PACB - Earnings call transcript Q4 2020 | Pacific Biosciences of California, Inc.

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Operator

Thank you for standing by, and welcome to the Pacific Biosciences of California Inc. Fourth Quarter 2020 Earnings 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. ahead. go Please

Trevin Rard

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

today's a begin, potential plans fundamental plans and make and to expansive growth disease cost on specific epigenetic, in including adoption research, applications; remind to technology projections; of expectations, growing widely of our clinical products events, efforts and COVID-XX grow and strategies, our due with partners, more future products expectations timing COVID-XX, to and regarding commercial develop plans and our research. the cancer throughput and and projections; our in to research our rare financial viral testing I'd the with sales to technology expectations our revenue expectations in to to research projects and increase plans may respect such sequencing impact development commercial lower need other statements, applications; to to relating including genetic with we Invitae; infectious connection plans advantage use COVID-XX including and to robust and development our the research you to expectations related on like collaboration expectations, and of as footprint, business as commercial relating of mutations; product applications, workflows; expand team transformative related accelerate our making teams; protocols for our commercial the laboratories; COVID-XX our that and tool business and portfolio, COVID-XX plans efforts; and our our and collaboration and of employees plans of we including with clinical be for more Before the forward-looking call emergence including sales impact customers connection pandemic partners, and and available in partners, use surveillance and and

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

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

Christian Henry

And you us thank good Thank you, afternoon, for Trevin. and joining today.

Finance Before we Ben begin, I'd like quarter. of Vice is President Gong, this retiring know everyone to that our

his Susan earnings As result, his the the all significant is behalf call. past would the On for this I to at employees and contributions him over of company last a thank to like PacBio, decade.

of opened in million the our initiatives. that acceleration making we of support market announced the is Before morning, company $XXX to this SoftBank the an growth investment

sequencing our read realize a call, on to they genome investment can clinical making report will for sequencing we're our We footprint fronts, technology and including this and become our our range on pleased that to believe a with of the to I business. whole expand position enable portfolio, partner scale. us ultimately ability the our On vision in and our described last will help us use progress are earnings I tool excited number a long broad accelerate research our and and expand the of that our global to key our to in -- a reach using help as of that product priorities SoftBank am us fundamental validates of execute We leadership expansion applications. both grow some commercial

including describe financials efforts, our remarks, will the walk management key briefly financial our my I addition key review through outlook For around expansion then thoughts some several business and provide for detailed prepared our XXXX. summarize highlights, will fourth highlights the then us for Susan of QX hires. the and and quarter

QX exceeded not our revenue an overview to million, revenue $XX.X COVID-XX QX our XXXX. of million, from impact the Instrument quarter. a for significant Total see compared financial was quarter of XXXX So $XX.X up starting negative with internal we XXXX. the from up results. during was the revenue XX% did sequentially target for QX, pandemic XX% and QX of We

well increase received an our by orders. Our newly launched which IIe customers, Sequel in was drove

in and IIe multi-system of base and year II Berry XXX systems II an like Sequel Wellcome Genomics. systems. during the quarter Consumable customers quarter II the the received Sequel platform QX in the base with QX, and We II Institute was the XX was per up we on than several Sequel installed Sequel XX% install fourth on utilization Additionally, exceeded approximately the sequentially with levels. and in install $XXX,XXX System system higher QX, QX. pull-through for orders pre-COVID new $XXX,XXX $XX IIe XXXX Sanger Annualized revenue million, compared from delivered XXXX. from ended and

this are to increase pull-through. see We pleased in

fourth benefited our Susan call. However, seasonal QX details the we is financial revenue orders in stocking year. some note consumable the will of the in provide typical on that more later as metrics quarter from

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

the QX, about the resurgence for were in States we potential and impact on quarter. cautious United Europe have that rates infection the sales into would our in Going the

of be QX was customers I enabled strength to quarter. were all about higher than said should systems Fortunately, these did of prior utilization on the average was existing operating prevent the just IIe to us challenges. And travel it systems the throughout before, installing in Sequel from our as Sequel pandemic. It that some quarter but orders us noted limitations overcome the during the II

systems revenue capital conservative impact some will our the continue ability install and that we to remain new believe we our with may in uncertainty cause that customers as could believe some outlook respect Looking spend. pandemic shutdowns to to forward

technologies the early testing in HiFi assay scientists was working are look making COVID impact, COVID-XX scale as operations to as to in forward strategies. exciting in robust ramp reinforced for support sequencing continue are CDC given over infectious different topic in easier expansive has amplicon first January distinct PacBio mutations world with purchased LabCorp on fewer to LabCorp need the and to beginning around Africa believe and PacBio last and researchers Africa strains genomes, this additional public variant and the of months high-throughput service PacBio which Virginia protocol widely HiFi to use surveillance South developed viral early elsewhere the announce LabCorp research to and has systems with balancing including week. laboratories, wish several collaboration over Already the a few Additionally communities. to COVID IIe their a LabCorp health available robust, We highly need. the strains to scale-up already the making we academic surveillance chemistry of II systems in COVID, HiFi who UK, New It's technology. of HiFi the last CDC COVID just different of more the accurate sequencing up States, globally, up at We're and sequencing COVID that the Governments South to see for South more offers an identify identify surveillance to using Carolina and pleased amplicon -- LabCorp efforts to stand high-throughput with and advantages and the United individual. moving contracted will their organizations this whole Notably COVID this the sequencing XXXX. ability public the the global the now track can their Sequel Sequel detect to long-read their that The be between the locally. other genome quickly programs phase commercial in PacBio's health was institutions infecting emergence year to dropouts, surveillance,

