PACB - Earnings call transcript Q3 2020 | Pacific Biosciences of California, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Pacific Biosciences of California Inc.

Third Quarter 2020 Earnings Conference Call. At this all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host Ms. Rard. Trevin ahead. go Please

Trevin Rard

be on financial issued Investors Good call. different and XXXX quarter, are welcome today with Chief that the Conference A Finance during today, on our keeping Securities Alexander. Biosciences call Susan the you to the bear furnished Chief available Exchange our of the website Third Gong, our which any www.sec.gov. well Similar outlining Commission we Earlier of time. Quarter or us, our discussing Call. With available if on alternatively last X-K are Treasurer. of Executive there as and is website issues today's we so me this locations, press afternoon, we'll or are pauses. Financial Kim, results, our please you, on section release number hosting to and Ben of Pacific copy are a at President at Officer; Thank technical and Christian Henry, Vice conference www.pacb.com, We Form from hope a Officer;

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

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

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

Christian Henry

I my thank Executive of I'm Officer, am today. weeks. some seven in joining and earnings progress, first as for we've afternoon, Biosciences Pacific us first and to the excited made share my for hosting be you, call Good pleased the Chief to

of share do effort our I all want begin, to have opportunity before But extraordinary to the I of the pandemic pandemic. is I an financial and COVID-XX as and early impressions our on review impacting business and my QX will highlights, prepared how some view grow during the of business. the provide remarks, employees For thank for we business, PacBio update give briefly their finally the our CEO,

reopened. the to quarter the our quarter QX and pandemic successfully with activities, second continue the million, XXXX the for development research we up overview pandemic. down of with I'll have able and from revenue significant disruption Most were maintain QX. from XX% Consumable who During start was had an shut production our quarter, to without $X the sequentially of customers, in financial. our due

levels to on million, or utilization pleased had $X.X from for they returned are even was than were quarter report before down higher that system sequentially revenue pandemic. or We the the to Sequel Instrument similar XX% installed to, systems where QX. II

were instrument I of significant As put bookings on seen sales we've in revenue have We sales hold be impacted our to instrument the purchases improving. these in due of mentioned call, and we in some seen been instrument course, budgets bookings, Many QX. pandemic. in opportunities, our earnings QX. have and This wins believe opportunities to capital system delayed head recently new continue delayed previous as instrument

healthy a have sales Additionally, we system pipeline.

of up conducted the the at held offering third which driving more the and opportunities June. on from we quarter sequentially end in the QX, proceeds associated be million, balance, financial QX. difficult is raised on strategic will in million and to an our pandemic, approximately August with ended details $XXX instrument core XX% quickly two allow were follow-on we revenue from cash how converted The from successfully challenges with it will the Overall, $XXX investing quarter our navigating the development. more the predict, investments, to in our the pleased due still in the met provide was we forecast, operations $XX execute will with these million call. Susan aggressively $XX.X and the recorded commercial up expansion We a However, was Total for to we to objectives, in of as us offering metrics from through product later million total internal pandemic. sales. the revenue while we

few impact provide business. regarding of to on Now, COVID-XX I'd and like our comments the updates a

was sequencing high pandemic. That the of in the of is these the earlier, the reopened large certain and as pandemic. animal flow been United customers the of of human sequencing delays samples United and Darwin the in Us The and II have as ramp-up all from such mentioned genome majority have it project Kingdom. projects, our utilization plant of base Tree hindered some persist sequencing project projects States the installed in the said, I As life by to our systems of Sequel prior vast as of

to loosening near term, related signs a many U.S. a diverted up customers However, for the and see believe to activities of instrument government third that next we we delayed those customers from spend typical are and the in year. we receive to the more response. should year. activities we new quarter, systems regard budgets of directly quarter COVID are orders looking customers this this some In prior have With sales capital ramp-up to that would government-related spending early projects capital funds these near-term seeing their to of end fiscal

as not our healthy sales bookings difficult those That increase when instrument and in expect to the to said pipeline did However, it due is see receive QX opportunities to I we and before, any the is fourth quarter. those predict actually pandemic, come. said, in we orders in of an will

to processing for will The increased reduction to scientists in of XX% by smart monitor launch Sequel accessible computational as represents have system, IIE eliminates optimized up the our macroeconomic the secondary an for and post to analysis data continue significantly announced of instrument processing new an We The IIE based on make need capital technology is impact the we exciting closely, This conditions by has before. the which time. the been will pandemic instrument on the a that system month, sequence created extended the spending. on Sequel data this instrument. evolution may next technology. delivers more and than sequencing system capacity Last HiFi ever has smart

the and market system is compute for Sequel priced Sequel system is be it costs to in is system storage the the to the up to file The these II, Additionally, data received reduce designed say and and help Sequel -- our the will a transfer to month. has orders. research. substantially data to IIE The IIE we with have is combination associated XX% system will achieve XX% II achieved accelerate enthusiastically X% that will and of X% than higher expect to Sequel customers' and this higher new reduction II the needs. already responded advancements shipment XX% available we than The Sequel is storage

to the II to customer's capabilities. be systems will our II new can access provide Sequel of our Sequel Additionally, Sequel easily IIE, field which all in upgraded the

