Pacific Biosciences at Canaccord Genuity: Strategic Shift to Clinical Markets

On Tuesday, 12 August 2025, Pacific Biosciences (NASDAQ:PACB) presented at Canaccord Genuity’s 45th Annual Growth Conference, showcasing a strategic pivot towards clinical and biopharma markets. Despite challenges in the U.S. academic sector, the company reported robust global revenue growth and underscored its commitment to achieving cash flow positivity by 2027.

Key Takeaways

• Pacific Biosciences exceeded Q2 expectations, with a 60% placement rate among new customers.
• Revenue grew 45% outside the U.S., counterbalancing domestic academic headwinds.
• The Revio system’s cost efficiency is driving clinical adoption.
• Multi-use SmartCells are anticipated to boost high-throughput customer engagement.
• The company aims to be cash flow positive by the end of 2027.

Financial Results

• Q2 Revenue: $39.8 million, meeting expectations.
• Growth in Rest of World: 45% increase, driven by international market focus.
• Gross Margin Improvement: Continued quarter-over-quarter improvement due to mature products and better SmartCell yield.
• Cash Flow Positivity Target: Aiming for positive cash flow by 2027, with reduced cash burn in Q2.
• Clinical Consumables: Now account for 15% of consumables revenue.

Operational Updates

• New Customer Acquisition: Over 60% of placements were with new customers, indicating strong demand.
• EMEA Growth: Expected to be the strongest growth region, supported by PopGen studies and hospital adoption.
• China Market: Modest pull-aheads in consumables offset earlier pull-aheads in Q1.
• U.S. Academic Market: Existing tools remain in use, but fewer Revio sales to academics in H1.
• Multi-Use SmartCells: Launching in phases to target high-throughput customers; designed for multiple uses.

Future Outlook

• Revenue Guidance: Narrowed due to increased confidence in the second half.
• NIH Funding: No expected upside in the second half.
• Academic Demand: No forecasted pickup in the second half.
• Clinical Market Growth: Anticipated with the launch of multi-use SmartCells.
• Market Share Growth: Focused on providing affordable whole-genome pricing.
• High Throughput Platform: Prioritizing long-read capabilities over short-read.

Q&A Highlights

• Revio Placement: Challenging, with only two sales to academics this year.
• Clinical Adoption: Increasing use in clinics and hospitals for large studies and diagnoses.
• Pull-Through: Mature customers meeting expectations; new clinical customers ramping up.
• Multi-Use SmartCell Pricing: Higher cost per cell, justified by multiple uses.
• Ultra High Throughput Platform: Development continues, aiming for price parity with short-read.

Pacific Biosciences remains optimistic about its strategic shift and market opportunities. Readers can refer to the full transcript for a detailed analysis.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Todd Freeman, Head of IR: Todd Freeman, Head of IR. Thanks guys for joining us today. So maybe guys just walk through your second quarter results. You just announced them last Thursday. Good good quarter, better than we thought.

It’s acting pretty well. Just maybe do a little overview.

Unidentified speaker: Yeah, great. Kyle, thanks. First let me thank you for having us. This has been a great conference for us so far and second for giving us a chance to talk about PacBio. So this quarter, we were really happy with how things finished this quarter.

I think like a lot of companies entering this quarter, was lot of uncertainty with what was going on with the NIH, what was going on potentially with tariffs. We felt like we navigated that really well. Came out with a solid 39,800,000.0, kind of right in line where we thought we would do, a little bit better than what everybody else thought we were going to do and some of the things we’re really excited about were over 60% of our placements were with new customers to PacBio showing just the versatility and demand that exists as people see the value of long read. We had 45% growth in rest of world which we were really happy about, an area we really started to focus on. And then saw gross margins continue to improve quarter over quarter, another area we’ve had extreme focus on as we mature our products and see our smart cells get better yield.

A great quarter, really happy with how things finished up. Todd, if you want to add anything?