of as pandemic, sequencing a in and We to experience to of further Tree genome and CDC United plant as proud the of to projects, plan gears Shifting lesser such on extent, certain technology Life build Darwin to some the Us assay delays a this benefits ramp development of get the large bring animal now understand in against the the of project Kingdom. are the contributed using ahead in that sequencing and the the our this All of in to COVID. virus. United sequencing projects, and population States up to mutating We human have the scale fight the to project are result persist LabCorp rapidly bear to

X,XXX Darwin Life the new Sanger the to Wellcome Tree Institute started IIe prepare high-quality the next has two to samples samples, In seven of its facility past the be generate this going Sanger Wellcome genomes receiving where are quarter. years. systems those sequenced However, over Institute Sequel to anticipation reference of ordered

those quarter and the were systems installed the in be of of half we balance first last expect year. installed Some this to

reality. hundreds Invitae processes sequencing, be in to Moving production industry. expected The with a a working the is majority with those to to to develop thousands input opportunity at as announced samples system We of month. PacBio new is enable to year. sequencer agreement, setting a HiFi PacBio will a fund last on samples samples and we system the sequence medium-sized development discuss in will collaboration on to are vision to and make using new partnering to potential scaled preferential genome completion sequencer, Under Invitae workflow whole of Invitae consumables is of a why to we Invitae this thousands expected are Upon to clinical to we operating of pricing the the provide there throughput capable sequencing, a of per believe at that read genome defined new every testing of associated has the the up of Invitae facility. Currently, is Invitae our time. for production workflows. genetic Together, as PacBio which move bring of transform and highlights. ultra-high that to vision clinical hundreds cost whole Invitae new period the well scale. year available to significant routine that that other business like share fundamentally I'd

new have will as the the other sequencer PacBio addition, ability well. to to commercialize In customers

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platform new Over related workflows. the plan we first years, to sequencing and develop the few

expense. R&D rapidly will XX new people more which to our hire organization, dramatically We increase expect into our than R&D

While additional later describe an to as expenses, call. more accounted detail dollars be be the us for these for may not reimbursing those Invitae will expenses. Susan accounting reimbursement these collaboration this in the for offset will in

from do As revenue few the concerned, is collaboration stemming far expect for direct any next contribution as we revenue years. the not

technology. And before expect once very increase led sales to highlights and However, we significant to organizational share in available, to commercially power new by the see that some sequencing system Invitae. get customer the really like of HiFi I'd revenue demonstrate a potential to the is PacBio I updates,

diagnosis of the sequence at one a University January. Lo in Chinese PNAS First Dr. Institute the short method Hong congratulate the for to work DNA for we'd accurate genome and and in and Genomics of determination read the HiFi go, saving reducing of our on recent of highly organisms humans gives This at and new methylation to clinical and method HudsonAlpha CPG like impact development published demonstrates to across simultaneous lacking Dennis the We'd congratulate clinicians Advances more in in diagnostic colleagues in to now rare methylation of of and the and paper changes information Kong who help eventually also a help Journal markers. with leveraging changes variation PacBio research time new the odyssey. organizational are team precious important an diagnose in cancer team. Biology great like in to be areas HiFi still more the Human children will their investigators in to Their where has the which sequencing. disease known published researchers diagnostics after make capture epigenetic explore and potential power and Shifting answer and other disease Genetics read resources sequencing other disease to of are

Mark to and Mark our into Oene genomics strong R&D have board, as We deep in Officer. our new experience customer organization. a Operating of are voice on Van thrilled operations and brings Chief has

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population at to execute sequencing Commercial initiatives excited also organization forefront our as of the have and Chief been are has move Peter vision commercial board, Peter levels. to We scale will world ability the Fromen around his to on our and Officer. new

executives commercial critical areas we product will to commercial also Mark who addition In as and operations. have Peter, well hired recently in strategic lead marketing additional and four as

globally. for XX new making our I've than more the progress increase our quota-carrying great direct last sales We're this over over personnel well we've is to key puts our past indicated force our area the as toward on strategy doubling force. in on few which months, As call, the company sales hired us way sales

new revenue come expect quarters the to then I become of speed To sales very that come board by encouraged few in summarize, first over fourth our and our on consistent up am We after the reps part growth. to they quarter. performance engine the drives

internal revenue quarter met or consecutive we second exceeded the For our targets.

and more transformational made what turn our the future have expanding quarter. a Year to significant kick-started for progress promises I'll New over current on results be and have We Susan with drive the team first will outlook in to growth. collaboration Invitae that our QX provide to Susan? with financial details we our With the call who

Susan Kim

and growth impacted delivered you, team revenues a afternoon, Despite COVID-XX solid and Thank very in bookings headwinds by that QX good still being the PacBio included sequential Christian gross quarter margins. everyone.

