PACB - Earnings call transcript Q3 2021 | Pacific Biosciences of California, Inc.

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Operator

Good day, everyone, and thank you for standing by. Welcome to the Pacific Biosciences of California, Inc.

Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to the Director of Investor Relations, Mr. Todd Friedman. sir. ahead, go Please

Todd Friedman

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

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

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

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

Christian Henry

on third performance. you, us. brief will for with On strong joining Todd, today's quarter everybody. update I and start Thanks Thank call, a afternoon, good our

of across break revenue markets, as our sequences of are to X full both share the how record commercial community and it quarter regions. discuss from PacBio encouraging placed to ever finally, further utility our are the us is systems, and making and successful HiFi broadly Next, strategic I II end our at also and increase will to all-time I'll brings to Sequel increase PacBio solid all-time we sequencing. in the for the over an had company, XX% this Then as a PacBio discuss single II Sequel marked all quarter new progress second of base which will instrument the pace our in on IIe year. the quarter, installed organization for we the revenue customers system third to another installed high of in and is initiatives. $XX.X is of year results double is IIe our against to the in in This most now our and the Susan the of record services XX another guidance. more We financial XX% We some year continue research year. quarter last drive and QX a make of and million, of achieved innovating quarter we target progress product third more the compared with last than year. customers our installed quarterly before. demonstrates the an XXX and units, our world-class investment installed were we total a to base almost orders reach are third history most developing sequencer enabling

a quota-carrying plan. quarter of ahead of have our of doubled our end that sales we As achieving team, the quarter, the goal

providing to we are which that product past enhancements made of our our platform. the driving adoption over more the customers, year is Additionally, value

markets. into to from to pleased help working Over our these contribution the provide develop in target tools year, we've us been specific key growth to understand we're insight markets. And past the today, some revenue

provide will information We this periodically.

size and to directional intended approximate relative be in are the used that as and note rates nature. please Additionally, growth

and expansion PacBio HiFi answers our program setting. in the from disease, fastest-growing Included to total carrier the showing research kids genomes and found HLA genomic largest previous the substantiate were translational signs program. initiatives. using Recent rare the completed and as findings our not in accurate is in market of and success like Human attributed population findings clinical structural covered market use variants, to is other long-read well date research over germline and customers, then X/X HiFi Research single including this germline methods. like multiple genomics on of human as screening, research with Children's institute diagnostic pharmacogenomics sequencing repeat revenue XXX Mercy case focus contributes for which for year-to-date. disorders The areas nucleotide help sequencing variants, has inherited and that Institute, over the disease, First, includes and are just customers

instrument. into HiFi rare and germline genes last NMPA human genomes. directly genetics our Prenetics, PacBio more. human or been variants to health customers which the Outside complete test variants approval sequencing focus may diverse significance today. a instrument XX uncovered of a programs reference Berry screening as and submit the and them PacBio quality the States. build over Sequel data existing human regulatory rare United outside an inherited in available that for over for unanswered representative category genomes variants the approve more plan in to hospitals. coding Specifically, new II, first This genes also pangenome also globe testing the which is includes QX researchers to and its be our human project in body step like clinical Sequel diagnostic made week, includes uses provide carrier WGS These more structural a It of customer the short-read to Other installed The and a This Barry Genomics. and they CNDX already system. the germline include and has to they questions IIe a PacBio in project to for a reference around over hundreds leading marks received company, expects announced reference of than approval Sequel selling further differentiate clinically in its found trials qualified WGS to Xx the important one as Sequel II disease, undiagnosed insight China milestone half unknown to cases. customers brand pathogenic and day II for prove will

and to This Moving It USDA's its USDA, complete least X/X and Genome the multiple complex third We're myriad quarter, installed the reference assemblies of initiatives across towards category leveraging IIe's animal Europe. continues diverse XXX,XXX goal which also to remaining and animal the and staple by with assemble year-to-date on, to progress, potential. market includes the be and to Atlas, science utilizing quality, pests Reference like sequencing includes WGS their and Seque climate plant like the encouraged its into plant accurate progress and at under change, to decrease tap budget. technologies customers and generate error-free species blueprint its increase HiFi PacBio X-year towards main accelerate use genome breeding is use ultimately genome yield year-end help susceptibility which sequencing the to in European long-read genetic highly diversity revenue. goal represents for just of and to our diseases genomic a

Christian for to the and like Africa. from African Center prepares Sequel Next, threat includes solution microbiology for of Professor the more place other Drexel Also pathogen distributor IIe surveillance partnered II/IIe viruses short COVID-XX address and disease HiFi African which at microorganisms. disease and Genomics today our next infectious West infections. a help first a its like for from has picture comes the gaps roughly the Infectious Sequel in Biotech, fill to with and on sequencing to our the implement Hoppe related and technologies hand University them to needs have to of genetic Excellence long-read respiratory of research Disease customers that center and complete provide emerging XX% of who microbiology, Inqaba to installed business will infectious a applications,

revenue just from oncology XX% comes of our and emerging Finally, applications. about today

