PACB - Earnings call transcript Q2 2021 | Pacific Biosciences of California, Inc.

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Operator

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

Second Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded. I would like to turn the conference over to your host today, Mr. Investor of Director Friedman, Relations. Todd begin. Sir, you may

Todd Friedman

be Biosciences Good President or as Earnings today Chief XXXX press which outlining we is Pacific copy and the Mark furnished call, Exchange on Executive Form Commission and call we are number our afternoon, different X-K Christian welcome to quarter, release With www.sec.gov. Van website will Similar from results Securities Kim, Henry, financial section available Susan of and available conference Second the last website locations. me on Chief Conference and of Officer; alternatively hosting Chief a today's a Operating Quarter issued the on at Officer; discussing Investors our Call. we're of in a today, Earlier to www.pacb.com the Financial Officer. Oene, at

are if issues with there pauses. bear any So technical us or

on making estimates, Before you remind we we that and providing predictions, call, I'd including be like begin, plans, information. statements, today's will further expectations to forward-looking

You statements today our filings to Exchange because forward-looking fully from the uncertainties in should more revise results. and issued uncertainties release We These Commission. they on our any differ actual these may statements. are forward-looking reliance risks update and disclaim subject risks or assumptions, described are or and and place in to press earlier undue not with materially Securities obligation

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

Christian Henry

us Thank the and Thanks Circulomics welcome to afternoon, family. the you, joining PacBio To team for to good I'd today. start, like everybody. Todd,

customers in fungi tissue, company long-read Nanobind Circulomics, sample for large giant Nanobind across sample sequencing As who by solutions that announced and was including use manipulating products in extraction. blood use PacBio you type, Related worldwide. used acquired XXX customers prep Circulomics' NIH kit, extraction genome. have this to sequence plants. the seen, have gigabase initiatives especially sample used has insects, cells, like hexaploid also animal and high-molecular-weight Alzheimer's Circulomics DNA blood Circulomics' its extract specializing XX These every the it Several from may samples. a brain and bacteria DNA, approximately and Center biologists to Dementias, customers almost sells morning, we prep from redwood to to

As will President sequencing will team library Baltimore, team report Sequencing will SMRT our I've as past, data. simplify Cathy which sequencing is important Senior to improve strategy and to of processes platforms. PacBio, we consistently even HiFi customers of workflows complete leverage our of to be is able their both With and for an deeply that ultimately indicated to The into workflow, Nanobind proprietary the and obtain in Circulomics Maryland, will capabilities and our our preparation expertise part enable quality, part our Circulomics Ball, Research. technical overall in technology generate based higher acquisition Dr. our our Vice the sample significant

those platforms other continue products even Circulomics' Finally, will on customers of to use for that that the support extraction require high-quality the high-molecular-weight to market customers we current I want all of DNA. assure all that of current the

of sequencing our us scale a With to applications to position customers into entered Omniome's germline sequencing for strengthening acquisitions serve weeks an strategy to As to a clinical short-read more intended build to biopsy, allow to we it platform other by data. respect Diego-based to minimal developing technology long-read shared more also the ago, producing commitment highly adding applications. capable begin broadly. we and we we that a liquid residual agreement as company Omniome, disease These is differentiated am I pleased HiFi proposed San that in to reimagine this continue Omniome, potential DNA track two we documents, required have to acquisition a a regulatory sequencing all proprietary possibilities acquire sequencing -- few the clinical to accurate short-read acquisition technology and filled both that later like report of quarter. has believe are the on we and the areas our complete underscore of filed to

Now let's business. the turn to quarter about talk and highlights second

the first the over to growing XXXX. of the to XX quarter as X% to the quarter and revenue of and from result compared compared revenue revenue XXX XXX year. base installed our IIe and a of Sequel by our at grew see quarter in Product continue XXXX consecutive the of the line XX% up was million total of second PacBio's We quarter was an Sequel II XXX% business IIe in expectations in strong record to represented second was revenue. quarter, and $XX.X The year. PacBio and we second Consumable point is of base sequentially expansion. its compared installed second consumable achieved services strength quarter and record XX% In to same II the last installed sales. Systems, of million sequentially last of grew driven part increase bringing $XX.X consumable with

platform, second significant Sequel quarter II of IIes. new and customers of to less spend IIs XX and compute using our XX on were meaning installed included About processing. customers. our savings Nearly from can is Sequel more Our time benefiting placements instrument Sequel half base data and X/X placements the IIe IIe are Sequel now

an to solutions. into company our Some quarter Dante to HiFi Italian therapeutic the information in new customers included Labs, of health sequencing diagnostic and planning use transport

