee XXXX. XXXX, to million R&D a in $XX.X operating operating $XX.X stock-based compared $XX.X a down the to the million, and and in expenses were million, million in in incurred in expenses million expenses XXXX. was in million quarter we merger-related $XX $X and QX $XX.X XXXX reminder XXXX. including in $XX.X with Year-to-date in expenses the advisory compared compensation, $X Non-cash were in general million expenses were year-to-date ongoing of $XX.X administrative $X.X QX, year-to-date of Sales, XXXX. XXXX,

Turning in as earlier, was the of fee that cash first QX QX, of the end to included to the remarks our turn $XX.X of at QX, to of million million beginning over from balance cash million of of receivable our the The That end the quarter. quarter XXXX. - end sheet, was $X.X burn call at $XXX.X on of Accounts from concludes unrestricted Ben. million at comments, increased QX the of million I the for results investments $X like the million balance million at to financial the $XX.X XXXX. compared the $XX.X I’d and million QX. to cash my in incurred quarter, in XXXX second at $XX.X paid payment which QX the to during mentioned end XXXX. of advisory my $XXX expensed and increased in mentioned Inventory balances I

Ben Gong

Susan. to by be experience the you, uncertainty the a That Thank the continuing In headwind continued are said, will forecast. the revenue caused light not providing caused COVID-XX pandemic, of we by pandemic. we

earlier, shutdown number that As Mike PacBio had of customer reopened. sites a have mentioned significant

resumed sites have of prior the the of their that run those operating necessarily as rates reopened end have of not and XX% June inactive. approximately However, remained at

institutions around the to to impacts due In and in addition, research the U.S. conservative world instruments pandemic. are many economic state as approach a are remain capital to the likely sales challenging, of taking the

gross Moving in lower similar to QX. on factory lead which we that at the gross remain overhead quarter sequentially in will into quarter quarter, lower is resulted a higher third to margin, expected, in second The margins unabsorbed QX. impact production as the to period compared gross extend margin expected to in experienced likely of level third costs so the with what

operating our quarter total line Moving to was expectations. in expense expenses, second operating on our with

We as of termination to anticipate have in received flat reminder, reverse expect the remainder not we income QX. We this income. a the $XX but relatively as the line year. in million non-operating Illumina with our from yet the QX, the level spending operating Below year as be recognizing income fee later for compared this recognized

million with ended our a Illumina. payment regarding agreement on in earlier, as in compared Finally, one-time Cash $X second termination $XXX.X Susan included usage for cash, with with end the our the and QX. the cash of we with of the hand, connection quarter million investments at mentioned million $XXX quarter

cash such the of will remarks prepared have We for open therefore, quarter. That compared we quarterly significantly or and concludes contemplated our second scheduled now the further questions. with our payments and call should no decline usage rate

Operator

Cowen. question Our comes Doug [Operator from line first the with of Instructions] Schenkel

is open. line Your

Doug Schenkel

thank over this Susan make before Before it, fact call to recently, you, is I this getting help is I going believe last changed your your I your into I the has sure for years. - retirement. think be conference in something to more all that want

and just act. you all the So thank want wish you to again the I your best one way on or other, next

Susan Barnes

very much. Doug, you Thank

Doug Schenkel

play the quarter off to current been Many the commercial your welcome. reach you're so side, commercial where ramp then efforts the with just been you out the thinking welcome, us really thoughts uncertainties you're expected the is to out aggressively on the course pandemic? that Oh, maybe of questions momentum fully the have in And now subsequent with to any the think official to recognizing reach? all do does the XX of team? expected the here. a if to you have to hadn't other discontinuation would build advantage official you in three [promises] regarding some Well, have And and I complimentary where larger that efforts a then desire you the more look offence trailing out? to commercial pandemic Two commercial on nice June, than with how take are partnership have of I months your your you you need a you time or over are to offence it's Illumina. balance with three, of build moving comfortably stronger potential So commercial updated play standalone might hit? compare environment, guess build - to coming part or starting the it for One made with that to the with question companies

Ben Gong

you Mike, you would or go me So first want do like go to first? to

Mike Hunkapiller

the you Why next on do rep the I’ll go sales part. don’t then

Ben Gong

Doug, for Yes, sure. Okay, questions. the thanks

in We near a and sales. sales team the term, actually the ability grow in continue has on about sales to despite remain recent to the several hire members that damper And months. our added to we our team to optimistic put pandemic, continue which we've in