customers. orders of base from systems X% fourth revenue XXXX. breakdown was during than December XX% and in revenue XXXX. as increase in The in of mentioned, of million follows: XX was in and revenue was increase $XX.X XX. of Christian a a quarter and from We to II QX $XX.X million decrease as million install internal from down IIe the stronger orders exceeding QX IIe As $XX.X $X.X of of of key the IIe launch recognized $XX.X the instrument an number million II resulted Sequel $XX.X million fourth Sequel from multi-instrument of recognized installed recognized growing QX XXX including Systems XX% fourth QX in an in XXXX, the Sequel Total our but QX expectations from of was million anticipated in quarter quarter which

in resulted The well consumable to was sold II XXXX, report sequential $X.X of as from across customer growing of represented continue the and up since consumables IIE IIe down, the for be customer Sequel that of we in base million we stocking XXXX. revenue Sequel consumables systems. on fourth Sequel similar Sequel systems end and systems. inventory. shipments and of our pandemic are as XXXX our the growth will five systems to install usage million, increase for total of approximately recently labs II in install base increased systems, the XX% we the cumulative and RS a II Sequel the of forward. the up COVID-XX install continued in IIE X% Since QX Sequel combined quarter the and I sequenced for in year crossed base patterns $X shut see of fourth IIe million utilization II usual in meaningful to on the were a the have and consumables consumable reflects start and are QX XX% roughly from of the revenue our being expected utilization that quarter such As sequentially our older have remaining our Sequel sold XX% same shipments our going $XX Consumable purchased petabases of of

We the from II million consumable systems revenue to million QX continue $X.X XXXX. other million of compared install in Sequel to $X.X to and systems continues grow as proportion XXXX, base to in Service in sales and $X.X QX expect the of these was QX expand.

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

profit reasons gross XXXX. gross and XX%, Moving of on margin in XXXX, margin of margin to of sequentially. million improved XX% In a of $X.X $XX.X million, generated we gross three key a to gross profit of gross a QX There are margin. why gross profit representing compared of representing gross a QX

improved on and gross QX; margin First, quarter gross million finally, product revenue QX factory utilization. XX% had partially higher; insurance in generated the were volume sales ASPs of over $XX.X offset a from in higher on lower XXXX and by we our as and manufacturing result sales. of declined in Year-over-year utilization, and ASPs instrument improved factory mix profit second, higher

net in of The loss Operating QX in from million expense $X.XX to diluted quarter was associated was net a new which noncash in QX we increase of previous back of in of of income Moving Net a to and included $XX.X and of $XXX,XXX, related increased was of expenses. XXXX share result per fourth million QX XXXX $X.X recorded, $XX last large expense of XX% and growth and totaled development operating QX QX loss the of net income rounds the $X.X per $X $XX.X was The was gain QX in termination quarter January fully a up per on year $XX.X million primarily and the basis in in a one-time compared an million XX% up of and commercial year million with million $XX.X in share the which compared in $X.X of XXXX loss compared up in was XXXX. expenses to on loss $X.XX, Noncash million the Illumina to of in a new in XXXX. stock-based recognized of XXXX, compared received increase last up share operating QX income and with we fee million net in and expense XXXX, XXXX. the expense executives QX product related from in reverse $XX.X higher net in expenses to of operating with XXXX. R&D of a compensation and several increase as expense. and in our from million to result team SG&A stock-based XXXX, compensation addition QX

inventory end to in million end million with quarter primarily reflecting XXXX, of The XX compared million $XX.X in QX end of million offset the of XX investments, Inventory We offering million, receivable installations November which turns, turns, ramp $XX a at increase QX. at XXXX, cash of the sheet. and of represented X.X was $XX XXXX, approximately QX plus that balance proceeds, in the in employee in to cash a stock of approximately the reflecting used million, of in QX third associated balance fourth function due netted QX our Accounts with approximately decreased with investments to unrestricted partially X.X a our proceeds inventory a DSO of million exercises, XXXX. follow-on option by quarter $XXX.X ended for $XX of operations. balances $XX.X representing $XX.X $XX.X customer to days. Turning in in million at with of the increased and a the cash DSO with days, million, compared compared $XXX.X

look somewhat impact XXXX, we As the into revenue of pandemic our uncertain. on still the growth is out

a on how QX said, start as with second investment like to levels. grow commercial short-term, the of be that expanded to QX revenue expect year, revenues significantly In However, to the will of in our year. the growing during I we the provide slightly the lower half would framework We that believe and infrastructure. realize see than we revenue benefit we

expect strength Lunar some with we we last have seasonal consumables pattern, While the this to consistent quarter, years. past the we the holiday. over foresee carry Year into we instrument in seen also over saw APAC, revenue several the is due quarter largely sales This sales New softening in to in

continues slightly slightly anticipate Although, we do our gross will factory improve utilization margin lower QX, improve. compared to in to anticipate QX, we as revenue

million due between new compensation $X.X stock-based up we employee in QX to to grants in increase $XX materially million operating equity $XX will from expenses. expense higher estimate, our accounted to for non-cash For million, QX,

key mid-to-high significant plan investments, We like and $XX intend to objectives. the in I a context to million. our we provide expenses grow moment we be additional XXXX. forecasting push make We are investments our with forward to total in take QX to business the operating in as our to to make would regarding

reach, the And to expanding we the quota-carrying targeting our than number expansion double of commercial the objective, ended XX by with significant are a representatives. organization. our of year first We that end includes Our commercial year. more sales

