Pacific Biosciences of California (PACB) Stephens 26th Annual Investment Conference | NASH2024 summary

Market positioning and growth outlook

• Long-read sequencing is seen as providing a more complete and accurate genome view, with ongoing efforts to close the price gap with short-read sequencing and expand throughput, targeting a $6–$7 billion market.

• Despite macroeconomic headwinds and elongated sales cycles, especially in the U.S. and Europe, sequential growth in consumables and record utilization in EMEA were noted in Q3.

• New customer adoption remains strong, with 45% of Revio shipments going to new customers, though these customers take longer to ramp up.

• The launch of the Vega benchtop platform, with a lower price point, is generating significant excitement and expanding the potential customer base.

• Stabilization in Revio demand and sequential consumable growth provide confidence in a return to growth in 2025, supported by an expanding install base and new product launches.

Product innovation and customer adoption

• New chemistry (SPRQ) reduces DNA input requirements by 4x, enabling hundreds of thousands to millions more samples to be sequenced and opening up new sample types.

• Most customers are expected to adopt SPRQ chemistry by the end of 2025, driven by higher output and lower costs.

• The Vega platform, announced recently, has a sales funnel in the triple digits, with over half being new or potential new customers.

• Promotional pricing strategies, such as the Run Revio and Vega Access programs, have successfully driven adoption while maintaining gross margins.

• Onso platform saw record placements in Q3, with oncology and liquid biopsy as primary applications, and global reach across 18 countries.

Financial and operational efficiency

• Cost reductions have been implemented in both instruments and consumables, with further improvements expected in 2025 as lower-cost inventory is sold.

• Manufacturing yield improvements and reduced waste in SMRT cell production are ongoing priorities.

• Operating expenses were reduced in line with revised revenue expectations, with a focus on maintaining commercial scale and prioritizing key R&D projects.

• The organization has been flattened to improve communication and efficiency, with 2025 OpEx expected to be lower than 2024.

• Flexibility in OpEx is seen as a key lever for achieving cash flow positivity, depending on macro conditions and revenue trends.