With a the Children's clinical this applications. forefront incorporate genomes. we to nearly next data of sequencing, Sequel genetic now be sequencing intended HiFi who which they the Mercy toward database applying Mercy on years, seeing for PacBio City, into systems program collaborate of sick Kansas XX,XXX facilitate with and to goal the we search repository for health for opportunities data customers, HiFi growing genomic collect Their Last a month, Children's several are has to ultimately emerging Children's to and leader information popularity for a of are new a which over translational recently effort. their two treatments will kids with research Mercy in use is to collaboration is families launched creating for novel children. a called II announced and children answers conditions. Genomic the cancers sequencing pediatric XXX,XXX

facilitate help accelerate, on comprehensive generating patients We also for the of growing intended In epilepsy. assays reach announced by of first molecular development sequencing were more treatment of focusing epilepsy. genome in perform of This Armed Sequel the diagnoses PacBio to collaboration genetic Invitae's collaboration, performed II options and recently QX. using summarize, encouraged Invitae, research data, targets PacBio cohort. the investigation to testing targets. able basis specific a use for this internal with pediatric genetic whole advanced improved sequencing third revenue systems. our multiple our on relevant clinically towards the to investigate variant of HiFi work to Invitae sequentially diagnostic will on over is accurate performance based the to large obtain epilepsy Sequencing profiles development quarter. I'm To with We in plans be a targets Invitae will phase

like a extremely the collaborations with SMRT who QX. our and details QX that results for initiated will Susan HiFi also research will financial over important support provide applications. that With turn We that reads Susan? on to outlook for sequencing be I'd to more important our call our few clinical belief

Susan Kim

excited everyone. Thank be comparison good I participating and our to Pacific you, an my sequentially am with on QX results overview XXXX financial at providing first of the afternoon in will be earnings CFO as of Board Christian and Biosciences. I call year-over-year.

of XX% will of year, in million decrease revenue. third QX QX Total was quarter addition, provide last with a this of of $XX.X but on XXXX. an million increase quarter our of fourth for XX% revenue Starting million, $XX.X In in $XX.X from year. the I commentary from outlook

additional XXXX. quarter QX revenue million The Sequel been reflects pandemic. is third the of of consumables the million that we to quarter. older third XX% sequential million Sequel consumable quarter shipments the in revenue sold me sold roughly for QX represented as XXXX for XX% and from approximately total II on Consumable benefits $X.X which were in revenue in XX% of purchased base for that detail able encouraging indicated $X.X increased shipments $X customers It Let consumable the our installed our of to from utilization in have the of consumable systems. was systems. sequentially XXXX the take has provide returned some II of to growth and advantage the up growing with Sequel levels prior our the XX% come our of

to low down in XX. systems QX a insurance hit quarter, third the Insurance capital for for We of spend. in installed due revenue sequentially million systems point to recognized Sequel continues largely had year XXXX. down Sequel proportion bookings to II recognized resulted the II in of with revenue instrument expand. COVID-XX quarter Instrument year. We uncertainty in which from the expect XX in QX recognized during QX the base the revenue environment growing headwinds II II last XXXX $X.X and other associated for installed million our by to from $X.X as QX on $X.X in QX $X.X was million September of $XX.X last funding was reflected Intra to from XX% customer Sequel as and installed million QX million, the of grow $X.X the down pandemic from quarter revenue last past consumable sales sales this Sequel compared QX year. XXX million to basis and and continue Service in

and over service Our been the remained Sequel past as year systems. by offset relatively on has in flat II in systems service declines service Sequel II on revenue has increased RS

instrument QX, COVID-XX. a QX timing to targeting has strong. instrument are of growth be entered QX, unpredictable stronger installations in utilization ongoing the of with can forward to also revenue the compared impact over due We sequential Looking we with however QX. pipeline total been System

sales. closely lockdowns may wave like U.K. and monitoring consumable are to of the We in impact how see this the countries our of impact France infections latest