R&D year hire And targeting development research new the more in Our ended will people than organization. and in are second objective, with the development we multiple our pipeline simultaneously. XX to driving the of additional We people entail this development XXX year. products, product

off accelerated start Our our third market objective, clinical an is with genome in sequencing Invitae. with leadership whole to collaboration

working with thousands samples to and sequence year. of mentioned per Christian develop Invitae to system earlier, we workflow, designed to enable hundreds ultra-high an of As throughput Invitae are

million XXXX we this For alone, to $XX the project. are on $XX spend to targeting year million

periods, this Invitae likely While be of on will substantial funding line we or we it in statement, sell we the revenue our to expense delivered report period income our first in are recognize will contingencies Invitae financial or all performance this do the expect project, results. the be into accounting fund to that expect our these occurred. we treatment a sheet, Please as R&D when agreement has and how appear accordance our until released amount products our we from proper and in the developed quarter liability as be of obligations we finalize, balance received recorded The in expense XXXX which to statements, are lapse. other is not may Invitae analyzing we on in amortized likely for advised, a later still to or activities, with it

we is close thrilled the today on will opportunities significant financial as The investor. The foundation are us earlier to million welcome to for we scheduled Lastly, new note a as provide week. transaction SoftBank the convertible long-term next $XXX announced to ahead. growth capitalize

termination. a Illumina for close the $X year a growth will of in over capital expected of of now with investment of well our that the With the the financing over expense Christian? to due foundation will to repayment of As to on SoftBank we advances merger QX significant will call week the result a drive back In continuation I to summary, balance that be sheet expected nearly the result our and recognized $XX billion next by as cash P&L Christian. us million with have giving $XXX account million we term. the ended to turn is this long on in strong

Christian Henry

objectives you, To core reiterate remarks, Thank XXXX. I'd for like our prepared three our Susan. to wrap-up

commercial expand so dramatically customers our footprint to can plan around we that we the First, more serve globe.

throughput, plan focused to to moving focus development multi-product access we finally, portfolio our pipeline accelerate end-to-end a the the the other that clinical where in over January. believe as for technology This on we announced the specific remarks have that of the one have of these accomplishments high-quality and lowering so on opening through executing be long Secondly, And increasing thirdly, we partnerships a diagnostic execution My developing made with right our with product and smart workflows; such costs, Invitae their applications. sequencing we scale technologies. a strategies. number we're will developing customers toward on deeper read done into market unique advantages sequencer touched towards team

significant we believe HiFi forward a impact. against can global expect reads in positive to increase fight our the we make engagement Moving COVID as that

significant provides we a expanded drive XX% we elude to opportunity in our and and million You'll it with finally, investment towards open achieving And prepared about will the in up growth with I'm execution work reads see front us our with beyond. resources to believe strategies, us concludes by and that now although SoftBank's our of core and have That cases seek to other to of diagnoses some diseases closing, for objectives. associated who to us XXXX leadership strong and our we'd work collaborators solve expand a the global with technologies improved the today. our to HiFi XXXX In like of pandemic future. challenging network a that, financial have exist, leverage still finish team, I excited headwinds of pack in remarks rare and I inherited Q&A. $XXX believe

Operator

Schenkel comes Cowen. with question [Operator Doug Instructions] from Your first

now is line open. Your

Doug Schenkel

questions. Hey my for and good afternoon everyone thank taking you

a Biosciences your of strategic almost was and just been long all start from Ben you how chapter. I or from essentially luck asserted sequencing essentially Is reverse to being mind, playbook part of good attempting to that? And a Christian, be acquire inorganic? it you go With organic that thinking next help the both First question and is Illumina on kind thanks in going is It's short short organic be change and versus it both does in best want guess dominant PacBio read of being sequencing that company the it that achieve question with how to in could Pacific to that attempting in short long I for read. talk about I to the just the about read. the off company over this investment think about the years reason question. are inorganic? read long read to from high-level with way SoftBank,

Christian Henry

we markets as in different back then company that driving that want try obviously good read, for It also it all, a multiproduct more can with to where strategy to is reads adjacencies, end start And us and leadership portfolio, could uniquely do the encompass organic to and products capital respect and of lot we're workflows number our of question, we of today. I'm capital of how long to the in could up opportunities accessible about to first our a drive accelerated could are with. think this a I -- reads, there's short more some can business be position can as the inorganic now the more combination about solutions you reads, think well for that us advanced scale, think very if for biological I'm question Well, does accessible specific to what And of forward -- first I higher to end. question. products you are our large most with of and encompass level short think a to but you create we long There's and going short going technologies, With flexibility I the that and our that the one step of complementary the how have work interested gives address what to hear faster. it course from things When as at we encompass at front development about could think SoftBank thank look us. create inorganic the obviously a how of Doug, opportunities we we the it's company, least abilities the think a you there. market no read/long and read/short read, portfolio to us and in be

complete relationship so capability, to to the leadership and developing a just because opportunity we for with right lot team in us. us have have our we long capital And our need building think now we're I of this big SoftBank HiFi our sequencing think front of do with So read those give thrilled I think solutions customers. to

