Pacific Biosciences of California (PACB) Morgan Stanley 22nd Annual Global Healthcare Conference summary

Key accomplishments and operational progress

• Achieved a 400 basis point improvement in gross margin last quarter by reducing Revio production costs by nearly 20%.

• Advanced R&D on new platforms, including a benchtop sequencer and high-throughput short- and long-read sequencers.

• Realized over $75 million in run rate savings through significant and early cost reductions.

• Maintained R&D progress and schedule despite workforce reductions.

• Optimism for future growth remains high despite revenue challenges.

Market dynamics and sales trends

• Instrument placements delayed by global economic factors, including budget cuts, high interest rates, and geopolitical issues.

• Sales funnel remains strong, with growing demand and increased conversations about long-read technology.

• July and August showed improved consumable utilization and instrument use, indicating positive customer engagement.

• Promotional programs, such as leasing and trade-in offers, have effectively driven customer engagement and increased the sales funnel, especially for Onso.

Customer base and utilization patterns

• Nearly half of recent orders are from new customers, many transitioning from short-read sequencing.

• Utilization expected to follow a bell curve, with a significant portion in the low and mid buckets due to early market penetration.

• Clinical and translational customers show higher and more durable utilization, with almost a third of Q2 instruments sold to these segments.

• New targeted sequencing products, like PureTarget, are enabling high-throughput clinical applications.