unable continues From instrument perspective, whole-genome customers These Pacific's explain that and new sequencing, sequencing de Sequel rare them novo regional transcriptome de its customer, of PacBio and already on and included over installed Novogene used the This adopted region X,XXX and a In Japan, Novogene will agricultural genomic plant projects sequencing. further was human In including of plant China, to recognized PacBio of bioengineering research, in strength win, installed completed Sequel IIe PacBio fleet and for laboratory as metagenomics lab, sequencing, newborn's exome scale an Additional PacBio genome adding on animal projects. to sequencing, revenue in sequencing also with disease were condition. expand previously and novo was studies. and [indiscernible] order reference their short-read long-read microbial novo and Asia Novogene technology HiFi an help IIe human customers services because a purchased which animal competitive has genome academic expanded sequencing its QX. full-length technology, to all Systems, sequencing. the a is HiFi systems inherited and and and This X a where Sequel but completeness. short-read China. placements new a capacity another customer across accuracy to IIe run HiFi adopted de some

will adapt to plant Strong driven our in to our EMEA. the Core Also climates, leverage to variation in that research can help conserve Moving organisms use installed the new animal long and produce disease-resistant in consumable Europe, ultimately other accurate their and variation structural were highly customers Leuven to and crops. endangered their sales the Genomics species changing and Belgium, genetic applications. human IIe, first understand reads the by Sequel higher-yielding instrument as sequencing region growth and in

PacBio missed for everybody sequence autosomes have not HiFi X% This reads. has could without of over XX expected was like region to up is the incredibly research fully-kitted that Research ramp had genome highly in new of We the detect before the to our goal copies, of there Hospital one committed the surveillance of and gene new Sequencing the the X,XXX COVID protein over reference second with end decoded learn solution add still COVID to of containing [indiscernible] United to we are involved second customers, teach the Rady's like with and quarter, clinical sequence broader in we Program States. quarter, telomere-to-telomere expect the sequencing new consortium and to X, I'd to declining reads remain and Delta high-quality accurate, genomes so serving of long offer to continued in booked now coming long setting. university Sequel second to to been This the research of for is lab deeper need surveillance of their System so Americas ultimately of growing plus telomere-to-telomere chromosome surveillance proud consortium, emerging the COVID PacBio this years. effort. genome, other the especially in study variant, All leading with contribution why modest we light slowing of Finally, COVID the in is including The efforts at The consumable all pairs congratulate the record predicted speed And viruses. the health. which made that to entirety. much to in in the long-read assemblies volumes highly coding. the the research after year. Nearly corresponding shows sequencing using are better June our researchers ongoing we underway initiatives we share be cases genome last X program's Human been another We Project, base Us quarters. understandings revenue human is demonstrate million Genome accurate sequencing of includes revolution. database back the to quarter. the done business important like PacBio can a the contributing past in this a about XXX to the step and in We us. a a updates, quarter believe XXX which the to in collaborate IIe overall its best are NIH's this our to thousands is of mission gain revenue decades assembled Children's this landmark biology genomics human continue completion technologies finally the Taking the to from institutions

focused by provides disabilities. for for sequencing test unidentified first-line potentially tests on justification other Rady's sequence. variants use see believe and in families. example, whole a previous sequencing technology guidelines disorders already their support methods. currently it proven first- which As genome PacBio other presenting cases guidelines to clinicians sequencing parts short-read established rare recommendation no and or areas now complex for provide genome exome be patients disease its a intellectual Staying disease, or by genome of for exome used odyssey detected congenital of strong study technologies. to a our genotype to the are ultimately from and with explained, on platforms are that develop collaboration, as by part association sequencing whole expansions, yielded And patients to Short which undetected are repeat rare We sequencing diagnostic other Garvan ordering and underway, sequencing the anomalies sequencing-based and either whole updated the tandem as a cases may to can strongly of as The reduce HiFi and in dozens is or and updated work long-read Institute elucidates NGS second-line unable short-read of the recent with and researchers Australia genome of study, on could have challenging large with will unsolved. for together answers. These technologies genome ACMG pleased leading repeats, inherited test we study

address can We also sequencing believe HiFi other applications. key that clinical our

and Genomics Berry with carrier identify collaboration from panel improve present is PacBio results its able HiFi show screening in results panel to identification benefit variants reveal that negative sequencing test, variants our all which their assignment to development. example, carrier with to was study of by current no rare was July Research in in of continues able through sequencing thalassemia missed the tests. false the For latest