improved year generated a gross in million, we representing average $X.X gross QX XXXX. of to primarily compared margin. million of primarily compared of gross in Year-over-year to margin The profit to of the The Sequel and improvement on transition to profit inventory of our instruments. QX year of in quarter-to-quarter in In which of QX of XX%. gross with profit gross price result XX.X%. was the gross last under-absorbed gross profit Sequel was $X.X of lower the gross million gross XXXX, XXXX. to represented taken last profit XX.X% in Compared decrease XXXX, a with margin $X.X a due margin a Moving representing a gross of as offset quarter of a production the attributed overhead from reserves II, product factory selling partially from of fluctuation QX margin in by

our continues anticipate QX, to as factory forward Looking utilization improve margin improve. will to gross we

in margin to be gross QX in XX. the low expect percent We

Moving of million down with XXXX of XXXX. X% QX compared $XX.X of development increased XX% third up in primarily The $XX.X XXXX. compared of sequential result in of increase expense to primarily totaled operating million related compared product expenses. million was in quarter result which were decrease to XXXX the QX incurred with R&D year QX merger-related was with Operating of The to QX in $XX a expenses a and expenses compared new costs. last

direct goal across capability. to expand force our and development in markets mid We long-term. believe continue new the serve as accelerate promise efforts our better to to Therefore, the our HiFi of read well our product as our is sales

loss As $X.XX. a QX XXXX. to of grow operating loss in Non-cash was Net our fourth $XX.X stock-based million result, translated share compensation QX sequentially the for quarter. included of XXXX in million expenses operating we net to from expenses million, in which $X.X of XXXX in a expect $X.X QX was per up

at due of exercises, reflecting $XX.X increased of representing QX turns. quarter at the the Turning of receivable of function a of of $XXX Inventory to XXXX. from million employee our million by compared quarter proceeds second million million third $XX.X cash Accounts X.X DSO follow-on $XXX.X of We inventory. $XX the a and August a million a turns our in $XX million days. end investments is or in ended increase consumption to approximately QX of at to with stock DSO $XX.X end with cash unrestricted million and balance in of sheet. of in balance million instrument primarily consumables associated XXXX cash attributed improvement primarily $XX.X The to change XXXX primarily higher the QX end partially $XX in operations. inventory used timing inventory XXXX a nearly from The balances to the in decreased was offset QX with offering million our XX XX billings. that The the $XX.X approximately plus million netted option the in for X.X reflecting days of turn

the reverse termination $XX as fee this back a in has termination with Illumina of on gain been result since balance a deferred January, sheet. of year, recorded we as earlier received a which Finally million our merger

and contingency R&D call As statement. fee of of be minimal tax October QX this losses accumulated the operating X, be that turn as with other We net I tax gain and associated reverse back will income With impact will lapse the due existence Christian. the to income the therefore our in of will recognized amount the XXXX this our credit. believe to termination

Christian Henry

Thank you, Susan.

execution over company first several know, objectives one of of and joining define strategies the As core drive the next is growth that years. to you our upon the may my will many

several to the planning and XXXX. look at well for three is share underway that company strategic you Although, more I've like only forward however, detail weeks with Today core us I'd in drive process will sharing months. that objectives in I coming to been the

Our be focused first reach. on for objective core XXXX commercial expanding our will

systems the leader IIe the and products PacBio ever as long make than highly II but or only recognized the sequencing Sequel to sequencing, before. range reads, accuracy These lot of the leader customers being in desirable launch in our HiFi as is companies. advances among now all the also completeness With emergence of and reads and accurate more not

the As size customers. sales meet of over year. of take opportunities force approximately to to to global plan new team we personnel. a of next increase a Today commercial advantage we new result, our of modest the need the dramatically and these force expand needs XX sales have to that sales We

In already fact, ever will sales for potential help new than reach more grow. before, recruiting these believe new positions is us We more positions. us customers enable than underway will to dozen which a

and would to once a few in and time speed I take hiring get quarters start a and way. to up new at a salesperson meaningful takes it course that hired training would Of contributing expect has least

force, the our expand As execute to we expand sales we need commercial our organization. will ability also to within