While still long-red we areas. these is customers, long-read studies emerging expect synthetic publications to and catalyze like therapy, What's our reach nascent as CRISPR, we exciting further of as growth. use supporting me useful see emerge, growing will Technology has list to sequencing the and of applications in biology, sequencing that PacBio a we new and important in gene more which see been applications tool a demonstrated today, of

Finally, read to expect short platform drive launch. the its upon addition sequencing of a applications growth we in oncology

to core the PacBio sequencing workflows. of our customer has develop of end-to-end labs accelerate strategies simplify sequencing to to adoption solutions One and more to been accessible HiFi make kitted to

competitive a offers access to use kit capture COVID-XX, kit genomic novel for reagents price. detection of solutions early expect HiFiViral we other at weeks. all by HiFiViral from in technologies. less quickly our which other it to Louisville, an pipe and fewer by their mutation compared view, while heading very The includes mutations. solution accurate protocols sequencing including scale of allows One and approaches University example, XX% for PCR the In and with than reduce launch and robust providers to efficiently customers surveillance coming our with to improving used explained also testing a kitted them to amplicon hands-on that time allowed variants, HiFiViral these of simpler

proud assay We this design. extremely of are

kit more robust missed We already to other the next in catch to fixed officially a variants, designs. few allowing due product it variants launch emerging the with capture developed we identify to when team forward we've the and viral novel HiFi redundancy Our sharing and seen weeks. assays design, look

Customers an Sequel to ability build and plan in detect provide microbial version unique HiFiViral, set system. about genomic Beyond With leading PacBio labs next IIe to ethylation WGS, to health continuing the application signature. updated genome on last a PacBio's seamlessly applications continuing the doubles received improvements for also immense broad epigenetic of an not have expecting updated We're information menu Together, their platforms feature use quality microbial the service capacity this public genomes. Sequel adding platform. to current bring on feature year release releases a while already on and and the deliver II research their runs vastly This IIe Sequel also of improved we're for talking their early only research. cases this ASHG to reference sequencing at industry's of X update to interest but simultaneously the we to IIe standard to powerful bolster this month. multiplexing these end-to-end and assembly the exciting are range of to microbial with

only highest quality, As type to the easiest and you sequencing to committed available. we're HiFi the also data use most complete see, the can making but not

quarter, to With among Institute to the DNA prep. the the This collaborated Medical develop sample long progress weight beginning weight are simplifying which is superior see in Coriell most read which team Research in we requires based repositories, demand quarter, for Coriell's reference past for a in adoption to the addition widely testament used already research. the technology of molecular repositories a are with and third of DNA. often and product the high the sequencing, on and Circulomics molecular improving of long-read Nanobind its the NIGMS NHGRI high cell genomics growing the quality

a long-read this in-house to fully solution committed supporting these that and workflow, In we're long-read September pleased have complete backdrop see that are accurate on sequencing in improvements, the from addresses we're and platform. of sequencing leader commercial and part technologies, published any short sequencing. in all of a We pleased customers the affirms which Resource compares important the major PacBio of Association as Biomolecular to data to Facilities

rate and Google reads HiFi Specifically, of regions. or in and there's shared a highest more the accurate yield and circular yield the calling publication the for reduced the to that the had feasibility still more models HiFi precision level error make their variants XX%. deep to the the all as Health, in NVIDIA, the by community to technologies boundaries. a preprint, reads of Similarly, to highest And errors approximately consensus pushing with PacBio According total keeps HiFi and collaborated HiFi train shows bioinformaticians that reads relevant even headroom errors genomics deep QXX clinically rate read the accurate and by The lowest The XX% reduce polish mapping builds study consensus on example, the on by at team tool PacBio scientific to also increased reads. learning tool study at XX XX% increased software Q reads. to HiFi team produce software X%. in

in potential to Star, you to in bar. accuracy more reference-grade non-human, As North invest bacteria. more clinically complete raising a and is and see, Improved and we'll genome and mutations sequencing the into better can assemblies, discoveries, sensitivity novel genomic the viruses and both continue higher has human accuracy to translate relevant

is cancer Sequel are single-cell and MAS-ISO-seq and which cell is with generate base of to genomics full-length existing published as its HiFi unattainable data the for the sequencing This cell and currently Institute, protocols installed boundaries II something their that sequencing fully a to their in II/IIe relevant including XXx can this According Not protocol, to with Broad up CDNA Sequel short-read it obtainable smart applications. XXx reads addressable most example, get expand only new the a in researchers single-cell we in an XM single to transform environment single- unique cell breakthrough run, hands, into improvement or the creates isoforms is per The associated disease. generating and of the amount As our isoforms more especially cell push customers' RNA-Seq where achieved on but way potential this deciphering is performed. full-length compatible and types libraries. to has XX isoform CDNA, protocol up specific site-SEQ. Broad, important million throughput, recently

Omniome after in Finally, Omniome, of of launch using X.X first completed development our on our the the platform technology the month I'm we half globally first to to acquisition track timelines XXXX. remain pleased report