Doug Schenkel

ask just Thanks then if question Christian. a on helpful. I could another super development. That's for second And recent that maybe

You shared course the development some Invitae weeks. details several of on a with agreement over which last was additional exciting really the

also leads during happens well of bit to this Regarding you. about Thank that clarify I that to does over after. the that the and there actually be I what being this outlined, a are applications also instrument with does just larger more what And commercialized? limited this suited of period? comes little have decentralized the you instruments an Invitae essentially development you about that in when an mean that like not Invitae. industrialized central of would approach? suited maybe that where And that's just want agreement five mean more be talked unpack a PacBio five-year well for Is instrument able labs terms to scenario concept want the a those duration is Invitae, for clinical years there exclusive an in but expectation to would to

Christian Henry

a lot see I unpack to Yes. There's do. let how Doug, me but can there

is not time, any with on a embarking them develop First, long-term to the exclusive Invitae we're are period we rather of it's developing arrangement multiple our products. for but collaboration an -- -- with agreement

to of unique offshoots decentralized out. and So product technology so to capability said to potentially than substantially number in feature sequence different that is product scale sequencing leverage genome And Invitae situations of throughput do we of that will product release below this at you needs ultra-high market. five of for much the to the different market imagine, more believe that that years is sequencer or press first And develop closer will January. we that be that is production also course but broadly that the giving power preferential be can pricing, as free I at that the will will Invitae be that What the $XXXX. give I the prices we throughput will we whole or could a levels customers. product of meet in

want technology -- the Invitae. want start think each the be since imagine in way sequencing. applications. was does at reaches about customer is they a do in And way with you -- customer they applicable developing that one of been across this company broad types But portfolio I can the of joined the strategies talking core that is the to be that spectrum the product I will to it I've a and high-end

And there. so go we'll where that's from

products of first will will will but course. We Invitae, beyond product that impact over -- have time with this those be themselves

a hopefully So you Doug? bit little for that helps

Doug Schenkel

That's lot. Christian. Yes. sort Nicely a done of

thanks get I’ll queue. all in So that color. for back the

Christian Henry

Doug. you, Thank Great.

Operator

Tejas Savant from Your Morgan next from question comes Stanley.

Your line is open.

Tejas Savant

pull-through share for Christian, you color the bit here? about How projects, this consumable in all conversations participating Life. on Tree existing beyond? guys. popsy in think XXXX you're and including on little your the should more For of sort the in Sequel sort Hey, evening. early a of timing of the Thanks of Darwin we us can

Christian Henry

end you our II as likely that, they the therefore, the of running question. at and My Thank be platforms metrics. higher Sequel would Yes. is projects expectation these ramp, optimizing their pull-through for be

to And they'd And want in how it. maybe accelerate be thinking be so expanding I cases, their some if would that's they infrastructure. about

it for samples. while story to get And them than a doing sampling getting lot the just interestingly large them the more the that's and process sequencing. the reality to sequencer. ready slow is there's get then It's a Now customers these takes for get the these process. And a the ultimately projects on are and

would them to this starts ramping as operating open up be pull-through expect be of the But And we COVID to of sure. would been up. to -- our likely their to area. not metrics higher up, be scaling ends we in the back world friend expect so at our has them then accordingly, and

Tejas Savant

did you on XX push-outs come some And expect order the quarter momentum in extent, through mentioned here sort the To here. Got first to And quarter fourth you of side. it. continue then the instrument installs? in one quarter in what last it like the looks revenue instrument

that just in is is -- So of how that came up in order I'm sort that just versus and trying catch new XQ? more strength out, orders of to book the parse much

Christian Henry

Yes.

the there -- XQ. as order think in goal some we I strength the line couldn't definitely book that talked I about couldn't I across was in because was some And think were there there installations get travel. we

us are getting the accuracy that can surveillance think installed that of the instrument across can in be take with will that lot I the precision get COVID sense in demand excited But very where generally of or -- those done increasing have front, a customers and there's that IIe been powerful Sequel how show allows this reach board the basically FDA HiFi And don't and powerful have system to studies we our technology. that coupled on customers into the QX. hopefully, about So a is it with -- excitement the compute the coupled around to infrastructure.

-- the will us be theme think year. the Sequel I that in I pretty and over a QX So suspect we'll IIe throughout is launch of carrying helped some common into QX,

Tejas Savant

early perform me the sequencing starting actually given read enhancements? it. of to are adopters you by savings long IIe data Got the compute And one time more generated cost storage for the and final here see the on platform one

Christian Henry

to It's of too the a you see Usually, early settle it might kind to little a system takes tell. where launch new when quarter metrics to two really a out.

deeper here. the update we don't get on year as that And we bit so why try everyone to into a little

Tejas Savant

Got Thanks. enough. Fair it.