As result, sales we expect PacBio. ensure great and that that with a resources operations quickly and I has to ensure invest convert marketing, that can customer in service will we a experience opportunities each

focused Our driving product second pipeline. is core on our objective development

will Our significantly improve has of our SMRT as the market. system. genome be underway programs sequencing important This in sequencing the whole throughput engage to technology we headroom large-scale have we and critically several increase to

sample In increasing materials. less so will addition our preparation protocols we processes to fully also automated have starting throughput, require improving that customers upfront that be the robust,

for has other reads objective deeper today. into rare clinic, ones our collaborations genetic evidence as our emerging partnerships execute we continue solved have core technologies. on and such the clinical sequencing and using that HiFi with Mercy, moving is our available third where believe on rate technology increase Children's researchers City and Using market partnership clinicians we Asuragen. were SMRT that unique to is over their Kansas technology technologies there To focused the Our diagnostic our and not solve diseases we can ongoing quarter, with technology will been the this announced leverage other Invitae in that past advantages high-quality

recent the our technology read sequencing SMRT to will near-term With long in and technology to of the our products our advance come, understanding genomics. our advancements customers enable fundamentally

impact biomedical will microbiology, human of disease broad research, ultimately improve areas to We health. agriculture, this and human have expect significant infectious across

in my prepared to the we grow the increase business respect shutdowns with particularly are that purchases. These I recent levels. and reflect States. is on I COVID QX conclude want environment new Before rapid over to can sequentially capital United volatile Europe highly in the that reminders cases the we remarks believe in our revenue Nonetheless,

the as amount such However, of of in to may related impacted growth what by happening closures be emergence is currently pandemic the the Europe.

The has created service look of be technology forward of opportunity markets it closures the great the impact our for for new challenges technology and PacBio fact, integrity by the in with well. serve. time advancement company we conclude for for me great have XXXX the exciting build an due and is to customers revenues animal our high several the foundation has the PacBio a to we held associated will high launch questions. the business. in our a will among truly with this technology excellent sequencing PacBio up and on call This prepared to company. for Even to I commercial to the half remarks, In gold as an presence in is are pushing customer accelerating sequencing. the and first joining now open company reference is pandemic regard created We the plant go-to great of us clearly grow. establishing and the products building may and team products the given is the has and that believe strong standard remarkable genomes and increasing a a that for pandemic

Operator

Instructions] We have [Operator Schenkel from Doug first you. question Thank your Cowen. from

Your line is open.

Doug Schenkel

Thank you questions. the afternoon, good team. Hey, for taking

ability on there just versus place delay and a of of unpack same There's applications. just been to Could terms And on question on I first, whether the where durable more commentary geography any in or the So accept areas, guess instruments been pipeline have orders to not some systems. notable by been you differences progression? has little your kind others?

Christian Henry

across saw Doug, seeing you. delayed, The talk do QX. in seeing remarks, Yeah, somewhat But And prepared out even you strongly what instrument if what significant of more if us through, some we the term. pretty what pipeline of an be will closures near we're that EMEA, see to really we thinking AMR If is are how in in And meaning the it's we are probably, in than that the changes, the that impacted future of it's for geographically said back is just us really good is like challenges than as kind answers we're across and much improving or EMEA France we timing mostly right in when Americas. the look about getting we'll work. kind concerned have impact AMR, in -- to and may order here, funding now, that, focused question. to we example board. people see QX of AMR ,what very in be due your And the to

think lot of around of traction we're good with part getting now lot and a there's we've and I second on outlined. The sequencing a a HiFi collaborations whole genome lot reads of applications, excitement as right

actually I'm excited pretty about so And that.

Doug Schenkel

maybe been super would placements off building helpful Christian. And it of pandemic. the higher, of that, for maybe have maybe well, the Okay. been -- hadn't That's kind if

some there on numbers. definitely was consumable progress encouraging where I II Sequel was the think utilization

little there high levels pandemic got normalizing at as early was maybe You you'd this I, about talked first we pull-through ask in kind on bit to pre And dynamic stocking wondering, about believe But if I question annualized. again. back the comment of look it's levels. to if just then a to quarter? I'm as any utilization second, Sequel $XXX,XXX at least

can quarters get the point eight I there was you Sequel coming II it over this or with think launch. you quarters? into Do at beyond think

Christian Henry

Yeah.

pull-through, Ben, more let, question -- wasn't I the he's the But stocking, still. of quarter. during got that there a address than think do the history the per on I'll stocking lot because se on I

one it and were think It's we're Link people we're majority a -- tracking of customers thing was not to have excellent but of running are our that SMRT an significant have PacBio all, we -- -- customers quarter. quite runs. at our what that consistently and I the we is work we getting able back to way software our actually able through And of many all were to we running. systems were people their pretty the see encouraged

And so we stocking ,particularly Ben don't the maybe respect pull-through could a that. think it in to you was address With phenomenon quarter. third

Ben Gong

Yeah, Yeah, hard that kind of right is I'd has IIs, be to predict be let's were before for XXX,XXX let's to gotten the back happy you're to. we it's Sequel to pandemic going which of Doug, say the Kind in where the future. pull-through right revenue hit. going say where up

having to and between ramping Darwin We larger or But us of high or project, are should projects driving toward I Life same off, project of the hopefully, increasing that a the going like say the time at contest some up system be Tree volume by that's new year. all of placements. kicking next these

that's to into we say I'd to predict it's bit us So, We're a where pandemic just we're that recovered gotten happy had of it's going to back time out. this for hit. before early the -- settle where kind

Doug Schenkel

that's Okay. Yes, helpful. I think

Sorry Christian.