R&D each leveraging making expertise. other's advancements, teams solid combined Our are

disclosures have that, the turn between call submitted, an financial in We technologies. invention synergies the company's increase to seen results. our With leveraging disclosures, dozens new I'll of Susan of number the discuss to Susan? over including the

Susan Kim

you, Christian. Thank

which of XX% $XX.X with represented prior and quarter XX As million was quarter, million million of of and pleased delivered an September revenue the quarter XX% from $X.X from We XXX in Sequel XXX% the quarter year product the another Instrument systems third in second II revenue million record revenue and the an XXXX. to increase base of and are installed sequentially a $XX.X increase discussed, growing service increase XXXX second the we of XXXX, quarter $XX.X in in an of as quarter systems during the the of $XX.X in quarter in report million, from third XX% increase recorded in third $XX.X from to IIe quarter. the XX. million third

systems $XX.X $XX.X and quarter XX% base increased growing in million consumable in XX% The II consumables. cell quarter from revenue quarter of the consumable the to represented older IIe in remained average Sequel Turning of million a result the growth the II quarter XX% Revenue at system the consumables. utilization and instrument. up third and of third per and pull-through install and sequentially $XXX,XXX. on rest in reflects usage from smart other grew base was install the Sequel systems year. with approximately third in million Sequel our $X.X prior II last increased third shipments as IIe approximately consumables of of IIe total strong in and from quarter, relatively our Annualized the

ever. PacBio connected customers our network, utilization more are We observe on customers than sequencing fleet increasing continue that evidence from further to to smart

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

service to in Our than installed Americas Sequel regional growing install the first doubled of unit third third note, basis South the reflects Sequel of $XX.X the II million a Shifting quarter America. revenue more we view, quarter, II last and revenue the in Of year. of growth IIe. from

revenue grew million and since $X.X revenue representing utilization to installed start XX% of increasing marked fifth Moving of continued the growth, of Asia-Pacific, year-over-year quarter pandemic. improvement straight base the consumable the in and the

and compared million to was revenue up prior on basis. Finally, sequential year roughly flat of the a $X.X XX% EMEA

the Spain, they and and in third quarter, distributors continues we the Our commercial signs already tangible presence the in and East, expand signed business. Africa, additional in shown driving North region, Middle of including have in to new

encourage will gross reconciliation $XX.X of and starting of GAAP in As with non-GAAP we information. of We a margin, which operational release found third investors provide will the understanding company's gross measures income and review GAAP net of today's result non-GAAP acquisition, I operating of more begin this profit to gross XXXX and non-GAAP performance. be in GAAP expenses, the a the results quarter, represented you million that our measures, GAAP believe our recent net quarter reporting sharing for margin a of for both these deeper or loss. can XX%.

inventory enhancing or Excluding second the intangibles, XX.X% gross was incurred volumes product amortization higher higher continuously from XXXX. offset by $XX.X adjustments XXXX as Benefits Year-over-year gross third compared the of higher with profit year-ago non-GAAP expenses of the of margin fair were utilization. and through as result factory. X.X compared drive of gross quarter we quarter our partially by we quarter, value improved of our of profit million represented points in factory process XX.X% XX% manufacturing a $XX.X a volume approximately a profit factory utilization and non-GAAP higher driven in million to gross

were million expenses and quarter expenses equity context GAAP on, which the million. $XX.X $XX.X third acquisition the with Moving in of of $XX.X Omniome compensation XXXX, merger-related associated included operating merger-related million of of acceleration in the expenses

higher acquisitions and expenses and compared increase headcount-related merger-related higher prior expenses in the the expense in quarter R&D $XX.X previous in Excluding the in quarter spend in non-GAAP third the of the quarter. a compared third was with The to third the quarter commercial million million, XX% primarily last quarter added million operating and totaled expenses, $XX.X sequentially $XX.X than operating result XX% and in our year. year from of second up organizations

acquisition the terms employees. XXX hiring of of with well organization increase our the as Circulomics. to due In as The June primarily of was in from Omniome XX and quarter headcount, we XXX as ended R&D

the expenses million fourth doubled GAAP in equity expected total expense stock-based $XX.X part compensation further included quarter from the of of million, of certain XX, operating a related quota-carrying the headcount in the growth quarter. awards September year expense as of to included $XX.X with we've third of the acquisition also our Omniome. start As non-cash acceleration which of the

difference merger-related and in acquisition was for in the acquisitions assets related third nontaxable million of release prior portion value. end a associated quarter receive or and valuation Excluding a therefore were tax third of the the basis to $XX.X purposes, a book-to-tax GAAP of tax a non-cash acquired in per $XX.X $XX.X XXXX compared compensation non-cash $X.X intangible booked in the stock-based the onetime discrete resulted was expense on third $XX.X discrete tax of In The non-GAAP expense of diluted XXXX Circulomics. we $X.XX the Omniome not the share. and adjustment compensation, to the The do benefit P&L was quarter. reflects a GAAP million in with tax interest result allowance. benefit million quarter in considered QX, quarter notes. $X.X basic convertible XXXX. quarter of net acquisitions our income of million income fair Interest the quarter to million stock-based basis Both third million income

loss of of non-GAAP was to a in share Excluding a merger-related third second loss loss net loss $X.XX loss XXXX quarter loss of $X.XX share net $XX.X per million the million XXXX. of compared net in the per or net million net $XX.X net per $X.XX share of adjustments, non-GAAP quarter non-GAAP was and and of and $XX

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

moving Now to guidance.