Unidentified speaker: No, that was great. And continuing our path to cash flow positivity. So another quarter with a reduced cash burn, and we expect that to come down even further in the second half of the year. So we’re driving towards that goal of being cash flow positive exiting 2027, and it was a major step

Todd Freeman, Head of IR: in Q2 on that path. Okay. That’s great. So maybe you kind of refined the guidance range a little bit. How are you thinking about the key like international markets, APAC, China as well as EMEA and stuff going forward?

It did really well, obviously, in the quarter

Unidentified speaker: Yes, mean we’re still looking and anticipating EMEA being our strongest growth region. We’ve made great inroads there with some of the PopGen studies and some of the hospitals and we continue to see that type of progress for the rest of the year. We also saw continued improvement in Asia Pac. This second half of the year, we’re still anticipating that. We did see some modest pull aheads with China, but that offset some of the pull aheads they had in Q1.

So part of the reason we’re showing kind of flat revenue quarter over quarter is because anticipating some of those pull ahead in orders in China, but otherwise we’re really excited with how things are going in the rest of world. And that’s really helping us offset some of the headwinds we’ve been seeing here in The U. S.

Todd Freeman, Head of IR: And then in China, what exactly was pulled forward? Was that like, you know, instruments or consumables?

Unidentified speaker: Mostly consumables. Mhmm. Yeah. I think it’s, know, we have we have a lot of tools over there. I think our distributors there wanna make sure that they have the consumables available for our customers in China.

So they wanted to make sure they had those in stock.

Todd Freeman, Head of IR: Got you. And maybe just since we’re on the topic, talk about like why you kind of narrowed the guidance range and why, again, like you literally have more confidence that you’re going to be at that midpoint basically, more visibility. So again, like it’s in a time when it’s pretty uncertain, especially with on The U. S. Academic side, why are you more certain, I guess, of the outlook in the second half of year?

Unidentified speaker: Yeah. I think it’s a couple of reasons. I think number one is there was two reasons we were concerned with the second half of the year. First was the tariffs in China and second was the NIH and the potential decline in funding there. And I think right now we’re feeling pretty good and pretty confident about the second half in China and the rest of the year.

I So think from the standpoint there, we feel like we’ve taken the risk out of the bottom of our forecast. On the high side, we were hoping that potentially things would clear for the NIH funding in the second half of the year, we might see some of that upside return. Right now, we’re still cautious on that, which is why we brought the top end of the guidance down.

Todd Freeman, Head of IR: And then maybe just your U. S. Academic customers, you know what was what was their activity like in the second quarter, you know in terms of like savings, spending and things like that? And then how are they I know it’s been, we got this update last week from you guys, but basically like what’s kind of the current perspective from them? And how do you anticipate they’re going to be using their funds if at all going forward?

Unidentified speaker: Sure. So there’s sort of three dynamics to our academic customers. First is the ones that already have tools and how are they doing and they’re still spending, they’re still running their studies, they’re still buying consumables. So we’re excited about that. There’s still demand, there’s still scientific discovery happening with those academics.

Two is, some of the customers that we’re potentially hoping or the academics that are potentially hoping to have bigger budget amounts have, didn’t have the funds available or probably wouldn’t have had the funds available and have actually been buying Vegas and we’re excited to see that because we’re still getting these folks to convert to long read. Two, we only sold, sorry, number three is on the revios. So we only sold two revios in the first half of the year to academics and that’s down dramatically from previous years and that’s part of the reason we took the low end or the high end of the guidance down in the second half of the year is we just anticipate that not changing. But what we have heard from a lot of these academics is if they get clarity and if things happen, they still want the revio. They’re still talking.

It’s just we’ve and when we talk to our sales force and they’re talking about these opportunities, they’re right now pushing them into 26. And they’re saying until people feel more certain about the funding environment, they don’t want to commit to a plus a half million dollar plus tool.

Todd Freeman, Head of IR: Yeah. On the revio, you know, is that I mean, just confirm, like that is definitely like the instrument of the future for the company that’s going drive a lot of the financial performance for the next couple of years, guess, until the next ultra high throughput longer, let’s say, whenever that comes out. So that’s so it’s very important. Know, placements have been have been, guess tougher. I think it was like what 15 or so in the last quarter and two of them year to date in academic.