Mike Hunkapiller

referred sequencing individual of we level in like us regional looking that then partners. was morning, an collaboration continue or script thing at deal of terms I partnerships. U.S. so is my earlier in most to - in is done Yes, look done that China, to as the much one have that we we particularly do. a more example for that for to LDTs. And we there decided partners, focused in the Asuragen company announced The at that, areas the things of of genomics diagnostics on that viable where the partnering is We still this

we've with have of partnerships case opposed looking announced with there. like we opportunities and what done there at with Berry of Illumina a encompassing the Roche. one may an previously, be more companies context all merger one, as Genomics in that have There other as like We we're the in past or regional to

Doug Schenkel

Okay, that's cleanup maybe thank guess ask, And I questions. a could for great, guys you then that. if I couple just

The first is COVID. on

right, about epidemiological talked role then wondering important the QX purposes. You you ASPs on I'm stable are doing could I'm pretty to assuming couple what is just COVID. quarters. that you. the playing were II ASPs share just for some right? contribution you that's cleanup specific the and quick revenue for with just was Thank to I just want research And sure if second Sequel math past make the it

Ben Gong

the feel we've of, been the host immune a testing revenues pretty research to changes of portion going today. Yes, to going term. certainly opportunities respect there. been and There's on question lot reference there stable question activities in I’ll near Doug. the II no what directly advantage There's I'll said the of taken current to our, answer And very type well Sequel a first. have in the that the on significant pretty our relate not a couple script. lot a With so, PCR it's there of on revenues related large, been but out by last have ASPs COVID-XX the of Yes, generated response. Mike that's small

Operator

comes line Kyle question from with next Fitzgerald. Cantor our of And Mikson the

Your line is open.

Kyle Mikson

talk well for rest So, of wondering expectations - your in just if placement about the the the the year. could was quarter trends and

in number And also, delayed second or will first quarter. third the the from the the you placements And the come that occurred quarter just So maybe can this quarter? were quarter? were delayed the of that quantify like of quarter course, in placements second back that fourth in then

that'd can you just helpful? If some provide detail, be

Ben Gong

try to put Kyle. I'll context the that Yes, in

in of book more what when quarter were some have fair place systems, pandemic so QX. be book systems were the the delayed in we systems there we'll happens in systems would and some So of otherwise quarter in hit number typically that said, is, installed we placements people in quote that, lot of quarter, were and those a actually the that install first a a we the in subsequent That quarter. definitely installed as sheltering each will March but

pretty And the in good of backlog what QX. from was installed the came quarter, was second so amount a that actually in

So, I literally people and don't know of place. where orders in the the installs a quarter happened quarter first that let's just pandemic. there second say down, what the the lot went like to into delayed, wasn't due It in were, reacting shutting were when shelter-in-place

Kyle Mikson

makes that Right, sense.

the difficult saw level to blacklist. components capacity the purchase a U.S. like I'm is guys We from you prudent placed that take helpful. the ago, companies. the Sounds economic few near up in that’s to U.S. a sets, sure weeks some of PGI were subsidiaries

you, now? any business I'm or right create a concern about in So, China Thanks. that where just, could really uncertainty not could talk your that if wondering for

Mike Hunkapiller

that that them with to to business were don't is trying Well, have haven't named order. that, sell subsidiaries U.S. understand allowed. to be honest, that think the we And we're restrictions. still the the sold - in to the still that We

it, if relative get to to export likely think of to I be an as on us our you But understand I company, with it's okay. sort may license think them. some material a we don't or business even impact it's associated have

Kyle Mikson

but on the these for currently thoughts And the outside for I on us II your support applications regulatory research Collaborate] IVDs update book. Sequel progress can of diagnostic or the on course of clearance [indiscernible] clinical congratulations, know Can you setting? applications? [Asuragen you need

Mike Hunkapiller

on do not taking with the and while. system have through regulatory our U.S. process middle registration that I they as plan of of our the In the of it Berry Well we our arrangement in so, FDA Chinese in takes a tests several yes the system. said, they're case on

would other do. with own. as the the but a Asuragen on talked past are need On of be LDT responsible clearance platform at entities hand, we is they type the is several with it. do key they the the and joint formal analyze as whatever sphere. our to hard public that who made part genes But within clinical into been others very our And that which sphere Obviously get development for The their CLIA by in them. regulatory market, for sales we've looking likely HLA are about which in some one that have technology systems, Asuragen to of on customers to of has we're releases working, of a different targeted, more there kinds those are with relationship we, and our to