XXXX, annual IIe are our For high. full XX% $XXX in an maintaining XXXX we approximately to guidance to of in of quarter at the is revenue on QX grow XXXX, compared the million earnings year represents all-time and a August. range an million. to record provided the which with expected QX XX% We we in revenue II $XXX call had Sequel shipments to

mix the instrument IIe of first expect Sequel quarterly can be quarter. XX grow As the based still in we year. discussed, installed in on half placements half and variable to from in II previously a revenue installations particular of timing the We the we second

down Moving P&L. the

team fair GAAP non-GAAP gross to about points customer basis our to and inventory assets to higher. sufficient adjustments to On several XX% supply We global and pressures, has next which expect be In be between inventory the for diligently XX%. basis, and beyond. XXXX a meet quarters value merger-related XX chain intangible the demand procure margin worked backdrop excludes of of amortization

sufficient our may continue availability demand, there However, ensure to to is customer disruption to in to unexpected similar demand, if higher-than-expected customer industry. in our become to it meet supply chain or difficult global increase an material others

to margins result an prices over of gross are points the may chain raw on for XXX several components, incur XXX starting have a of we basis impact supply higher materials and our which quarters. next As pressures, to

operating XXX GAAP expenses, For year to the million. full be we $XXX expect and

operating our than merger-related of non-GAAP roughly expect quarter, million This in the be $XX year to full higher be by expenses guidance, operating approaching associated million which end year. includes between of collaboration, also and R&D Invitae This expenses $XX XXX expenses is previous $XXX $XX third from million approximately we million. to Omniome. Excluding we largely with year guidance the full expenses reflecting the expect

costs expense earlier year. debt expense notes issuance issued approximately interest and our year, million, which amortization full be for the reflects this expect interest to we convertible For of $XX

be share reflects quarter. XXX purposes to average million share the of the increase full for acquisition The average investment XX.X expect approximately for our for and consideration XXX in and for million the issued X.X shares count the quarter. weighted shares PIPE shares count million third fourth year EPS shares million weighted We issued for in

full press As will our GAAP ended and for Christian. for X With the non-GAAP between a net release a that, reminder, September loss call please Christian? to turn reconciliation refer to XXXX. the months I back XX,

Christian Henry

you, Thank Susan.

all able in achievements the during out I With the building X and We company the pleased locations San in we announced growing history first few left quarter, the acquisitions extremely accomplish the as been the and positioned months company's Circulomics to am our that PacBio and and our we've and continue proud growth. Diego XXXX, teams company of continued in we're this our long-term Baltimore. year Omniome new as for with closed well

As sales for earlier, we learnings these detailed that team. discussed serve, I we've commercial into expanded we're performed analysis opportunities and more our the a translating markets of

highly sequencing We to in smart on platform end-to-end and throughput improving long-read the a with focus dramatically sequencing. our of continue cost increasing invest workflow, lowering long-read accurate heavily the

health. the customers help enable enable short-read We will us offer that promise through to are and better highly having in biology acquisition our accelerating both will platforms also that long of short-read development the believe our Omniome. our ultimately acquired accurate human and them We resolve sequencing, of genomics solutions to of to portfolio

expanding with week, across share advancements you questions. customers forward call will from Meeting genomes where knowledge Virtual X, look that, for science. our Operator? globe the November User of to I'd I how and HiFi And to in Group inspiring and like the invite open all sequencing Finally, next is

Operator

go Tycho first Now Morgan. Please our of question, Mr. Instructions] with Peterson [Operator J.P. ahead.

Tycho Peterson

with are Susan like you starting flagged semiconductor we you there otherwise, as reiterating dynamics of shored up this. year kind or you inventory down the ahead about, you're issues. full I look it component supply to are some end. whether at of to I'll Thanks. think of shortages chain semis doesn't have it's to supply know, the near near I term and cameras in or And worry ahead But start the have so guidance, that term? work seem

Christian Henry

bulk question. the for it. to done we're thanks about the the good well in things that. But Tycho, very sheet order answer is strong well, a that Yes. advance Mark of position I'm one and able having have of balance going to we've

good to ask so, specifics. I'm generally in And going step address Mark and in the we're pretty But to shape.