So is there like a backlog or like a pipeline or like maybe to actually just talk about the funnel, what it’s like. Are you pretty confident that you’ll get some shipments at some point next year if the, again, like the funding environment kind of is a little bit better than feared, I guess?

Unidentified speaker: Yes. So once again, I think right now, one of the things we’re excited about is the revenues are still selling and they’re selling into areas we historically not sold as much into clinics, hospitals that are running larger studies, hospitals that are using it for diagnosis. That’s the area that’s been sort of making up the shortfall for us in the academic environment. So right now, I think we talked about it, for the second half of the year we’re not seeing or not forecasting any pickup in academic demand. I think everybody hopes based on what we’re hearing from a lot of the folks in academics, the academic environment is they do want to buy the revios and they are indicating once they get clarity in the twenty sixth, they’d like to place those orders.

But right now, we’re not bringing those opportunities into the sales funnel. So, there’s upside for us if they decide if there’s a budget flush, know, we can build the tools and sell them to them. I think we’re, what is, what’s great, what’s great about the fact that we’ve had to focus on areas other than academics is we’re actually building a muscle to sell to biopharma, to sell to clinical. I think historically the company has had a huge reliance on academics and now we’re learning how to sell into these new markets which I personally believe are the bigger growth market for us. As well as the fact we have some of our clinics now that are actually launching some of the LDTs and other things right now and we haven’t actually seen those consumables get into our run rate yet and we’re excited as they get up to their going run rates, how that’s benefit us going forward.

So we’re actually developing and becoming more than just an academic research use only company. We’re becoming a company that’s a valuable partner with clinics, with hospitals, and around the world. And our sales team is doing that because the sales to the academics right now are not happening. So when they do come back, we’ve got that sales channel built plus this new sales channel we’ve built.

Todd Freeman, Head of IR: Perfect. Yeah. I want to get to the non research side in one second. Just on the pull through, so that for Revio, you have this range where I think it’s like low to mid 200,000 or so is the pull through range for the year. But you have the product has been out there since 2022 really.

I mean, people have some people have it for at least two years. How were like those cohorts trending in terms of utilization? Or would they be are they operating at pretty high utilization, like well above that kind of like two nineteen ks that you saw in the second quarter? Or what’s going on with utilization? Why is it kind of like a little bit modestly growing?

It’s accelerating a little bit.

Unidentified speaker: So I think our mature customers are utilizing as we expected. That’s remained steady. I think part of the thing now is we’re selling to more of these clinics and hospitals that are ramping up. That’s artificially decreasing utilization because there’s more tools in the base. So I think we’re hoping it’ll return more to the high to low mid 200 thousands as these clinics and hospitals get up to speed.

And then I think what we’re really excited about is potential utilization with some of the things we have coming in the future with multi use. I think with some of these higher, these customers that have higher throughput needs or want to compete with lower cost because they’re being reimbursed, our foray into multi use is going to be hugely beneficial to those high use customers and we believe that will actually increase utilization because of the requirements that are needed to run the chips multi times.

Unidentified speaker: And when we think about pull through to by customer base, and this is why it’s so important getting into the clinical run rate business. The research customers, you know, they tend to be project based. So what we’ll see sometimes is, you know, certain customers will have pull through well above our company average for several months, and then they’ll go, they’ll analyze the data, they’ll they’ll stop sequencing for a little bit, and then pull through drops. And so research and academia tends to be a bit more lumpy, whereas getting into the LDT and the genomic testing labs, as they get their labs up and running on their tests, that tends to be more steady volume. And so we’re still in the early days of these customers really starting to ramp.

But when they do, it will be nice because that’s a more predictable steady volume, and we’re working towards getting to that state. Okay.

Todd Freeman, Head of IR: And then, yes, on clinical, that’s like 15% of the consumables, think. Think that does not include translational, right?