a the of clinically studies to beneficial. the University variants. structural sequence. month, to improved clinically based used CYPXDX This is having HiFi's drug for to and and pharmacogenomics. CYPXDX scientists show metabolism several metabolism utility and complete at method the gene in PacBio sequence long-read Medical more on example sequencing is where elimination difficult Last continue to be prediction just its pseudogene of Center one used computational drugs approximately of the is information Leiden Additional responsible XX% develop due can significantly that

of head total the our to expanding our XX significant second year. We our to at end sales team. the And the updates. we're the Turning the in goal quota-carrying in double well way bringing rep added We by organizational on to of QX. ending sales reps progress count achieving XX our made our XXXX quarter, to end

our We the also Neil England. successfully broke his end the the in region customer added directing extensive to regions as Neil's function. and hiring General markets the have EMEA lead financial Manager. developing with and experience and working region deep the early other Biobank our key with including team development Susan? an brings on Susan the results. investments toolkit UK positions Neil Dr. on our broaden Americas into to and out customer. created sequencing Cathy our EMEA EMEA now with to leadership, of increased hire time relationships Under to research quarter, will Genomics our turn focus call will We over feed research Ward activities focus newly function our during leadership product the Ball, the technology to and I'll pipeline. discuss development This

Susan Kim

you, Thank Christian.

approximately in which first record from revenue with in quarter $XX.X of the XXXX. Customers with Sequel the million XX% from about Sequel first million, XX% quarter in $XX.X IIe and XXXX quarter, increase $X.X Sequel last II to of shipments as of to $XXX,XXX installed $XX.X quarter was were the the a the from second June in in quarter million second from We quarter, an X% the the in upgrade growing to systems achieved quarter and in the X% X/X of in quarter. another in discussed, second of recorded IIe of sequentially Consistent XXX during Sequel As from million these represented Systems revenue. million million second decrease Instru XX of second Systems. an prior year a representing increase II increase IIe delivered the XX. revenue, $XX.X quarter, $XX we base and continue

result Revenue in growth of shipments and IIe in consumable as last increased XXX% and a the of in of second million the $XX.X over up our quarter year. and Sequel base IIe million the consumer SMRT second growing of $X.X The XX% consumables. prior installed from sequentially systems. quarter II to in approximately total of $XX.X Turning revenue represented Cell usage Systems. grew quarter Sequel the the rest million XX% was II consumables from with quarter, in second reflects older our from

customers platforms. and the on expect the second per to consumable to migrate base to pull-through base expand our of quarter sales approximated revenue Systems continue Sequel installed We proportion $XXX,XXX. for installed the as from newest grow the II these Annualized systems II IIe system in and Sequel

$X.X service million quarter the $X.X other million revenue Finally, the million and and grew $X.X of to in quarter in the second second quarter in XXXX. compared to prior

service reflects IIes. II Our base growth Sequel revenue the and installed of growing

profit Moving gross gross margin. and to

Second XX.X% compared represented in our to $XX.X gross quarter profit and gross was gross quarter expectations first million XX.X% the a or $XX.X of million with line margin in of of in profit profit gross higher margin utilization factory. driven our with growth Year-over-year to and due doubled to million, gross XXXX. higher more revenue in $XX.X approximately than points by primarily higher X.X volumes the of

the the up year. organizations. as to to second primarily last higher commercial of in operating expenses quarter totaled line and quarter $XX.X result expense in higher build expectations. with R&D quarter head-count-related $XX.X with increase compared XX% in previous the of XXXX quarter Operating million in in The continue spend and year the of the on. compared our was Operating expenses $XX.X our million, first prior second than we a and million were sequentially Moving XX%

sales and and grew total were we're employees, where of XX people, well sales EMEA we to more our We In bringing majority regions, the ended double our our of head first ending our of we by count, ahead target whom the than terms to added Americas to with XXXX count. quarter head ended the rep XXX XX, force quota-carrying quarter. XX

in and the and of research convertible quarter the We with associated quarter in reflects organization second prior Other also notes. quarter included to $XX.X the million XXXX. of million number in added quarter a initiatives. our of in new of support $X.X and compensation expenses our $X.X second operating interest Noncash development million compared quarter in expense $X.X hires in was expense second to income our stock-based full growing million the

was million net loss net loss share net of a million and to net loss compared was, the therefore, the loss in $X.XX of in share of per $X.XX net quarter XXXX Second quarter per and share $XX.X a $XX and first million per $X.XX loss $XX.X of quarter or XXXX. second

to million quarter financing earlier $XX the XXXX related of million As of a loss in first convertible in advances quarter. repayment expense continuation our net due a to the reminder, note first the to Illumina $XXX included