Mark Van Oene

Tycho. Yes,

So bit Susan mentioned extra little costs. a of

secured supply some good we really long about one sure really time having far extra is products one okay. have make We can we're to ahead. that that our plan thing on the And lead

about bit little and And now. our in us battling significantly the we long of bit our get right so, pretty of little but supply one But has that a working see actually have feel a it hardest hold for position it's favor been obviously we'll simply we times. to good lead audio a I things be the industry there

Christian Henry

very company feel second Yes. of -- next year. the even the positioning the I we half and well comfortable the near And next say, we're would year, term very, it's and with for really half of first

Tycho Peterson

HiFi the front? out coming. interesting what's things NVIDIA rolled there today? on new reads the new commercially? of a that markets, super of customer your for HiFi to Enhancement And of was customers the color in is terms Are able your a incremental all going you Google helpful then like Christian, And mentioned these and appreciate I what to Are are segments. You us the penetration, on ones sense percentage are the end handful be using some of give applications

Christian Henry

all traditional Yes. away now to but I fact, are from terms to using sequencing in Hi-Fi HiFi, and unpack of there of adoption getting think A people the lot people -- moving we're more our in applications -- seeing HiFi-enabled. more

of to and being starting already compute intend But continuing fully of think we the takes IT will With I progress have important talked about take workflow. to section, algorithms road, we're that the of great you large it think And talked is are first to to and we of a of so, AAV applications. have of I much labs applications. It we some some really improve. I go make be it emerging capable to really will how read people respect that clearly, accuracy also high sample be continue will or in time when just move end-to-end advancements, to way that's customers. that customers, of We've really people prep kits. asked are because advantage launch end, opportunities the improve my customer the the kind of gives about with some And more we predominant making suspect great make today, through folks with in And throughput as -- sure as these you way. down advancements. that the progress look forward. But in raw a really our kind And the the to informatics to the already lot seen can. And that in their there standard about us available clinic labs. able continues completed that the back infrastructures the customers really, bit in with commercially

can't sequencing short very compelling. at competitive scale very isoform us. biology that enables talked emerging And that I therapy, And that CRISPR, access in about gene think can we areas paper That underestimated synthetic now then, can't So powerful paradigm it section, makes be out kind those whole Broad. this the a very to. a RNA in finally, MAS-ISO-seq do and area a came is for it from in it I my get new of reads

very And you thinking happen past you as we've new places to business installed create emerge. base, deeper in is world to weren't I applications in be past, are said But core installed customers the think, would our I before which the seen at And into simple, easy access these more this new the so, installed and from get to kits so applications for drive developing cool. our emerge where more applications making opportunity, pretty as we're the significant opportunities. in we And I've of the very around that, and the build beginning us to that can those base, that maybe base use, look it. around going drive

Tycho Peterson

the Two Are next would hop on ones I the that clinical be there us milestones quick also on before path? on about at genome next this you we are make I willing comments and Omniome think that the off speaking year point And to of guiding point? attention Street's million. whole NPK sequencer. to then, development over 'XX $XXX you year, Great. at any should paying then to

Christian Henry

Yes. on for 'XX. Simple one guidance

business grow. to continuing is our think I

quarter do give think and I really well get growing But pushing delighting is we my great keep keep objectives with we're positioned but won't every I specifics -- there. that customers one growing, I to of products. our single driving, to keep think until

excited I'm about so, 'XX. And

is If new talk you -- start road come and some new I getting launch, product see about first amplification that the to to Omniome using our see and thing amplification method you'll you'll the think that out method. data

So notch, in to take just back end. a front had EPCR it Omniome developed fully

with capabilities, is expect the to with That sequencing deep development the we that that needed market. they and which end problem new say beta -- give expectation really went -- mean to we like access throughput expect us then, test 'XX. and early successful beta capability, conversations tests front launch out when the to and technology is end. that commercialization this see is great And get fully in I get we fact, things in developed to to ultra-high and go where would platform to in a our And would to actually. world big end. was I global I front see front-end launch scaled full front develop But through that about the would launch, with full data want a I In quarter powerful it will already fully we with before past very we think this and see a data my anywhere coming

You going Mark know cover was to Invitae. what,

Sorry, I missed.

Mark Van Oene

for some milestones. key asked You

them all next front, So get that exit concept next do looking input, by next concepts obviously, once we week meeting. actually progress Committee the all with end preliminary of we've making assumptions the and We're some through to we on demonstrated generation more the around that and aligned on all Invitae, our the designed look quarterly great phase for our actually the on have week. of Joint Omniome year. data Steering we

And kicked So really teams new the encouraged with groups we've off together. Invitae. working the working are way some with

see We've amazing next sequencing then forward many power a meeting infrastructure and looking really the sample because got to work going with prep, So with encouraged they our another and is you end, genomes you front-end but the engagement group. that the remain on on to a have week. where to them lot require automation imagine, a we've got compute the working compute whole of expertise team back can

Christian Henry

concept Mark exit the development point, I be with expect that parlance, to it able it development of into start be take data, And talking about, feasibility is demonstrating and and a we've right the that we for project on what that means track. we this will is which timeline we in It's at really Yes. program, outlined. would where prepare the demonstrating ourselves accordance still to think then phases launch units, working as to was

right publicly talked but we're about it, We really on haven't track.