Unidentified speaker: That’s correct. So that 15% is genomic testing labs, it’s LDT labs, it’s children’s hospitals who are using it to return results. So it’s not these research programs in cancer or genetic disease. That’s right.

Todd Freeman, Head of IR: Okay. So it’s would you guys characterize that as kind of inflecting that research that clinical business? And if so or if that inflection point is kind of in the somewhat near term, what I know Revio is like the catalyst that kind of helped that. But like what is it exactly about your customer base or your go to market strategy that really helped you you know get to 15% which is pretty material you know mix for clinical?

Unidentified speaker: I’ll let Todd give the details. It’s two things. I think one is some of our chemistry around pure target. We’ve been working with them specifically to bring solutions that are easier for them to use that work with automated tool sets that they have. And then number two is seeing the pathway to decreasing whole genome sequencing through our multi uses.

We talk to them about that. So they see a path where we as a partner will help them not only be more effective in their diagnosis or in their discovery, but more cost effective. I think you’ve got all the specifics.

Unidentified speaker: And it’s really just what the Revio has enabled. So Revio has been on the market for about two and a half years. Before Revio, the SQL two platform was great, but it was 3,000 to $4,000 a genome. You could only do 80 genomes a year. So the cost wasn’t there.

The throughput wasn’t there. That really means PacBio HiFi was really set aside for just research only activities. Revio really changed the game in terms of what it could do in that that clinical setting with with bringing the cost down now to $500 a genome throughput up to 2,500 genomes a year. That really opened the eyes to a lot of these these LDT labs that, hey, I could bring this into my lab and I could have a production mode test off of PacBio sequencing in a way that didn’t exist just a couple years ago. So Revio is really, along with things like PureTarget, has really enabled these labs to start seeing the potential of putting HiFi and PacBio into their run rate production test.

Unidentified speaker: And the fact we’re combining what used to be multiple tests onto one test. A lot of the legacy tests that some of these labs had to do to get a diagnosis, we can now do with one test. So they’re also saving time from a labor standpoint and how much they have to perform. Okay.

Todd Freeman, Head of IR: And then in the clinical like portfolio of customers that you have, let’s say, on the conference call, brought last week you brought up like GeneDx and Varyontics. You have the Ataxia test. Like you have all the a bunch of our partners. Are any of these like going to be like a material like revenue driver anytime soon? Or are these just like proof statements for that clinical business for HiFi?

Yes. I think over the next couple

Unidentified speaker: of years, they have potential to be a meaningful revenue driver to our business. Not significant in 2025. They’re still building out their panels, and they’re in the early stages of putting them into production mode. But especially when we release our multi use smart cell, I think that’s going to really enable more volume to come onto our platform. These customers, they keep telling us if the cost were just x amount lower or if it was just a little bit closer to where short read is, we would migrate tens of thousands of samples over.

And we’re heading in that direction. And we believe when we get there over the next couple of years that that’s going to really drive a lot of these samples onto PacBio from legacy technologies. Okay. On the multi use SmartCell technology, I mean, so the thought is, first of all,

Todd Freeman, Head of IR: this can be just used over and over again like the yield does not decrease with each use, like any wash and stuff, that true?

Unidentified speaker: That’s correct. Going to have the same specifications as our current

Todd Freeman, Head of IR: multi use. Which is really important. So in theory, who would let’s say this is launched in the next several quarters, who’s going to be an early adopter of this? It sounds like it’s great for clinical, are research people going be using it as well?

Unidentified speaker: Oh, Anybody that’s sequencing any meaningful amount, this is going to instantly give them a lower cost per genome and really accelerate their research. If they’re a research customer doing a project, it’s going to allow them to move more tests onto PacBio if they’re you know, a DX or LDT lab. So, you know, we’re gonna we’ll likely roll this out in in phases, and we’ll we’ll likely target the highest throughput customers first as being potentials to to adopt this this new feature. But, Ray, it’s it’s going to significantly reduce their cost per genome at the same time help our gross margins as well because the the smart cell is the the most expensive part in our manufacturing of the consumable. And so being able to ship that once and have the customer use it multiple times is going to help our our cost profile and our merchant profile as well.