Christian Henry

you. Thank Yes.

Operator

Peterson next JPMorgan. from with Tycho Your comes question

Your is open. now line

Tycho Peterson

my understand as of It's well. with today this it's investments. $X,XXX questions SoftBank add genome. potentially years. early we the Christian, inorganic congrats Ben the days from can to I'll back I the looking $XXX line But whether to want platinum help I and great to accelerate grade you one go the working thanks. the to got been over infusion and Hey, time at organic is million

while. To you this marching some do developments? it for a You've of those down path what degree, help of been can kind think accelerate

Christian Henry

I think help, can aggressive clearly investing. will we it be because in

more I probably what which little think but of certainty time time does off, goes. than it improve helps the also a the by it shaves maybe bit it

product to trying sure to projects as stay but to the also product complex on out a And time. to these can get you out so to development make when imagine trying you and you get into line focused manage goal you're a right you're get market,

bring Tycho. more time us much do help if will the timeline likely it's line although prevent too to some, getting So, able be we any may in pushed is the from it what that that out sense makes

Tycho Peterson

to to the whole going are ready on you are to you front? genome Or in do just have It in as to Invitae, does, near clinic? no part do know here degree there's of what the that program. you want for on I then I payers yes. some said, think And term. then triggered milestones be And heavy that no could revenues lifting the make sure

Christian Henry

question good a That's Tycho. Yes.

about already. is them customer with respect on doing to project. Invitae with So a the revenue, the We've epilepsy talked obviously, we're collaboration

really side. it revenue But that have collaboration, with have going will we the joint true to partnership, from a to where steering they're -- we a respect So is committee.

meeting first our first is significant. joint steering our next fact In I believe committee week

So there's pathway. the planning down starting already and that we're development

Invitae that. And for be will so us reimbursing

but of of And Tycho. So we'll there see that your cash than question sooner see flows, revenue sorry, part Susan the rather we'll as And kind forgot I not I'm outlined. later. other

Tycho Peterson

genome are ready sequencing. whole or for payers Payers

Christian Henry

Yes.

the that becomes what's all there. Invitae be of will tests the I be the of to So price enough believe at what's with the value question and types And with low it I the out able -- question price that we genome the will other think a price? is about, genomes competitive

is going to payer going payers each to the partners that partnerships expertise payer more area. reason then be lot its in them. is here, a -- to So, which we we particularly United can actually continue we're the States, for through things. for increased of demonstrate, And have becomes put excited going being to why that's in we've to other some we're a diagnostic own to do That are will entity great sense. to going that And you another going because on of is likely with work to be the makes and the said, yield, decided these pay to be each exomes our to rely we're build and example, want -- it Invitae our things. team that expertise, if types number but has seeing collaborations And if truth of

Tycho Peterson

ends the short last Yes. front. And of much curious how on read you I'm sizing you're done one COVID then opportunity? read? just sequencing variance think being on the versus do surveillance up That's helpful. the viral how And long

Christian Henry

seeing but lot the good Well, -- right now, absolute put and a funding the of -- the One We're in for reads would I into an the information this that the get think is I area terms seeing sizing think really on our we versus on how fundamentally which read -- long is this we that will that I know billion is et that's though. coming at just cetera. of there's in thing sequencing is short extremely get answer basis through you don't think UK, say we We're long Germany market. And into can haven't appropriation quickly short I I have trying I saw over global through dependent Congress capability, better. in is with an get $X a only pricing it of us. to be -- point. competitive

really understand you get on to way. going the which allows you a example, much deeper information, For in all phasing what's

can proposition. price us it's up value can we're per fast of competitive. so the progress compelling us we XXX run that and -- already. absolutely the in protocol And a we've think to be it's I multiplex people. making samples And about how And get very of front up terms you there and right talked just it's answer to LabCorp lot will move to of so in we're up a The

Tycho Peterson

you. Thank Okay.

Operator

Your question Sandler. next Rachel with from Piper Vatnsdal comes

is line now open. Your

Rachel Vatnsdal

for This taking the tonight. Rachel Thanks Steve. Hi. questions on is for

we the announced Children's with be guys the you space, clinical and so expect should the will the guys then, of others. And on PacBio about near partnerships clinical to in pursuing And your you these own have term? in from clinical What a Mercy you influx, partnerships and So the partnership or number applications else we Asuragen can also, new in how see segment? of given think new with partnerships? your capital stick impressive cadence

Christian Henry

Yes.