inventory second sheet. of in quarter quarter reflecting to compared largely billion the accounts second quarter. investments part at primarily end to DSO of balance of deferred quarter million as in the ended $XX.X quarter our the Invitae approximately at million, balances $X.XX to from Inventory received a our second increased receivable compared XXXX, were The turns. inventory cash of of $XX.X with and the quarter sequencer. XX develop in grew Long-term to the at balance second cash million, reflecting function the to of million $X.X unrestricted revenue represented We $X.XX the to of $XX.X of increased agreement million $XX.X the DSO revenue ultra-high-throughput XX $XXX of in Accounts first with million collaboration a compared second the increase the to days; representing DSO quarter a end quarter linearity first last and end in million, the receivable first increase days. and compared turning with in turns the end the $XX.X the X.X a XXXX. Now at billion XXXX, reflecting of X.X the quarter which of

for fiscal I'd opportunity guidance. estimates take to provide XXXX. to like year to moving our this Now

II/IIe for Sequel in customer We our chemistry. our see to growing continue HiFi platform demand

result, we a a quarterly sequentially. continue As expect on revenue to basis, growing

can quarterly given based placements the However, any mix on instrument quarter. revenue of volume in shift the

larger from add orders with can of to orders customers projects in timing multi-instrument Additionally, additional any particular variability quarter.

XX% half first the which exceeded the customer we XXXX, in we placed project For and to of Systems, of sequential of million increased and grow with Sequel $XXX commercial to QX. half growth full In QX internal and relative compared in represents to each II $XXX the to demand. we grow XX% to the continue and XXXX, revenue presence of to second year which expectations, our range the XXXX, expect to approximately IIe revenue first the number XX installs our half, reflecting in million

Moving down the P&L.

expect XXXX year to XX% and gross We margins between be full XX%.

For operating which million, the expenses, we $XX expect and between we which for million expenses, to be $XX includes year. $XXX $XXX full million Invitae the and between estimate R&D year million full

As or issuance expect notes, and annum per to a of the as in terms $X.X convertible incur of part maturity quarter conversion approximately every reminder, expense of interest our amortization costs. we X.X% which represents notes, forward million until of going interest the debt

We be exclude to these expect $XX million shares. acquisition average increase purposes approximately the expect proposed year to rate that note for of full incremental from expense estimates by announced share closing Please EPS million. million quarter the the the first approximately will Omniome financing our quarterly PIPE impact do month. an related the weighted operating the full last count $XX of that We post acquisition for XXX and Omniome run

have from our acquisition to the the contribution impact Circulomics XXXX. immaterial P&L expect in of an We to

a uncertainty our that, estimates turn the of and there commercial its to the growing around effect With reflect Christian. current will pandemic. best COVID-XX variant state Delta that the I Christian? mindful given our the activity, estimates is back also are We therefore, on call and

Christian Henry

clear the and $XX HiFi last revenue clinical time. growth, When September, revenue growth, Thank drive laid our first I applications. whole offering a We've can now PacBio quarters PacBio consecutive quarterly how million achieving Susan. out have to a to for genomes impact you, product revenue real X of over genome show had I plan expand in joined

to are us barrier. development we that of as Our developing multiproduct, drive results long-read $X,XXX research push expand dramatically expand the commercial indicate to We've against expect size able to and sequencing progressing is and HiFi enable our customers that well projects also teams to been our below beginning of commitment forward. our the our genome their will cost sequencing the we portfolio well expansion

genetic entered have into HiFi several collaborations Finally, the disease. rare understanding power we for and basis are demonstrating transformative that undiagnosed in the of

are of sequencing at the better our the improve Additionally, Omniome's been acquisition to scale Sequencing And sequencing where delivering with strategy Circulomics, even Omniome accurate expected a to into operate in our short-read sequencing enable historically then with front represents technology SMRT our on that announced new so our dramatically end finally, beginning of markets to workflow can acquisition results. era we of customers the to access. not highly platform enter sequencing. has long-read is of large us able greater

have for the to sequencing customers will of soon offer our right all the We technology applications. ability their

than customers the will to of which platforms execution Sequel pleased I of close, more how challenges into technology expansion to It's organization meet both firsthand to with as reach rewarding ever not hungry will science. also enabling To continued better sales markets. drive further our to further end well. of our before, and us will Omniome allow our We only the see our but the is team our am future. platform, scale the Omniome's to The lead addition

are sequencing to accurate more up them. Looking that open from Operator? today, call our Thank that that, customers that the mission landscape And to I'd thousands there it's highly complete questions. like I confident for to and bring the of can realize benefit with at you. am and the sequencing,

Operator

[Operator Instructions].