Todd Freeman, Head of IR: Yeah. I mean but how is the revenue payment you receive for lease from our sellers that can be used multiple times? How can you kind of even that out given

Unidentified speaker: exactly. So it depends on we haven’t disclosed any pricing yet, and we’re still working through the final details on what we expect pricing to be. But at the end of the day, it does assume that customers will move migrated samples over to long read and increase their utilization. And so for this to really be revenue accretive, it doesn’t have to we’re talking about a couple points of utilization increase to really be accretive to revenue. And the assumption is that with the lower cost that the customers are getting, they will move and migrate more samples over to the platform.

All right.

Todd Freeman, Head of IR: So the per SmartCell cost would be maybe higher than right now? That’s right.

Unidentified speaker: That’s right.

Unidentified speaker: Exactly. So depending on the number of uses you get out of it, you would increase that cost of the SmartCell. It would come with the reagents necessary to do the wash and the reuse. But you’re getting more uses out of that, so it has higher value, so you’ll pay more for it. But it will be less of a multiple than just the number of uses.

Unidentified speaker: Yeah. And part of part of that is because in order to utilize and get the reuse, there’s a time clock. You’ve got to schedule your runs and schedule your samples because once you start using the SmartCell, you have a certain amount of time you need to use it in. So one of the things we’re excited about is it’ll bring more volume on because these larger customers will be scheduling more samples and running more samples. So in many respects, it encourages higher utilization because if you don’t use it in a certain amount of time, you can’t use the chip.

So it’ll one, two, three runs will be scheduled ahead of time. So and that’s why we’ll be targeting the highest utilization customers, the ones that understand that need and can actually plot out how their pricing and their cost is going to be benefited by that.

Unidentified speaker: There’ll be a lot of customers who still want the single use cell. And so I think there’s going to be a lot of demand for that still too. And so we’re gonna still offer both single use and multi use. And, you know, depending on the application and customer, they’ll they’ll buy the consumable that’s right for their project. Okay.

Todd Freeman, Head of IR: Just in terms of pricing, So Revio SmartCell initially was like $995 per genome. That’s right. And then now with Spark, think it’s like around 500 So dollars is the with this next iteration, the launch of the multi use chips or SmartCells, you would maybe there’s going to be a little bit of like a per genome or per GB like decrease. But again, there’s always other like economics that are going on too. That’s a good way to think about it given we’re talking about the future time point.

Yeah.

Unidentified speaker: It will bring the cost down below $500 Right now we’re at $500 a genome. Will bring it below that.

Todd Freeman, Head of IR: All right. Got it. All right. So and in terms of the gross margin impact, recycling I assume recycling is part of this right too, right? Like customers can return these smart cells

Unidentified speaker: as well?

Unidentified speaker: No. Okay. No, it’s

Todd Freeman, Head of IR: just multi use. But the cost profile is a little bit more attractive, guess that will help maybe. Yeah,

Unidentified speaker: the largest percent of our cost is the smart cell by far. So selling a kit that has all the reagents for a higher price for us that gets used two, three times will bring in a much higher gross margin for us than currently and much lower cost per genome for our customers.

Todd Freeman, Head of IR: Okay. And given you have all these like large, know, epoxy projects going on now, do you think you can get like big bulk orders for these multi use cells right away?

Unidentified speaker: Possibly. Well, yeah. Okay. We’ll discuss Yeah,

Unidentified speaker: that’s part of our strategy. Part of our strategy to determine what the impact and price elasticity of is, is are we now competing for much larger projects because they have an offering that allows us to price more competitively. And we’ll be able to figure that out in a way we couldn’t before.

Todd Freeman, Head of IR: Right. Okay. Just on the going back to kind of like the So you have the cash flow breakeven target of exiting ’27, I guess. What is what are the levers that you have to pull the will help you get there?

We hope that there isn’t another flat revenue year, but we’ve seen the macro get tough in the past and stuff. So talk about the levers that you have to pull and also just try to like give us some comfort that the debt that you have is it can either be paid off or refinanced or something, whatever you think about that.