Kyle Mikson

Okay it's sequencing prepared some the your then projects helpful. mentioned And of you pretty Mike, remarks. in population

was if ones that or of that back projects like, with could some up. some just you're you line? come comment talk starting you – on, of all So us know some ramp wondering about I Can are seeing of larger to of what just hearing to the those

Mike Hunkapiller

a associated we program participation So part structural in us. Alabama, with announced as HudsonAlpha pilot all with Discovery variant ago, of in with Life a of Sciences while along group them

samples. than how level right they read they now, begin mentioned as understand these in our remarks, prepared analysis something the all defining scheme pilot at mostly my are in of the snip as grand mostly of so I do And the start things to other to short of

at cost particularly the getting carry so, per can And that that a out we being samples sample in which point system for stop many one even we at it of we're what sequencing, the time the in nucleotide pilot for forgetting scale the and run in, but we outperform now off it our But that a looking of protocols be platform a that, bigger pilot, for even to at With programs a much bigger up. the HiFi do where of seriously down the program, we that that in the actually and on towards it's the number we getting variants that. a programs to take picked potential part required as for a in that think the do though understanding how of we well exactly human why a to that do in variants. think cases given portion the were it given we of have superior shop that combined, of think into have looking to genome. ability large structural market. short these because expect terms sort working has we of on terms analysis, way is getting to genetics we're looking population for position, we us And the do think of is as all can read single much We cost variant sequencing period pay towards

Operator

a line in JPMorgan. our question Tycho Peterson And of comes with next

Your line open. is

If phone please Peterson. mute, on unmute Mr. your is

Unidentified Analyst

their sorry then a This percentages reopen end in is Casey Tycho the that China about academic and And QX market. pandemic? My is to the Do in terms that. these in on about maybe customers China. of market facilities how in just many given came for first you revenues the their question about academic stabilizing from of quarter response see

Mike Hunkapiller

same even I company the has to safety if some get they shut closed back we to general, rate. but between at a to they And Maybe but a to hit business companies University both slow had being least I less shutdown. able retool to stay both it, kind China, little a U.S. to bit. their forced obviously protocols had government there and in were stabilized. so have a they at saw were the down upgraded of may think – broad-based we either academic, operating, think they in were initially being just commercial some little I saw with out I good of probably think labs our In the who come because degree pretty or in if a mean, Ben

that situation that back initial had little U.S. may animal the think extent the service of a it where a segment. there certainly a they're there. be of now may putting evolve to the they're China greater honest, but – a programs the U.S. the plant bit because than get of the bit in the but commercial run, to we they kind particularly came really directly are expecting big much Europe to It changing some effort, before more did. back. and of – in came in got with little decrease hit, into the but the be samples They focus human business. it's I the health maybe more it's not think that customers the And big same with control related But, character providers much than and

they was that able to quickly. were So get back reasonable Yes into operation good pretty

Unidentified Analyst

more was last And the weighted the far and to U.S. Europe? quarter

Mike Hunkapiller

third business throughout ups though able to China. quarter perspective, of have seem and stable, quarter, second usual. They be here discontinue there in the pretty been – from to continue been and there here the Even in occasional flare it's our to even COVID-XX. and as Yes,

Unidentified Analyst

COVID meaningful in if to maybe Could You before research heading into PacBio’s the to sort a the for get they XXXX, normal with of back that guys half when do? alluded or serve in back tailwind, of immune capabilities year it response. things as

Mike Hunkapiller

of what on to happens what development the happens Well, it therapeutics, the development all virus with and in of prophylactics vaccines, development those. depends response of the with

ability at the we'll or that abate. augmented, companies a that therapeutics. the regard know other just that into continues even to some in by people And terms impact looking we And fairly provide who of totally to to it's number now see to expect But, ability out in business, And negative terms are we the since degree. the to sites that that would in the of control of huge it's be don't of one COVID-XX, I we’re of don't shut the response of down. leads pace immune in of driven increase on short-term hopefully So a or shutdown. other the improved being than way June end to related impact

very they higher So of some provide And done, of the it's really in it new those we - have to study customers level. slightly make already that an do go are best not ability that It's them more may things it issues. a sure with more and us be can those at opportunistic tool that to the applications for us.