Peterson comes line of JPMorgan. from The Tycho first question from the

Tycho Peterson

start want with on I to Omniome. one Christian,

cumbersome for of competitors a One they're PCR past. and your in that's of issue some the questions gotten the we've just using emulsion upfront, is been

are you from maybe in to And the the view, it to how move that talk have you cell. that? guess, can some be away easy that to flow of maybe kind anecdotally I going is steps your redesign So to We've required? of heard

innovate to need may around the chemistry. You

launch about in of think map taken first Or be as some of Sequel? 'XX, half mainly first what sample commercial kind here then on are you that you Circulomics curious, to the for in that? the path steps does play the that that in just of And is think is side? And that key prep to I'm the need road So here?

Christian Henry

Okay.

driven So and reads. the of team how and we'll start at there, long-read into to platform said, their with in they're we're Sequel capability Circulomics, long for is The kind general. to principally is fragments handling That going there just experts DNA workflow. DNA, long Circulomics world-class being leverage understanding handle our of thinking about

through And so is well. to I were their principal the suspect, side find may equation our onto thoughtful the the With long-read way Omniome, over developing very time, they Omniome of about But as thinking would we workflows. and really capability. ePCR respect market we the think ePCR but a adoption. we much prefer to different do some about in get have is reality applications, could And useful be we broad that that, how clustering

in the of side. done. approaches. is definitely will right expertise that redesigning chemistry we'll weeks that that help and ready it's that really which that going ago at then of confident came different we to will -- be bigger decided we to as approach both suspect higher expertise get there. reasons I down believe go we of the to can And with the doing beta development to leveraging I've to density. pretty cell, we operate we exciting, changes as that a the one to can And of scale, will mission, we're companies so Interestingly, significant of have we show effectively, up in PacBio diligence, side us how clustering the some well. short-read on as internal the folks think, some to said nail and we're us because so flow definitely give a much And couple a respect to And they why Omniome I that the the were slow the long-read now method do unlikely down on With is some we were combination much order help the

don't I a So barrier that's for us. think big

Tycho Peterson

question guess Okay. X That's I a around unrelated helpful. then And follow-up parts. guidance,

trying below color and bake I'm bit surveillance. on would given versus anything The that million, kind just how any that you're XQ year-end if in are can about flush Just for a about you give the thinking like COVID $XXX into for think at drive then XQ. budget to you you wondering XQ? guiding step-up the us you example, sequential things And Just are that? Street upside, Did to there of

Christian Henry

Yes, Tycho, that's great.

I think her remarks, continue we in expect point to Susan, to that out sequentially. tried growing

So be be those would to The QX range pretty in would Street expect We're QX, the than to thinking same We we better ballpark. than is. and I better in be lines. where so QX along QX guided and a tight in

we news to in the funnels Delta just think QX record ramping in not demand good coming and where is state looking variant so I'm the -- QX, force. trying generation the QX. starting into that expand and The And we were environment sales we're continuing of -- at really COVID have to is. in through the market with and our to respect We're

time But we out thought our for the hope that would guidance be And I'm about very of opportunity front makes that an optimistic first us. basis, put we as thoughtful on we that in actually sense, -- that's I so Tycho. about extended

Tycho Peterson

Yes, that's very helpful.

Operator

The of from Tejas from Morgan question comes Savant the Stanley. next line

Tejas Savant

asked the just want question just you. that up Tycho to I follow guidance on

or quarter any about? in a the quarter. fourth of to Specifically instrument of such quarter orders we there Was XX multiunit I third with flattish slight Because from about that mean, first installed be sort in and in like Christian, had sort the in tick-up are it you need terms terms -- looks here. thinking I the of units in XX the some we pull-forward mean, of installs, cadence.

year. here to this what it So mental for just instrument terms do some of quick implies placements trying in your math

Christian Henry

Yes.

did quarter the believe to the a you of when So did on when -- fourth at we're come they larger each out a instrument grow instruments demand in, orders, little in, the when they that and come have think the the or few rest And how that quarter, to will than actually they is business the larger from reality instruments. still timing here. in variable. I do unfortunately, bit come when an third impact still I of small, tends consumables do being going not in in look the be are quarter in, that plays we instruments the get

in as through and we're funnels us actually drive for a and is to what saw the the will help dividends rest front, growth, know, sales the that QX, consumable very gross I'm the on that you'll base quarter, create that great over which to also more growth. growth will with at I Now instrument And respect the continue sustainable, that consumable year. expansion you can of But long-term we think instruments margin starting encouraged installed and see had to time, place the more we you placements. the seeing drive pay in

change, the And to timing gave, increasing quarter balance good is But of back had the see think particular so year. the over other in we we And the can on do very market through of piece the guidance we QX. in half success competitively any course. with instrument in placements the that

a significant was that very particular that I highlighted with deal deal one won. think we we competitive that Novogene,

the And of the well back us the think we so that's HiFi we with think going 'XX. only as customers respect And and get minds are and capturing for year I on to half in bode power. I to into balance, of its