Christian Henry

believe But those placements would as be be And that will it objective can't think consumables. I predict that's hoping market, accelerated see will be even it at our as drive or the No to how we get and is from empower that, I'd numbers. customers ramp interesting said, fine. to grow Ben we to in would the we fast organization drive pull-through be that throughput we commercial last can levels will just point we interested our now. on Yes. that maintain that to those obviously, the least -- the that, to say on

Doug Schenkel

a of between agreements actually sense That ways I'm your in view And just PacBio agreements really to or you in and read role prepared these quarter. couple solutions link last last as asked on a I side, these makes to noted variation remarks, PacBio a for types new October. being short to complementary structural specifically largely as of announcements Invitae positive as disorders? you Is because, get serve trying Okay. for being there had to largely I was the over the or in as solutions. competitive these of And one agreements, or tool whether you clinical the genetic then guys. leading maybe really PacBio guess in the understand read if even viewed replacing serve indicators not just and increasingly short as elucidate

Christian Henry

Yes, I great think you. that's a question Thank Doug.

think right given technology, that, a approaches. than the higher complementary costs our now read are clearly I are we short that fact

our throughput, they and customers create we partnerships and figure increase are the are can there However, and that increase our do get benefit read long more to sequencing. technology as looking out, that, capability more more workflow from can they and a bio Pac

some machines side our to all on over to and down bring And have more we customers cost a that driving up, years. could to are practice. at so be a our the on throughput And but we work there throughput could lot do few do being into excited the but complementary to of I interested prospect where in think and this high have next cost about technology, technology of it. I'm today, look the throughput It's we that really cases a of are

Doug Schenkel

again. Okay. Thanks,

Operator

Stanley. We have Morgan from question Savant from next Tejas your

open. is line Your

Tejas Savant

Hey guys, good evening.

user read you over also existing here that of about? here. And should time customer spoken do more Is Christian, the announcement? expect And base traction to user will your of base? of the just compute upgrade data can saves early perform talk customers you've given about sequencing, storage quick cost saves ones specifically, sort time, we XE what XXX% essentially it the the IIE? feedback couple a see to Sequel Just and long expect to you

Christian Henry

you thank Tejas, Yes. for the questions.

on customers really I secondary do think, simplifies our advancement. the that's great most able just lab has of of is XE you're thank it, a a now side. going I it's a and they the see This is actually in already aspect them feedback to a the instrument that What I this accessible significant lab, been instrument on tire that the an upgrade the infrastructure have a that storage save -- is, budget. you. not workable necessarily can core but into then pretty may the the is, May what instrument lab, fact second-tier an maybe you significant they core compute have you place. if analysis poor can think Being first can customer solution upgrade, think is And the for buy the money top still to take of to early launch but buy life. not $XXX,XXX compute -- create on because because, another exciting

just so gives to where Now, into places been customers get piece probably overall people I money. And little too for and new we've the be have think just a there'll probably reasonable a upgrade? customers predominantly and bit eliminated before penetrate many because that of value just to do On more are would that we the believe haven't cost XE, think how we're able buying other an it's great machines compute a to to going it I percentage. us I new actually is going opportunity much.

Tejas Savant

sort the Mercy following initially you given discounting of PacBio like Invitae program. it in on do the for full these pediatric clinical then And as for time? I it. mean, down these samples kind Christian, is Children's would side, And clinical otherwise PacBio? do Or it of are enable economics that what research price be? earlier like over question Doug's your are sample sort of the just expect ramp the look to samples How road? work Got efforts like to and up you a adoption on

Christian Henry

market. general, throughout some in then maybe the terms these is Well, in more get consistent new be our methodologies with where ability in we really the use things trying We are may standardize workflow of customers particularly try certain we pricing or that to discounting for customers. could situations, think that the we to I of aggressive with the benefits kind collaboration

those consistent it's short-term, run, the but the so -- in that how -- we In much heavily of just and the between think throughput the it long that that the in we what do. we've I past fact share in us for kind we not But we kind with would of benefit discounted we're is because is products will think kind our given the dependent I of where not we what R&D our will discounted, improve, sharing company. pipeline, business work margins gross think on needs what customer. that overall be it I the -- priced think have the and for are will seen do. to have the we I or say, going I gains conditions pricing associated opportunity be will able up, a so of And create better market economics customers' the the our in with and benefit on share be to drive it are story And the as of us this