Unidentified speaker: Yeah, I think there’s a number of things. We spent some time talking about just crisp execution for our gross margin line, whether that’s holding ASPs on our equipment, which we believe we can do, delivering on multi use, which for our highest utilization customers will give us better gross margins than them better whole genome costs, will dramatically increase our gross margin, continuing to execute and work with our suppliers on things like chip supply, you know, the things that are one of the highest cost components of ours, which are the CPUs. We’ve been working with them to get better compute, so there’s a number of areas and levers we’re already working to get the cost down. I think number two is just being really effective on what we’re spending our R and D on. We know what our customers are telling us exactly what they want from us.

They want multi use cells and they want higher throughput machines that give them a better whole genome pricing. So we know exactly from a vision standpoint where we want to go from an R and T standpoint. So where we’re executing right now is de risked from the standpoint of demand, we believe. So we’re spending money in an area that we know we’re differentiated, that our customers have indicated if we deliver, they are encouraged and would move over to that. And I think number three is and the thing that makes me the most comfortable coming in new to the company is just the market that already exists that’s waking up to the value of long read, meaning we are a couple percentage point player in an existing market right now.

It doesn’t take us a lot of market share gain to get the revenue we need to be cash flow positive and what we feel we need to do is successfully execute, successfully get the whole genome pricing closer to parity with short read and give people that want it the throughput. And when we do that, we think it’s very realistic for us to increase our market share a couple 100 basis points, which when you think about it, are companies that are already spending money to do these tests. We think they’re just better on ours for certain indications, better on our tools.

Todd Freeman, Head of IR: Okay. And just to be clear, the program to develop the ultra high throughput long rate platform like the actual thing, I assume a large box, is that slowing down? Is that on hold or is that just No. At some point?

Unidentified speaker: No. We stepped away from short read. Yes. So that was the high throughput box that we paused on. We did that for the very reason we wanted to focus on high throughput for long read.

So what we want to deliver and what our customers have indicated to us is the two things I said. If you can get the whole genome pricing closer, be a combination of multi use and then get your next box out that gives us the throughput, we believe there’s no reason why we wouldn’t want to do sequencing using long read.

Todd Freeman, Head of IR: Okay. It just sounds like you kind of pivoted to like the lower relatively certain thing to do would be make like a consumable rather than like a big box and sell that. Because given this environment, like no one’s going buy like a huge refrigerator that’s brand new. It’s a tougher environment for that. So I just you know, given the macro I was thinking.

Makes sense though.

Unidentified speaker: Yeah. Well, that’s where that’s where we’re excited about Vega. Right. Think what Vega is doing is it’s the perfect product for the capital constrained environment we have right now. It’s a 169,000 and allows you to do long read.

So that’s the perfect tool for this funding environment we feel and we’re hoping when we deliver the high throughput tool and people see the value of long read, they’ll start converting and opening up their purse strings again to sort of move into that, especially when the overall cost per run is what we believe will be on parity with short read.

Todd Freeman, Head of IR: Okay. I guess, and then finally, just what’s like the most exciting thing about pet.io that people aren’t really like paying attention to or underappreciating?

Unidentified speaker: All right, so this is my background coming from running data teams at Apple and other places. I think the big inflection point for our company is really when customers start interrogating their data using some of the new tools through AI and compute power and start realizing they’re going to need much richer data sets to come up with better answers. I think we are going to be one of the fundamental tool providers for the next generation of the data that’s needed to really drive life science because I think the complete data sets that we provide with the multilayer through methylation is going to be incredibly valuable to companies two, three, four, five years from now when they’re sort of unleashing the new power that AI brings as well as the new compute power that we’re going do to build to support that. And I think the companies that have those data sets are going to be much better positioned to execute on whatever their research, their diagnostics or other things are than people that are using legacy tools and much smaller data sets and what I believe are incomplete data sets. Okay.

Todd Freeman, Head of IR: That’s great. Sums up well. Thanks guys for joining us. Appreciate it. Thanks Thanks.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.