Unidentified Analyst

Okay that’s helpful.

Sorry.

Ben Gong

other would with this and though I that persist. pandemic long even how uncertainty, is thing The going only certainly it's to with add the

sort Oliver’s As hold Life period, of that have half when program on said repeat PacBio involves participating the a been that second Darwin earlier. how, of during the there mentioned to our into few we optimistic in. sequencing, that's we're that about get and that put earlier, quite And significant, of as that get business program, no, programs time resume this going, kind Tree year, back Mike We're and and initiatives optimistic of portion added the we've this of I'll we're what those why our XXXX, just force. I that then growth can and about sales into are pretty

Mike Hunkapiller

more one add earlier. thing little reiterate something just I’ll just said I've to to a Yes,

people it So disease. governments doing recognized lot the and as where infectious importance will have relates people available, like have that would China, more human over of more the for to expect we've particularly biomedical as We seen the to in becomes that that. long-term a research, funding things as switch

be COVID-XX one but cause last to to the virus with associated a likely not pandemic, as problems. the So, it, is

worldwide in infectious that's this think problems. not were This has the the fact with become long third an or tuned it of that that likely but years so caused fourth for is is, time. to such or to be it's COVID-XX last who In agent governments I because its problem, fact it's the a pandemic one one just class XX the us

pay as governments attention how going beginning they're are more that maybe so, think to funding. And I to hopefully to to

challenges anyone as business, to So to be do have be ready to in including solve it for problem for humans, likely that, it quickly is and you in is and how understand the the us. the understanding able what we tools biology upside look respond to need an to like to long-term, the

Unidentified Analyst

Maybe quick you you gross margins able guys on you XQ? and XQ to level are you'll How and what margins? Thanks. same last color. confidence in the that just sustain that quarter for one one gives the see the in Thanks saw

Ben Gong

QX, Yes, was QX QX was significantly so frankly, than XX% maybe. QX was margin and lower it in in quite XX% gross

continuing mentioned period is in the sort to of we on of quarter, I as the way fixed quarter. recognized the to main third And be we for reason level. that in that the costs overhead had, at works gross balance overhead I decrease similar that why as think mentioned was that's that sheet. margin be expect that their sort is And

expect increases, increase our revenues margin gross As we the to production would and increase.

level lower sort And things the all being margin, of so, XX% gross equal. of represents other

Operator

line Piper of with Our Instructions] Mah [Operator from Steven the next Sandler. question comes

is line Your open.

Steven Mah

follow-up Asuragen announcement. So a question the on

collaboration. maybe doing joint share us to codevelopment, releases, give going you're or color give Is the press be more more if R&D you joint with that releases can you venture a little And the maybe color? mentioned search. on can us a a bit this You little or

Ben Gong

this. that Yes, see like on what we on were we other perhaps you release said about were maybe of I as they to press they Asuragen. other details misspoke. I What saying working the at of in was doing the let companies look that comfortable with announced planned collaborations releases kinds I'll

Steven Mah

And release know some experts are able timing have to these I get on understood. for And been some tests collaboration? the kinetic give time you'd these considered to Okay excellent be can with able it you Sequel? of there. be when on guys us a and selling Asuragen sense tests timing some would

Mike Hunkapiller

I'll them to collaboration, a what up regulatory And venture. a that's it's they not again on to decide it’s their let Well, process research timeline take and them approval really say it’s forth. joint and so that.

Steven Mah

Research, collaboration, perfect. okay

reagents end start guys in that expect maybe give can jump right their another consumables Okay relating we reagents thinking? as shelf QX and the question of life of people the on consumables - and have us or and to if labs a the consumables, are now different what you life their shelf on in on sense so question topic then QX at that were a just should in a of you other light more

Ben Gong

what's in before was consumable the drive the II this a similar as the pandemic. in Sequel as utilization returned mentioned, the Mike to growth utilization. to is level on June we're And inventory shelf an tend to They little is don't keep life The of issue. Steve keep that People Yes bit. on going Ben. much hand. a much And too isn't particular,

driven the the sequential QX. of is, about consumable II growth by in optimistic in that's in that. overall, still XXX% the drive It's we're should not So I Sequel growth terms lower. where But utilization, revenues actually Sequel in