Tejas Savant

doing in don't And the some a early the have of sort with the a genome force have force spoke the And conversations regarding positions. core sales perhaps the had DNA you more to dozen large the stays Christian. intact? company of core in push question two-parter U.S. aggressive internally marquee next where centers sales customer-centric steady state little essentially it. do what customers, the mean, fuzzy will and And on labs you of the road? ensure innovation culture. being that they your know How secondly, around as them a you sort could a if so? become sort about bit of Got of marquee but XX R&D just months to customers then a you and are then expansion large on you open you I or here, of envision your here I culture

Christian Henry

question. That's such Yeah. a great

see me these. if all I of can unpack Let

it we the side want -- do on that does I of sure aggressively way but that make it from build, a think pandemic, XX phases, So the be headwind in the run to I P&L responsible what can we still with you're to have of some unpack to such at of ready is to we're But -- now is respect sales as point. here. XXX new ourselves we should also to we're you're expansion, -- force dramatically be the while see see to going on expense -- this the I products side prepare equation, well, I but launch particularly at go going we going and increase ready think in probably and the you sales not the do but we in place us force the train. tell over to we long and

quickly, trained I the there the think want we them we're also there's that's that playing. act is, too get highest the sure we quality make appropriately. we grow to can. So to but hire want balance I that people We balancing

that, some commercial And have to we infrastructure our around build organization. in operations particularly so

And very organization really exist today. that much doesn't yet so

I not it the force, our accelerate XXXX, been reconnect build best then getting place so our I of that With build into I on -- this role. out, But could probably at -- need one you faster. should customers get if with to some we been think, more, does we need be we we -- the hopefully will that level. double hiring hopefully to the think sales to conversations how some actually that depend HiFi of those major more what launch customers. to have And those really in world we the to coming world a relationships. sequencing sites and great with with think get significant company to in have the some IIe HiFi around down and the sequencing. now opportunities rekindle changed really has the I in for share think are and capability we mean to particularly up get game I able we customer opportunity road, programs, the market of customers of do and the And in once that's been we I've plays have I actually able engaged of of parts pandemic their that in more a around to some back but lot -- respect build really with thinking

culture. company execute so on the customer-centric we second here lot We our level disciplined has of about to And but improve to become the finally, right. it's you're had a We important to a of the and great been execution. And to respect more with there. team. want We the tuned then -- is a of how that, culture products, of create to none. want really want fantastic And I've the our stay unbelievable. is one but prioritize conversations innovation It's fact capability most that, aspects and talent

way getting is, organization do strategic things that and mission planning our we're the we're reevaluating that as one process. the so, core company. are And entire the values that in you doing And like our we're process, what the engaged drive

see that, be So, but the of to also I to to important, customer-centric drive cutting is lose get let's and is getting everyone my being so inclusive think, goal to sight edge. why not

And so, in you'll continue as invest well. see us to R&D

So they don't we opportunities. do because have -- those

a So whole culture. to we that hope helpful. that’s to maintain bunch order it's have of things do that in I

Tejas Savant

call that No, was Appreciate the time great. to Yeah. evening welcome Susan. and this

Susan Kim

Tejas. Thank you,

Operator

JPMorgan. Peterson question next have your from from We Tycho

line open. is Your

Tycho Peterson

a you're read. back. Hey. Good that. I narrowing the didn't the short I lot is committed cost evening. with have of curve Christian, about And know to things to hear you good one

But could platinum kind objectives. that You set about to are that of path maybe genome? you've do product at kind core of be you're just a there point? how to And talked things identified one level of the grade it is development might you this the three thinking accelerate helpful to about $X,XXX

Christian Henry

cost We we from we when develop throughput -- in The we in Tycho, the on. you're term have drive project, on be the opportunity down have all how itself, up that, different short also, think that a to We at prices couple new of where hear those scale. we And we And No, sequencing to accelerating are you. have Sequel getting the going sorry on you're drives do population lots on that be even great competitive were This to to things of still down. of we're the II. cost to Yes. yes, this. platforms, a aspect too, of central focused that about so looking systems, right? fundamentally drive we Tycho. through I'm there's platform need is our R&D, which the to the it's chemistry actually as

increased And so, hard the cost lowers see really then on sequencing. which us improvements, you'll of chemistry throughput, making working which

process, throughput we going before. of front because the more can high access on systems when situation, system input see the ever so do requirements more -- also We'll to end, work is than at in lower so look samples as really prep us so You'll that deal we we start the that throughput, to hard your not higher DNA, our on fully we a a ZMWs progress industry sample you're we semiconductor also the front you're some course, that how leveraging not automate lose number is continually of art of well. of are and that the of beautiful opportunity we now. course we're on on the see advancements you'll of technology to the in the that those state on have advance on are the working think XXXX. kind I a due the chip. those as And And automated. that in And And see fronts of things aspects you'll of one become

the genome population being at pushing with of of balls time the that achievable competitive on scale. read the goal So with very different large lot sequencing a believe here short we is we're whole same at