Operator

our Kyle go And Genuity. for next of Please Canaccord ahead. question, Mikson

Kyle Mikson

long-read of sequencing, question. using Hey public U.S. like that's evolving? Prenetics competitive and your pretty long-read, the with the of guys, the sales things are you to outside like Your on busy want main and on kind I taking in own for team, publications things also obviously libraries their with thoughts it's landscape my other start some the short-read quarter kind how the updates. competitors long-read highlighting among thank Congrats great and of

types in are customers, maybe internationally, Asia? guess, any in especially noticing change Europe you competitive or landscape or the from of requests changes any in So I the in of environment

Christian Henry

highly company, Outside want, to And quarter. on as of we're grow. that's that long-reads, sequencing in our I the we focused they're human reliable. up Yes, interesting they're a because United don't With competitive see of revenue, we think answers one the et we you the driving Kyle, for thank They where and continue the comments reasons are frankly, it's in learn our the the thank respect we're because in for and revenue on in and about customers, great we're to rest infrastructure you you more reach great those all the could quite competition making progress as now commercial and question, China, to their because actually that's States, APAC. continue driving continuing cetera. so grow, think situations, of that we systems progress we the why And very coming to you top. clinically give I we our out Korea end Japan building and Europe overlap in much and

excited my at prospects think I'm really from so about our down slowed and dynamic competitive I And don't perspective, from all. much a we're very

to customers gives However, market I in actually the people I and respect pushes We're competitive have hard. -- because give solutions need. think great want that they us -- competition it it to just it's the we

think frankly, so I we're think but of balance, it's competition, quite I don't And growth, on respectful slowing down our iota. one our

Kyle Mikson

with kind was possibly Okay. long-read. plan I agree first was guess That there Yes. the Omniome? the is And is kind far have last guess the announce I adjustments makes that you'll which And Christian. sounds that but Omniome encouraging, guess, in half I some line Omniome. that tangible submit guess of believe I still plan? excited? a thus but seen turn on of or publications really really merrier I or know -- far launch to I I is touched plans you've so of to you encouraging like the in anything the method appreciate helpful. to that, any I with how this it more you in XXXX. data in that to the the that was that seen going 'XX, wanted were questioning of amplification maybe I

Christian Henry

mean -- not be -- bit. one seeing even not data great we're mean, I I'm that Yes. I'm overstating every day I to

our clearly counting-type show technologies sequencer first generating of we'll will working frankly we see allow to of how to is done which -- probably expect, their the that but you want reads millions really peer-reviewed operate, really get The close an think that opportunities to has which launch specs make competitive in what plugging a publications, We're what that other amazing 'XX, you'll the powerful how market. this everyone and hundreds into with, of on. for taking with on us see right really that which our densities can accuracy is we're job. present and schedule 'XX. sequencing half are the little clustering you'll bit will quite data. to per the exactly ahead commercial well give be working it seeing the able team of around understand and data we of workflow. we to would run, we're I hundreds and with And arms Hopefully, the In

And -- how this leverage we're much so is prepared and talked we're very remarks, and have there teams my the seeing. what encouraged at also already And trying bit about about aggressively we're how been surprised I teams I'm in that. I'm -- pleasantly between synergy to the a technical

competencies and core compute we simplifying in As informatics very like you in us molecule the that also and and powerful the surface chemistry. can and that, workflow, fact gives sequencing which know, But the things moving than if technology single entomology chemistry dye faster higher results SBB challenges SMRT -- of go have sequencing, with would quality that problem those the also will if make ideas we lot -- solve standalone. provide have a to moving development that been Omniome probably

right of the get to seeing every redesign And more as is performance talked the and on more capable the capability and well it is tests talked level I well the significant, into when instrument going a is now, method market as it's are closed work. sequencing why we really as the the development development. the integration a using acquisition. beta redesign go the the not product on indications instrument powerful, prior gives proper going product anything. So important shows we'll went some lot We're ground-up about user-friendly about I to you EPCR that's The it is well, more how that really or make the we build but instrument, doing on to But beachhead, not well.

Mark Van Oene

having we're the with conversation is impressed what also want really by with applications encouraged add, accuracy I'm The to really Kyle, people higher with the only benefit. that other thing technological EPCR. read I'll will explore and shift

to sample And accuracy. external explore go really good probably types to some and start so access some to about really QXX its conversations

Christian Henry

Group very our for conversations as you mean charge, his technology. lot addition leaving Corporate well around the important taking bodes the to has job in Development Omniome of and a technology, day I Mark know, which really of the been future runs the

Kyle Mikson

all guys. I Perfect. that appreciate color

it's think I awesome.

about surveillance the as was data hop if off, guess, And just trends, summer I one current it's exciting related of meaningful see Maybe, ability stepped you me could going Let just to quarter, of COVID that's walk through the then same published during in why to kind was in is I to but break I before news testing? quarter? sequencing the I COVID. a wondering launched months. just third one one portion could material that out guess, from that, cumulative expected. saw more I'm ask do the you revenue solutions if quick Mark, really so the compared to sure the CDC be time fourth to you your up