Steven Mah

you you going into will about XXXX budgets. it's by to And lab their do Do there's of labs then a dollars question think lab spend question, final to deferral or XXXX budgets think a start a XX? December be

Mike Hunkapiller

And kind the vary place. over that’s of obviously all

been as were in that play. will they shutdown hopefully, committed and progress. work that they got is certainly in that itself purchasing available, people and out. as the money already means of were shutdown departments One think their opened, they've And as I of get long sort so that two factors orders have that sort were delayed that

places certain where priorities have are there think I shifted.

like rethink And have sites of even going I big increases they're so, NIH CDC. that want And people budgets more that the vary or getting purchase having for to to that the with do some consumables they big what next some wind to capital money. their up and mean equipment projects. year for places for proposals

finances, now. be that will impact because this postpone have overall where, or they institute their right research. really nervous to figure that and sequencing in of other spend little longer terms of that things, just out there may to of its in hard places a Some impact were then short-term term if people it's And are institution, versus

Steven Mah

makes that you Thank much. Okay, sense. so

Ben Gong

there. what And at their still balance are And to it's mean different are what it pluses ways, as is translates budget little in governments in unknown and different is, and the responding minuses rates. there I priorities

Mike Hunkapiller

Operator, we last one for I think time have question.

Operator

come with Our Cowen. next line of the going is question from Doug to Schenkel

open. line Your is

Doug Schenkel

my follow-ups. taking Thanks for

moving sure right I So but quick model to just thinking guidance, couple of providing we're to know a not we observations make the in for things keeping about just talk a from couple, forward. you're that mind want

a you quarter? placed And still view than though lot starting didn't got entering I think a instruments, better - as I quarter. if in II pressure, a you Sequel were quarter. you catch-up, like placements, we're the even bit the this you It instruments that So XX anything on sounds June where believe said under

it you fair $X.X assume isn't in And the on did in consumable isn't for there increase July, for year, material we Q-to-Q? lab Again, opening any a in a there trends reversal update third good sounds our a keeping the June into over mind on here June in million then like it what COVID-XX, the in guess revenue June? remarks prepared on rate is monthly quarter, as from that as consumable balance resurgence pacing. to Assuming assuming you of Based that about using should revenue saw full Thank the side, instrument exit your as models? you.

Ben Gong

Yes reverse Doug try it there. order take to in

we I consumables, just So consumables. sequential QX should growth previously, on mentioned see yes, from to QX

we June the for the there in openings half a almost total of represented And been As have quarter. mentioned, July, the few yes, of more since end June.

is comments the about one going is regard to determined there they're that growth. that's out dollars, capital So that a hopefully one's conservative going to see a revenues, later customers not certainly making capital. postponing some spend yet we're to more healthy. about when the them, time or to to mentioned call. headwinds have being before that. even either about With there. But The that translate instrument into, We hard still pipeline to We'll that's

think with still while call I going a for capital So we what's well very sales. play before to that to actually out happen has longer can

Operator

the to turn now back call I'll And remarks. closing you. Thank for over Mike Hunkapiller

Mike Hunkapiller

company. is have. Chief of Chief been, noted as that we the - as in last some forth so several CEO, at thunder my Financial she's unofficial This regard. that her absolutely been here, employee earlier week IT in Susan as I've actually manufacturing as Okay charge the ago, the is of the time time Officer other announced been I've said groups an and of personally, well, sort and blew somebody And during that has She Officer been since kind important but her retiring. the but Susan has only of not considered always company's and as company from Operating

stellar the may just forward that my done well with from year company perspective, her PacBio that XX take Financial at add Officer. for Chief to to whole as of his career, spend by to her big looking for serving he well. we're then working as spends, part permanent to tuned a want career And in announcement XX/XX we're while but the work role advantage the able as But to more her a she's comment on the official so the recruiting make being permanent he about to experience in make appointed Susan In being Interim want of. is throughout the his I meantime, stay gets will And a year a really meantime, played that such So she has thanks Carmel. in replacement. and a for the time be Board wish to it CFO

Ben Gong

I Great have add. thanks, don't Mike. else anything to

Mike Hunkapiller

we and to months So that, you in talking forward with thank three again joining look us for time.

Operator

this gentlemen, today's and conference. for does Ladies Thank conclude you participating.

may disconnect. now You

Pacific Biosciences of California (PACB) 4 Aug 202020 Q2 Earnings call transcript