Tejas Savant

the the Got the I quick on dimension the us from for Circulomics. trajectory longer-term technologies one press other share release here, long-read small. it. fraction you using sales and contribution we then you are size opportunity who of help But the 'XX customers know Can about And what as think the one pretty market? of are -- perhaps is that can Very said that helpful. in

Christian Henry

think support significant that there's their may proportion a to and of I will our on. to or give market. in I what really and we'll have release. competitors do mean was why on Well, that's is the some the They the what that I support technology. allows faster of using to and everyone phone said them how fully and -- It's significant reality And their is this that the generalities. continue that can very press is we preparation, said technologies, SMRT the may morning revenue workflow this customers about in a market. extraction small, we going sample intent But not easier all need the those customers effect, us impacts revenue, to we the think in make upfront you library our with reassuring prep sequencing so scale to other sequencing

many will have think easier. here ability consumable This per business is to our to is as platforms about, the so about samples important sequence because talked to our benefit year can. platforms, And launching many, our to especially accelerate it can customers and more real we as be going current that our pool base new we've than

is sense. what setting really that very we're have so makes to to doing we're ready the And stage -- at operate high if be scale,

Tejas Savant

doing remains of terms related new I of to on are managing the Should employees collaborations sort Got here on a one for PacBio mean well. intact? final releases? Sequel note, external you're integrating years and me, platform past? onboarding that in make core your around the just plans of it. Christian. time internally And in all Sequel that done one expect focus you has frame sure or And like sort one as a What scale-up of software you new ESHG we commercial and time on chemistry the Can deals couple these these confirm

Christian Henry

possible started would -- be And great this with really, vision a team handling capable of That's question. that's important management scale. of having and really Yes. truth a is senior if the the

you team of that at multibillion-dollar very and of leadership managers large operating significant scale at with these at have fortunate teams all to recruit, been look enough the lots complexity. if experience I've so And

And so senior team. reason that was the went the first so -- that was hard a such to hire I why

And company so to develop place think that on And foundational the Sequel to take we're respect to platform, capabilities the we and us And technology our to to that will we long-read keep the platform. there's use, place. laser-focused we the in continue taking the where really need those assets sure in go they front team we significant can in us definitely developing opportunity improve the there. now make going we eye sequencing. of ball of don't to put leverage With because off long-read on and

generations our respect that timing help I'm choice can scale much of give to those our be I continue that can comment And to want base. the not to the the we market when robust, you really customers to the we enhancements on the going time, this platform are we'll market. expanding then more And and right with will so that to improve will products of more in flexibility so and our the call, to installed move on they although opportunity at that. maximize valuable next assured into it make platform, think more ready, customers keep greater operate And usable, us what

Operator

comes Piper Your from Sandler. the next Steven question line Mah from of

Poon Mah

up maybe my trends. looks model, quarter something you Was the Sequel So the of that ASP just was it to due some orders? that. then and Or and wondering if one it on looking can of that it for ASPs incrementally. else? II trends Sequel and multiunit some like II ticked I'm at less caused confirm the in rationale I'm just

Christian Henry

quarter? you do ASP in to actual Susan, on want comment the Yes. the

Susan Kim

to. Happy

had the respect is confirmed different with right that not a higher QX capacity that we different. instruments QX, there in that orders had the and QX. mix multiunit We orders it's multiunit in of So materially terms multiunit was in But you're than the incrementally that orders. is but QX. in And ASP to in come shift

X that So also, it's quarters. big ASP the between not difference big a isn't the driver but

Christian Henry

Yes.

in enough think differences region the way might also don't I different difference be quarter, any in see was region. to fundamental from little there a the Some change ASPs of it's a of really regional given to a selling. where, we're

fact, force In the that going that building to a installed instrument base. priority top I've keep that out and we're instructed sales are placements

QX, wasn't happy in were the much. really with we So but ASP it

Poon Mah

just for us sense Can commercial a force? investments give the the a maybe and you follow-up, II. talking Sequel and sales about marketing and then And in sales Okay. all XXXX Sequel organization given placements,