Tycho Peterson

up the And on on of then clinical discussion earlier. opportunities following some the

little opportunities this think are and always investors struggled read I obviously have something a transplant with been right you've for diagnostics. what long entrenched the is bit in

clinical weeks, particularly from from your on, Are guys? with only and are epilepsy other you've mentioned side for identified been a few underappreciated early there there but you've you you You the perspective that Invitae [Indiscernible]. opportunities think

Christian Henry

down the really understand can we now. Well I on more think read. I long those cost as will people think sweet spot opportunities that probably right -- the are will in And emerge even drive applications

probably can you only setting. reasonable. think the where applications when And mind my small partners human as of cell-free cell liquid de some is use in I I make because that have a novo the a pieces But think that have we are sequence there. very every a free the vision is clinical be do PacBio And sequence you sense to at applications day and think I using cost definitely biopsy-type that accessible DNA, can technology imagine effectively our in doesn't well. you're clinical do aren't looking high-quality of vision that it -- probably

there. lot how the go opportunity on see we've out a a of But road gate, we there. down lot think plate of and the I got we'll So our

Tycho Peterson

model think years Okay. then Children's off. pretty opportunity. couple next now you or volume I on one genomes years? call be ramps Can the over And quick before at seven a the us that Mercy meaningful of how But help about over it ones XXX,XXX on hopefully two genome hop the X,XXX could

Christian Henry

I think I believe all of XXX,XXX what know don't that not gate. out sequences the -- sure that's you I'm PacBio using -- Yes, they're at least on

wouldn't don't that know and the So way know I number you lower they're don't that follow-up but be they're know with them honest. We're exact might they're I than be thinking -- that on then fact could right We number, that. that. you Tycho -- doing be now. a if probably much with you And it. in in working fair now should they're model to the to

Ben Gong

would have start. mentioned II It two Sequel is which a is add, X-year program. Yes, Tycho, they is pretty now you a good just right as systems I

increase had our do actually idea those the And help the here so goal is of of here and period a the I run I over do so actually capability through is time. them those all don't running to Even of to the you if course those that think over to can throughput have system continue more think And of the more samples. genomes years. we that they to the

Tycho Peterson

is Sequel know of some mentioned RS And Okay. I and of dynamic there. to enough convert IIe, IIs Sequel kind upgrading field. some kind to of launch the think older on the some that upgraded out the of of you out those lastly Do this you still then that the the have never are platforms just you in II?

Christian Henry

forward the IIe sure we I mean are too those there move compelling in think out opportunity to there. to customers good front to And because and our of for make us the -- sure is if instruments have this significant challenge pretty a force that field the into reality extent, Sequel make platform. can the IIe opportunity. absolute Sequel RS is we it's upgrade get I I'll everyone a they

Tycho Peterson

you. Thank Okay.

Christian Henry

Thanks.

Operator

your Kyle next from Mikson Fitzgerald. Cantor from question have We

line is Your open.

Kyle Mikson

Hi, Thanks question, for guys. the Christian, Susan. welcome,

new more the But could So if color revenue I kind orders a of wanted the be maybe what than these of heard? was kind to recently. year the bookings recaptured so next wondering your the there little were of concrete had kind just of you opportunities bit on government or the any just you appreciate have customers being opportunity and over gauge that thoughts pressured maybe loss these expectation might

Christian Henry

news would now that get expect converted are of significant as over team execution is were where I And this question. budgets those have additional allocated. with great belief because are opportunities lost a good to of us But to that to some either sales into processes really I they year. of them is new originally -- project would management be delays allocated sales the instead -- expeditiously them those be vast The as talking and focus last with the possible. or that's sales in pursuing time and Yes, those we course feeling. a may my on majority is maybe the that customers aggressively And opportunities improved the commercial yes, the spending based the COVID to call opportunities some sales force

I sales in have XXXX. we going opportunities actual sales are likely into those think potential to that to convert

Kyle Mikson

the for question. Thanks

the towards go. sales I pressure lockdowns maybe if COVID or expansion to of just U.S. any of that if all? does are these wondering, -- the systems outside relates going force the cases increases domestically is kind countries unlike to really expansion it recent was guess So in at potentially international But really internationally of and all sales more as

Christian Henry

lockdowns Yes. have There's we recruiting interview, can on started that starting hire. I for fast We've up an process. impact look you the recruit opened question how recruiting. We're no acquisitions. --

on able would Zoom be it to good and -- is some interview. have be would The impact. news doesn't is is that I everyone So silly to that everyone say

think think -- won't in but as would I the it's impact. I will And some think it bad -- base have so old as I it that been not it have

However, -- this moving. And had get hiring. of leverage we the be think we I I'm into in lot of lot We've the course hopeful can interest a some a of been that year, over to there's with able should transition. PacBio that

So that would be good.