Mark Van Oene

HiFiViral? The new

Christian Henry

we're with excited about why Yes. so why that, it? HiFiViral, Maybe start

Mark Van Oene

on revenues. move COVID of prove. a this of us important is to the But to some couple that for I'm things going to let Susan

ourselves First, we to product. a kit prove could that

back-end us to so perhaps molecular capabilities is about in like the workflow And enrichment X important dramatically new really what this really this and moved thing now developing we've inversion the with time. informatics. workflow doing for those the first product which was do. an hands-on and But our probes, end-to-end is with library I with And to kits, improves sequencing

plug ARTIC this. automation to and embrace going to that this existing are other market, see really on so you laboratory PCR into technicians you're that just And compare to or approaches seamlessly if start approaches

tile to dropouts. virus, we're to unlikely we're really perspective. so going to we've a differentiated the workflow sure And from from make the from we also that been a mean able across want product suffer create to I way

really And is those be so as emerge. discovery to of variance to going new important continue

that And feel workflow good for to I the around that's the we laboratories an but we've So really not to think a as benefit just data which time, PacBio quality trying world. is of organization. that first do workflow we're how build going the a created representative

Susan Kim

sort talked the by revenue COVID to of single-digit customers kind this we're to of of super be we've we're surveillance. of supporting revenue number we're quarter. kind product of about terms it for millions Kyle, expanding We're maintain of excited that in of released And in revenue HiFiViral and going continuing the the level. volume, course, that's

we all continuing fully out but into us, can it's for that So expand -- then about the that that introducing getting customers. and market, product so to kitted more

Christian Henry

in Yes. because The don't we of get challenge of such we each have sample Kyle, fraction dollars terms small a a kitted solution.

but are And sequenced in our million dollars our is hovering more -- samples revenue so kind and albeit being revenue of a the still few quarter.

So really was multisystem say And significant I core. orders. it the core and significant the wouldn't the was business, It onetime it of quarter. was was it also a overperformance to the contributor

dances volume order multisystem in doubts quarter-to-quarter. Our place the in same from

it's profile force, actually our and in territories, new with -- splits to split and the opportunity really driving territory the as some. our of more sales raising those we instrument the So generally in are us territories talk the particularly individual those customers us Americas orders expansion to giving

that's than funnel healthier funnel driving sales and been. think ever is sales our I our it's

Kyle Mikson

Great. Thanks for the details everyone.

Operator

next for from Savant And Morgan question of our Tejas Stanley.

Tejas Savant

to just guys, wanted the back guidance, Hey Susan. I go instrument to good evening.

by exceed And pretty suggests a sort and I for second fourth that my thinking pull sure the think have third a there's upside you just here? That's we year. the quarter XX XX mentioned about in floor big to be forward of of that any should you doing quarter. half more about as than step-down, to XX that the units units sequential in the expect did or curious you number. whether I'm I'm But math,

Christian Henry

Yes.

we pull seen to not forward X the quarters quarter-to-quarter, but So the did to continues we that is the reality number each so this continue to from one. of business instrument will as I'm year And you've take The that quarter. variable far. fourth be much say going in of that have the from grow,

wide. in last quarters every to planning quarter 'XX customers, few might variable well. on be You're customers we be making little this more we sure focused our than that range But single grow serving preparing placements very that for might are drive right, therefore, what too point, our and we've and a the seen and instrument as at

factors lot I I is of XX, So what at it so than there's think Susan you involved. more think said And a that. can take

Tejas Savant

it. Got

And on expecting related flush what here? year-end of around note budget are that Okay. Christian, you the sort

Christian Henry

it's know enough it's still -- in yet. always -- That's don't we're where a we good the quite question. answer quarter And that early

thoughtful good -- not year flush because the very My guess too had we there team far our which some past. a continuing and about a quite outcomes, come focus I QX, just think opportunities. strong budget incremental had being in are manufacturing supply in flush in, have is support not quarter to of And if prepared last we're issue, business. we that's great on Mark's over skis issues. to whole first budget orders the them. the to full an ready organization but knows, quarters getting exciting. I has and base quarter of getting who And We done a the chain supply of range job was

Tejas Savant

And commercial on it. one then here. Got expansion the

of you any quarter quarter. have target that as new in rep in You of of XXXX? relative here? plan sales mind ahead team doubled your a to you 'XX the you a productivity the terms plan can and had quota-carrying said to Do in you year-end further color then And fourth grow new you share reps the

Christian Henry

Yes.

So with question. the the -- new start productivity I'll

thing and up then about greenfield that I talked I I one territories longer last reps get found, that our are think call, is I say, into to said ramped this that norm. -- think the we on historical going are our taking

had just X And as there's and some that a order get X Reps X are so this probably I've to X of quarters, expanding tell months our split are taking as of see more much I in going funnel the going. and -- -- for in months. than X and about reaching think was, people much months how territory there. to Outside means the X we're are sense we've that and it's seeing are actually single-unit Americas building the more just we what seeing lower example, of they seeing. you're commercial excited much and balance, think through which because already the to funding X territories, do before, perhaps benefit to front-end is our the getting we're because -- in appropriate where and ever customers. you a on the you making on can And They're potential you levels funding. organization on more in and U.S. relative we're tender I the the value we're said advances could we're But because prepared of and obstacle IIe much bigger remarks in orders is general. are the have Sequel strong processes proposition variable seeing back-end. the States, United those the Funding

need 'XX, I be think we will into think our but overall Europe core expansion growing out I continue Europe, be it in proposition to value the compelling. so becoming more And a Asia-Pacific. When think sales and the will -- principally into is I focus also force will

in definitely Australia, in So expanding Korea. some Japan,

I think those are opportunities.