I you think strategic questions. -- thank for the

expect would on have Mercy. I I Children's with we internal to example more launching them clinical think goals we're partnerships. aggressive look doing to And similar what for

disease focused clinic rare and a example, important so in our first to objective as real proving why is undiagnosed with to continue and our HiFi why For area continue PacBio genome that's useful. the in -- so

just put this -- its each bit it's as And put in so, the line. I a them -- several would deal takes year. I own would to to anticipate be goal place aperiodic across least trying get at And its own life that we of --

out. these of one things pursuing of market belief still on applications technology to build does creatively how can think to about the that have it become financial capital the big and allows this the others. and creating drive the we because more how great with is think get are partnerships, us much competencies clinical own, we core we're really With partnering our help respect into wherewithal I to the our they that

product to in clinical is be preference with situations our and be of we with known make that build that certain we for general our core over company really sense partnering our us capability. expertise with to and own or But that's all will possibly so, developing And that want to business these because providers clinical more the way partner as think the long-term. willing others

Rachel Vatnsdal

of you those to talk for start have that's think going what platform off the those capture to markets what like clinical new Thanks. to that, you sizes lower will for do first the And the guys to shifting me. so you read guys to And rare all that opportunities and as Great. to diseases space consider of beyond you so continue in need partnerships the really could you a the cost, clinical about And long example? do like markets? be

Christian Henry

Maybe a remote about Mark, Mark of sure. reads one? do on wants a talk is Sorry, some the Van long that Mark to can try line. where bit you penetrate. That's we're little to for think areas too. want we mouthful Oene the

it little So, it a makes trickier.

Mark Van Oene

to take one for Happy that on Yes. you.

the of see still entire a I'm and or to there's the So, to I of opportunity collaboration more up I require genome do the going segmenting important the and labs big think the deeper whole Invitae getting into extensions about we Sequel will thousands and big than sequencing workflows IIe us the just labs with nothing reiterate there's that But out for and until longer thousands IIe opportunity. testing on automation partner And that talked build that of core product clinical clinical X this And or delivering is a portfolio. sequencing. into for for penetrate and the in reporting opportunity workflow Christian do the labs Sequel haven't Tier just the ways now.

think into So that lab. us I our critical expanding getting commercial new for segment to of efforts is

HLA will or read differentiation penetration or also And benefit. of about for long of are pharmacogenomics number that think So that testing reads extensions transplants as for regions. lab already markets clinical just think No-Amp with sequencing. long I it's a applications of when There here,

for a there's in reads. clinical think transcriptomes. clinical just not big underpenetrated do also we're long it's I I so, market sequencing. genome way think And opportunity whole targeted

about to ISO-Seq spring And us people people we applications are because those been great technology. is to full-length exist cell know single in next type explore, using or have isoforms start to bulk either always at that applications to you is what opportunity And with for a I clinical the And and think especially enough isoforms. then, pull studies going the at the say look not if look so RNA emerge, just the don't yet what oncology. to

commercialize base, series for market. applications expect it we to are of scale get us our and to And to customer the new so, I to on take as going and be a emerge that

Rachel Vatnsdal

you. Thank Perfect.

Operator

question Fitzgerald. Cantor Kyle with a from have [Operator We Mikson Instructions]

now is open. line Your

Kyle Mikson

like back to some the but you of investment in want of of I'm what regarding a ways in the technology the questions. development, Ben. help think It's of And you investment thanks been congrats to work cash few guys, during asked SoftBank. taking just the can I the Thanks. with the for as great call, the Chris ton know you particular? buckets And then sales for prioritization force over thoughts how capital then And to that it's it perspective next relates past curious bunch congratulate kind Hi, acquisitions? you want end a are and inflow what on of about And from of, of know I us the I year past prioritizing allocate your of there's or your, uses near-term and product like you the the this just times those over -- the the so. the years but mentioned are also cash? maybe some

Christian Henry

fruit the question. of the thanks is strategies prioritization, And next for couple have to do is first commercial the our here on think there's of you to revenue first and get about low we And the are our to Sure. years. side. core hanging When where growth the go what over thing back opportunities we direct infrastructure scaling trying thing accomplished

very we don't talk which You yet of many on. very we powerful we just There are lot there, small call today, presence several a about a heard technology and of have capabilities. out where even laboratories different have Mark applications thousands

accelerate us -- continue the I helps opportunity. us so that our accelerate And to think see SoftBank you'll money from

in in although are significant Europe, example, growth budgeting we For headcount, we because a were underpenetrated there. really

build do example, for think surveillance advantage build board. fully to this out bigger out with, Now we do incredible opportunity how and take across we can sequencing the of that how about we COVID capability team our

and would to say center. So commercial still I scaling front going is be

front, infrastructure take simultaneously multiple are ability core that R&D building. the projects competency a team, is more just And itself. R&D R&D not around people the that the the on we On requires to

to its strategic think our sales will management, into in line technology to to make -- project multiple we have -- in portfolio, opportunities ensure to that of multiproduct that incremental be we're can lastly planning and going core customers to example, highly strategies and get we then but workflow, would the to do There's reach the so capabilities investments sure informatics in -- successful the we highly end-to-end think And be there at or opportunities we that monetize And we at our can we real there can same So we us highly investing are developing to the that's or time. drive that, enable make can have or can the there's in we market more accelerated I then do resources products be that inorganic can if complementary have and to partnership production prep. I and with M&A sample company. leverage investments that. the and growth really because automated, for opportunities more order core that out force, if it's the

And my that to to team that great part team you CEO out they of that as we've it. management get started. here and out getting opportunity to table. the for have you and tenure to great execute really worked start is when do a of hard benefit first I'm lot can us And investment first markets we're bring that got capability. on about a sure to management you when There's and a the report are those think can The maximum you more that over to in have people then proud build an bring we opportunities make where just can the board. something secondly you make And through thing you think obviously things team

have So that now place. in we

strategically, thinking we use business and people to leveraging companies looking build same vision scale. the that same us have that and the that of for have and then so our And and share that putting people the resources it's really share now we create organizations vision

you have of think that it, a lot kind about order. to I that's think So in it's, to but -- it