Kyle Mikson

you. Thank it. Got

XXXX? I are competitor program. Sequel instrument. offering it's customers up any rollout. think just you've consumable you if time was from I for comment you a there's of also Sequel feedback And II lot on earlier could of the uncertainty their rather the to II wondering revenue it's then but know expecting a cannibalization in I early received substantial North trade what Turning credit in it's looking your new because this curious first PacBio America just the understand, to a than switch instrument I from And this on I'm program.

to And be so like in similar rolling promotions are you other in regions? or out programs going

Christian Henry

Yes.

don't the So, significant basically systems. revenue of because see I cannibalization think consumable to consumables going on both we're work

it the interest how and not saw we --the PacBio see goes. on that with. to been up Sequel early team that been -- way to ideas II there's we'll compute see And improved II from going And as it's to new that's promos, sort so is the real I. these With Sequel compute, the of you're is respect the the cannibalization are new so in coming some and drive

early whether start too like Americas really and sales long tell why other some cycles. the as and to kind wins sales regions it One try have of having how of reason to -- as to so and opposed some we'd cycles it's there get I you think in longer work. to out well going it's much to quick

because can for goes. regions focusing is really particular assured activities no we globally down me of there's of going or Pacific that each how the that, be Americas. us And -- a Asia operate are will date one of has doing the footprint, you differences footprint, the Europe maybe between very capability each But road. as we help the be and on there's see had company to be that grow small they that doing that's to commercial geography and nuances that our same to we so really something important region. that's in sales way we'll question that sales thing really drive So to in promotions haven't will and had the And those

Kyle Mikson

its guys, sound going you extremely questions That’s leave Okay. and I'm I'll their I and to complete didn’t to helpful. soon. talk good but

Christian Henry

Thank you.

Operator

We have your Mah from next question from Steven Piper Sandler.

open. is line Your

Steven Mah

you All Christian. again, question. right. get and talk Thanks to you the for great to the Susan, call on reach to

Christian Henry

Yeah.

Susan Kim

Steve. Actually,

Steven Mah

own Just a be of mostly going applications. But strictly programs? there's to partnerships focus follow-up development of on because where your there clinical will of we've forward? development own kind Is down your costs ground. and you be long go it clinical internal more lot read as to questions a going clinical covered Or

Christian Henry

Yes.

develop sense for whether us would make to is think That and said to the partnerships. market. in that core have should be focus there on and more the I I may think us strategy today instruments to opportunities have that be internally through we how we thinking FDA-cleared really help do

panels And strategies thing makes not be genome the there because I more the may that strategic remarks, we're As are my make moving would I clinic. of as whole kind to we as most or just may it's our we'll trying the this we're that may to through I say sense. going puck address would moving that strategy what planning sequencing definitely One opposed building common been. stay work working where unpack believe that a be is beginning where now. And make tuned is the opportunities that But in might there. make sure the to center that issue. sense prepared really we said want of may to world I And still in I on is right community detail front like sense. there -- is that panels on said to the process of at to in a and plan

Steven Mah

then more quick And Okay. Great. before. one one

regulatory FDA-cleared any have instruments the barrier you on on But path can about with the updates potential talked process forward. II genomic? China Sequel give a us and You

Christian Henry

through information I Yes. the talked really they're they've real a working And It's I that have the I'll system another and at a time. on update update But than at don't getting hard folks been, hopefully, other a for -- today significant process. have very to more I have the Gary you on don't today.

Steven Mah

questions. for Great. Thanks Okay. the taking

Christian Henry

Yes.

Operator

continue. There are time. this please no questions at further Presenters,

Christian Henry

quarterly like attending earnings we'd to forward Well speaking after with and thank look Okay. Thank next today's to we you. everyone call for everyone call. our

Operator

Ladies and today's concludes conference Thank this call. your you gentlemen, for participation.

You disconnect. may now

Pacific Biosciences of California (PACB) 2 Nov 202020 Q3 Earnings call transcript