expand we'll leadership area bit. for effort opportunities out a we so some of huge the figure aggressive much there's a to China in China. think and It's customers can us en quite have likely more more that how in put I that into

wait possible. double a we reps And that from Do wouldn't many the a as push weeks in as few about big up. it don't we're reps. 'XX have know. I as to you the what But wrap think us here? sales so we surprised that in to will tells sales customers reaching see be I be we We'll make sure when budget

Tejas Savant

final on approval obviously terms in then seeing Can one from the there those order book pull post-NMPA you're evolving major and how that's China give And one us it. of Got do through? me, here? on you a Christian, you. see trends And some for you geography color what

Christian Henry

Yes.

I think early to too post-approval. it's say

news. talk think and seeing we're pretty continues be continue China, be to fresh the strong. to But Hopefully, in I wait business I to it decent. and Barry. see That's think we'll

Susan Kim

COVID still be continues improving strong, quarter. since every It to

Christian Henry

to improve. continues It

really think I so And we're on China. bullish

opportunity our out China think macro with outside in we the control between over what little and factors our we're front lose frankly. customers the I start us, think and control. based are of there's to actually encouraged, still technology, we we that what doing are see sleep maybe I of bit, but U.S. our quite completely on and quite a what that But can control of completely is they're and

Tejas Savant

it. Very helpful Got thanks guys.

Operator

of for Please Cowen. the And Dan Brennan next sir. ahead go question,

Daniel Brennan

of like you a thanks just, you question. the times Great, the Maybe like look of course kind clarity it you taking funnel just provide Christian, past it. evolved could how give looks couple on it's know segment of I sense itself, the alluded funnel a kind customer call, for just my of in But during of to on on today the but a the XXXX? what over maybe don't and

Christian Henry

Yes.

color, more, Doug, be have executives going projections. communicate that the you new from and all, let's about lot club. pretty given improving Dan, give ball processes of it's common don't sales a reliable but and internally force We've are we year role. those We're we will funnel I forecast a that front think that of lot all better spent With time. much miss color ton the of language a of and we up we you defining this to accuracy, state give good to on get each of your we and can to are being can haven't First with built stand itself, respect so and evolving creating congrats you funnel because in time which what to on with a the the so the hope other

that. things segment, The that reality on the time, the the have build capabilities, and to had for of we we're focused kind the in of some market those relative first any our we and of revenues. is didn't come that One areas of talked company and about

so really comment use. give given This And the me I appropriate that than this specific on general time, the at the very future footprint have -- the impact see not given is more impacting any the binary had But probably there than often to such for over you -- is quarter, funnel into they're funnel, generally in it's because the quality size they could strong we're other visibility But since of instruments help increasing time, dollar does any at quarter. will we've you and us the give on funnel the and us products commercial perhaps what if still color we past. an which in platforms. directly better quite quarterly are significant demand for a look This out grow. the of encouraged numbers, and large part they're very our revenues that these

margins. we we will grow, improve be gross As able to our

our across and push breakeven we be improve we'll the gross to margins, As better. make flow business get able cash better and that leverage getting towards ultimately to

Daniel Brennan

on that to on but an that? impact seeing you're that maybe pretty entering headline growth over see XX 'XX. -- that academic was discussed, you've or be it something months? which Obviously, at the clearly all kind that Just your to into going a one seems kind Great. high-level the your got lot funding. next the levers robust wondering seeing on and just salespeople disposal, growth from figures at is That are top of of something to of that Maybe how we're helpful. a you've translates Is XX

Christian Henry

at and good strong as we Invitae, right, research to But a reasonably interesting, do providing funding point all the products. day, and a academic good in with us both much with with like customers used and even academic, and set. we're more their the to opportunity academic back used academic translational we today being pushing It's fall environment rise -- balanced -- because see this and be

we like I on think market reasonable good the now. shape our beautiful I are pretty small, Americas company, the need them funding, expand. critical And of is thing Mercy bit genomes is the is But to are to for of lead pretty still way get already that, that they've and build grow about, aggressively. to balance, academic harder sequenced think example, as footprint a is But amounts and us right Kansas are our XXX seeing very, EMEA, too continuing the great. for where continuing accounts is we to in Children's there talked of and very it showing sequencing and to are a City, yes, to there. but power over success really we're long-read on they is and thrive, which

Operator

closing would the At Todd we call Mr. remarks. And questions point, like to on to some longer the no have for Friedman I turn queue. over back this

Todd Friedman

us all for Thank you joining today.

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

Operator

And this concludes today's conference participation. call. Thank you, everyone, your for

may all. disconnect. Thank you You now

Pacific Biosciences of California (PACB) 3 Nov 212021 Q3 Earnings call transcript