Christian Henry

I funnels, Well, in that at do there's I to any think if generation opportunity an growing. the indication, you think that's if demand look continue our

position we're speak, more fact are that's long we of 'XX when to guiding start because But has not yet. was HiFi, that one customers to before, important. footprint demand. and starting my than strategies to is will ever reach I company why not if the commercial I remember, we a the and when that we increase very believe checks, today, joined people PacBio so in to course, word, our generate did my of are reality does is to reads really company, the the channel and first understand which why it Of And starting enough -- to foundational and you spread even do what

really then to with that that useful. enhancements And so to Sequel the And you're starting more make we're backing think I that. growing see commercial up our platform and footprint it

You're consumables grow. seeing the

to some the the X going. starting now, momentum grow. seeing of growth row a company quarters You're total revenue of had really sequential get in we're We've and

to well, rest on the excited too And and XXXX it's this so comment of but probably really specific early anything there. about as I'm year

Poon Mah

you're color provide. appreciate I Okay. the to able Yes.

the instruments you are this you moving you also, on maybe a then a comment II now, more XXX,XXX so good run -- I sense that ramp instrument give given the rate did about many that And could know consumables. Is per just instrument? on placing to a us consumables new could year. going on Sequel forward? So guys you

Christian Henry

Yes.

in it has in it's take bit a be few or to a going run a and a if customer down that they're data. or takes ramp quarters rate. I longer customers new a an whereas how ramp to get X- addition a general, their X-month lab very brand-new brand-new will the customer to the the put workflows to reasonable on little dependent a backlog, there, base. they're And think core going that installed it's a Imagine to nailed quickly to system if analyze we still will

And so variable. it's be going to

once the -- think unreasonable where place I is are to XXX,XXX not we be. an in

given a their dependent we're placing quarter. how on shipments for on reasonable balance, You any bit bounce to places see be. on many systems little from it also quarter-to-quarter. That's -- us and this pretty take But around are these is customers how

you think as and utilization, ultimately to If click the on which us starting overall a utilization well. up bit at per basis, I we help see will look system some a actual little

Poon Mah

And Great. if Circulomics. in I final can sneak a regarding Okay. one

integrating for you sequencer it with an instrument? integrate staying Do integrate would going You low-cost, it are mentioned you into you you're workflow. you also And it, the developing a in Or the II? Sequel to clinical automated potential press as are envision stand-alone with if release the Invitae? long-read

Christian Henry

want to you one? take do Mark, this

Mark Van Oene

to. Yes, happy

So this that, I do believe stand-alone automation. would least be for initially, at a instrument

bit great can like used the disks readily. easier shown extraction and that things be One things quite have just and robots these Nanobind is are Kelvin of with KingFisher for they automate little to team us that a even the

short-read the So right The -- a with Sequel There could the for integrate for -- how there that to this this earlier opportunities as us this focus and for synergies purification his technologies, extraction try long in initially focused this are of the is sure to focus is platform. in think stand-alone, on are and we're and something questions. further this with now Sequel Christian initially to the the that And make would into reads. use team of mentioned the long we explore I and not optimizing the platform focus but team. reads

Operator

Our last Mikson the question from Canaccord line comes from Kyle of Genuity.

Kyle Mikson

hear you Can me?

Christian Henry

Hey, go. you there Yes, Kyle.

Kyle Mikson

Okay, sorry, guys.

now Congrats front Circulomics, you're but workflow. acquisition kind optimizing and everything to I on the small, know the Sorry it's nice it's for obviously, today. end on of see this together. investing of coming the audio. And

got analytics in I and on kind it's acquired think, kind some and And back then, maybe to from have a an to Epicentre And so it's to there, the went BlueBee because, recently. interesting Enancio interesting of they XXXX, clinical and interesting. topic, capital inorganically long-read are right? short-read guys, deploying parallels what already of think a similar interested you're deals, when just technology great in and Edico Illumina platform if as with has back-end the I curious You've and, I'm enhance done well.

side, hear curious picture your too. I'm thoughts the your thoughts of and on the bigger kind around analytical So data to here

Christian Henry

Yes.

get is and we -- and get prep sure and is -- with as collaboration with that scale Invitae, of to entire us, very very high-quality going to with the going data with the we so end generation And this Kyle really end Kyle. coming side get the kind informatics it. into example. thank make back we our truth But we for looking science front out next be to the think across very, systems that are data the particularly sequencer and for I of the question, important sample the of the DNA you to high-quality workflow, need starting we because

thinking of that strategically we're through yes, our and how So side do opportunities. equation address we what the are

problems. infrastructure both are the our do customers solve the is making help we But and so the workflow data new market infrastructure, on solutions And that that to then, to what's most really very between sure our think going Omniome that how systems and radar. I at the moment, start we part. to get strong is the about are definitely get important data analysis think, science as integrate And what we up this their data to PacBio