Susan Kim

respect Susan. add couple is this a just just Kyle, with to this comments And, year. I'll of

it the but operating drive accordingly. will come across headcount be they investment, our ramp seen we and ramp that are company, into for during pushing, little you'll our adding are bit board, not to a to the in on talked had terms investments XXX to it we're it still see whether and of us or quite put about remains we remarks. organic all expenses making bit perspective, my terms growth, In hiring But a prepared of long-term so over I

Kyle Mikson

thoughts in I to appreciate guys. deeper Thanks. referenced, you of I that And guess in tailwind about hear really kind I talking Just your And push guess near-term. But I accelerating both you keep it relates into to month. or kind just Thanks, were that. accessible billion wanted I wanted headwind? I which then your investment just the market? But comments. expand with if just penetrate Okay. is your could markets to to of to light. this as the your the there. be this accelerates hear Chris those don't markets theme TAM appreciate ability sticking $XX this view last

Christian Henry

question. a our Yes. accelerate we we getting if No, into truth these is opportunities this And for potential was have to taken wouldn't there didn't market TAMs. it's us investment The good only think the large is, larger. sequencing

of We around the the other create have aspects And level whole at great a market to clear Mark like outlined earlier. have genome lead a a clear business opportunity to sequencing. of opportunity we

really resources be long will run our an so expand able reach here to over partner we But table brings and their And in will incredible the their help this then I the business us to And strategy investment the away. these the SoftBank. straight scale end TAMs accelerate of how do and opportunity core really at to of as -- drive growth. take this into we having as growth And drive advantage that's quickly day our capital is my possible. and think

We what to set already faster. can but And working we of on. technologies going incredibly go have an even to that's what powerful we're do be

Kyle Mikson

And there. right. a it. promising. talk All answer appreciate Congratulations Invitae just on I to It's your perfect. very That's wanted little agreement it. about I bit. obviously Got

that. course. mentioned Thanks. will to adoption be I for Invitae think to expenses million XXXX will to sequencer clear that II back in how terms I million of quite course mentioned guess -- that of I $XX Christian, then spending of like I loaded? in be just pricing $XX that. the the five-year broader that understand about going for on occur in guess Of And But Is kind Susan. you level of commercial other like kind customers, wanted to I half also within favorable this line? time believe you wasn't when could

Christian Henry

Yes.

from go dollars. the and go -- Susan So with No there. dollars ahead the we'll ahead with then go

Susan Kim

Yes.

Kyle of an just you give will how I'll So ramp time. terms over of in indication investment that

So associated have We're in development ramping as as mentioned, the platform. expenses of the the hiring we of well terms kicked as new with off. Christian

We have -- steering next committee we is our kick that week. joint are happening off

for so of be think year the just of But is would be most February, the QX, obviously slightly program nature more part of QX new the I QX the within a then will whole linear. lighter. company. probably And given than in QX rest pretty as ramping will it the because we're here

Christian Henry

words, time be no new get the the able associated broadly accordingly. once commercialize built, Yes. And product we it In it we'll with other with. built, the to there to and products, respect sequencer scale is

because up want you to they just a to we're we're we go develop be successful able that quickly are to exclusively up you they will going first we Invitae, commercialize Invitae we Of with are the through partner product time a they have to focus on the scale new -- course, not collaborator we're accordingly. But of and absolutely to be Any ensure ramp them. That's that that's that priority. because give exclusive right. and part thrilled as and as but so product, an going

Kyle Mikson

that's I it. right. All of Okay. heard non-exclusivity. the part Thanks. you I guess And I know mention

So thanks for that.

kind question. Just of one last like softwall

Mercy at like total you source really partnership Kansas know this guess I some guys Children's of disease, has released of So wondering the data? the or data update I I -- regarding when have was know proof But some they're and here statements coming any rare City. And with kind pediatric if term? out near diagnostic I can be there new new there could AGBT. in we regarding presenting some see Thanks.

Christian Henry

work We're we things I over can on the But they don't see the great I thunder. our to new the several or going just several on. mean, one steal week. pursuing recently past that days a HudsonAlpha we'll of that to of there's data is want Yes. released the partnerships. leave just And you -- lot also think road reality some to their last as the collaborators

should check statement. because powerful you the a that's very HudsonAlpha release out proof so And

Kyle Mikson

and guys. all Congrats progress the the on you. Okay. updates Thank

Susan Kim

you. Thank

Christian Henry

Thanks the much. for very support. you Thank

Operator

now the call There at are Henry questions no I remarks. further back time. closing this for will to turn Christian

Christian Henry

Well, forward have you for us in questions if thank you joining you reach on to with to speaking our feel call. And And please look today. the everyone out. next we future, free

much. very you thank So

Operator

This concludes Thank today's call. conference joining. for you

disconnect. now may You

Pacific Biosciences of California (PACB) 11 Feb 212020 Q4 Earnings call transcript