And one clearly it's but it's our on at a time here. step so radar,

Kyle Mikson

obviously, wanted to exactly talked on didn't the read sticking lately high weren't of Okay. months kits an And of it sequencing. at cost the length. the I And the -- that That's all? and Circulomics. on, about increase more But understand kind seems kind yield helpful. can It I it ago. that. just accuracy appears -- I guess, they does like bottlenecks as there's with kits guess impact just of The emphasis

update fall of talked I of cost, list we kind does past, now? the that list about in where your if were reducing on So the you like priorities, to guess,

Christian Henry

yield the lower at cost And through therefore, right cost easier I think More base sample per top. the means yield making still prep lower more overall. gives sequencer. It's so, you do

cost down is So a priority. top the driving still very, very

priority is customer throughput that looking sure a second making the each scale system at is operates The the for. has that

large we to out germline really interested the numbers high-volume of result, into platform our a sequencing areas. such very human low large, sample, very at as getting do make it build cost. And we're need in that So samples we can sure

capital, everything, and none the And And so accuracy, the it lowers forward, that costs while -- as going We everyone. need can that's down be to to market per read course, leader -- you interrelated, length, accuracy. then on really, really that of the and because scale actual drive none amortize be then our cost is and we for speak, of to sacrificed we are in and the drive continue the the that pushing lab. so lever data starting of which base going in in of cost a leaders this we're with to throughput, hard quality, up

Kyle Mikson

Okay. Awesome. And question Susan, I a had you. for just

January, line going But that should of this the announced a hit -- economics. Invitae is revenue think for outlook portion Or so know at Is some agreement we've top that, the impact P&L the Invitae like back, yes, guess, On end how about the 'XX? discussed included certain that to in point. of agreement? in from the I we I the the

Susan Kim

we launch product. until Kyle, hit think that is the So actually revenue about to won't way the the

that revenue making and deferred in our investment is is that XXXX. the hits the of none the on revenue long-term in Invitae sheet, So sitting balance balance

Kyle Mikson

That's right. That's All it. right. Got right. Okay.

one Just last question for me.

the one think last queue. I the I'm in

the you was since last year think, remember So Christian, release year went it's press August took I the I of a out. X, about the when CEO. role of been kind of

company objectives If that out on say looking what put how you on forward done of you've the kind a those your back of year past those? And year, is and would there, goal of in you now some executing the look has advance? kind reflect

Christian Henry

I proud time. period of what just a to in able really been am of we've accomplish short

a platform where this multi-omics about and customers' created We've we could and the of organization transformed more solve before. ever the accelerate If company you a capability, taken can -- new using go, vision respect. think than commercial get about revenue team being it, we've technology a customers new problems. thinking company can deployed We've a bold every long-read and lead completely in in to leadership the we've sequencing where where basically customers

of we've opposed and upgrade the to for one team offer to opinion, way, Fromen on really where to to none. Chief a that offer. and can have going the from the new leadership whole technology, my create built, line, this who the the technologies all down step are the our is call, of been go. suite marketing quite the then At second As commercial Mark Officer, we've talent that as And we just team in way is a built, vision Susan, and every frankly, able Peter to company Commercial we'll we've

first my I So think expectations actually that we've for the exceeded year.

we're of very the at journey. this beginning However,

us. of look landscape, just genomics at you the front opportunities If still are right the in

If really the to and Omniome about of the you $XX And the potential itself ability to it, of billion. acquisition take management the develop doubles execute team TAM advantage basically we think have and that.

And so ago. a I of think think did months they us differently lot when XX people they think PacBio, than of

And even years what I'm to of this to excited of so be It's and we fun. what's front going I'm of landscape. as they more about in unfold about next as us continue transform a the lot excited done, but we've couple in

Kyle Mikson

that to see I'm said. excited really going Well great. forward. That's

Christian Henry

Thank you.

Operator

back I to the at turn no further I Friedman time. closing for am would showing remarks. conference questions Todd this like to

Todd Friedman

you. Thank

Investors in us in be as the to contained Thank a we concludes dial-in section today. As you the of through our look updating well replay third the available progress you instructions call This our for our reminder, call, in earnings will on joining a on as today's quarter. release. forward and website this

Operator

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

disconnect. You may all

Pacific Biosciences of California (PACB) 4 Aug 212021 Q2 Earnings call transcript