Pacific Biosciences at Jefferies Conference: Record Revenue and Strategic Shifts

On Thursday, 05 June 2025, Pacific Biosciences of California (NASDAQ:PACB) presented at the Jefferies Global Healthcare Conference 2025. The company outlined strategic initiatives, showcasing record consumable revenue and a focus on long-read sequencing technology. While facing a challenging capital environment, PacBio remains optimistic about future growth driven by technological advancements and market expansion.

Key Takeaways

• PacBio reported an all-time record in consumable revenue, exceeding $20 million in Q1 2024.
• The Vega system launch saw 50% of initial shipments going to new customers in biopharma and microbiology.
• PacBio aims to achieve positive cash flow by 2027 through restructuring and focusing on long-read sequencing.
• Significant growth potential is identified in the germline human genetics market.
• PacBio is pausing development of short-read sequencing technology to prioritize long-read advancements.

Financial Results

• Q1 2024 Highlights:

- Record consumable revenue exceeding $20 million.

- 28 Vega systems and 14 Revio systems shipped.

• Gross Margin Improvement:

- Anticipated substantial improvement in gross margins in the second half of the year.

- Targeting over 40% gross margins by year-end.

• Operating Expenses:

- Restructuring plan to reduce annualized operating expenses by $45 million to $50 million.

Operational Updates

• Vega System:

- Scaling up production with reduced unit costs.

- Targeting run rate production by Q2 2025.

• Revio System:

- Cost reductions through software and algorithm improvements.

• Spark Chemistry:

- Lowered DNA input requirement, increasing data output by 46% at the same price.

• Restructuring:

- Prioritizing long-read sequencing, pausing short-read development.

• Salesforce:

- Approximately 60 sales representatives globally.

Future Outlook

• Strategic Focus:

- Emphasizing long-read sequencing to drive cost and scale parity with short-read technologies.

- Expanding presence in the germline human genetics market.

• Financial Goals:

- Aiming for positive cash flow by 2027 and expanded gross margins.

• Market Opportunities:

- Opportunities in newborn screening, biopharma, and microbiology markets.

- Replacing legacy short-read technologies with HiFi sequencing.

Q&A Highlights

• China Market:

- New distributor HaoRe specializing in HLA and blood screening.

- No negative impacts from scrutiny on American NGS products.

• Newborn Screening:

- Involvement in Thailand’s national newborn screening initiative.

• Competitive Landscape:

- Views Illumina’s entry into long-read market as validation of its importance.

- Highlights HiFi sequencing advantages in longer reads and cost-effectiveness.

For more detailed insights, please refer to the full transcript below.

Full transcript - Jefferies Global Healthcare Conference 2025:

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Right. Good morning. I’m Lauren Timmons from the Life Science Tools and Diagnostics team here at Jefferies. And it is my pleasure to introduce our next company, PacBio. All right.

Just to kick things off, maybe we can start with some of the exciting news flow recently around PacBio. We’ll touch on the China, Thailand, and maybe to start, talk a little bit about Target ALS. So they chose PacBio’s HiFi sequencing to advance ALS research and the largest global genomic studies to date with more than 6,000 genomes. Maybe start with discussing some of the aims of that project.

Unidentified speaker: Yeah. So, first of all, thank you for the opportunity to get in front of you today, and, we always love coming to Jefferies and and seeing the team. The, you know, when you think about ALS, it really is a disease of the genome, and it is a it it requires a very comprehensive look at the genome. You know? We’ve made a lot of progress on ALS over the years, but but quite frankly, we’re we’re not we’re we’re nowhere near where we need to be to really help these patients, and short read sequencing and other other technologies really haven’t provided the insight that’s required to truly understand the disease.

And so we teamed up with them to do a long read sequencing project using our technology, HiFi sequencing. And as you know, HiFi sequencing is the most comprehensive and the most accurate view of the genome Mhmm. Full stop. And so, what we’ve been able to do with advances in our technology over the last few years have given have increased the economic viability of doing these kinds of projects as well as the, improvements in the workflow have simplified actually looking at the biology of ALS, for example, using long rate sequencing. And so we’re excited we’re excited to see how this, how this project unfolds, and be the technology provider.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: No. That’s great. And kind of on that topic with your HiFi, the recent deal to expand distribution in China. So I know that kind of aligns with your thought process towards, you know, establishing HiFi sequencing as the method of choice in blood genomics. Maybe talk a little bit about the customers and lab networks you’re planning to distribute to in China and kind of some details around that deal there.

Unidentified speaker: Yeah. Sure. So HaoRe is our our new distributor that we announced, one of our new distributors. In China. We have a few different distributors in China, but HaoRei’s specialty is really in HLA and blood screening.

And so they have a very strong market presence, And long read sequencing for looking at complex regions, you know, like HLA, HLA typing is the ideal method. And with the launch of the Vega system, the Vega system, which we started shipping in December and shipped 28 units in the first quarter, globally as we’re starting to scale that product up, was a great opportunity for them to get engaged with PacBio to drive that to their customers. They have a huge network of customers, and so for us, it expands our presence in China. It expands our footprint in a, new application area where HaoRei is arguably probably the leader in China of serving that part of the market. And so for us, it’s just a it’s a home run because now we’ll be able to place, you know, lots of Vega systems, and we think over the coming, you know, over the coming years, that’s the kind of, the kind of instrument, the the Vega instrument that you could see, you know, hundreds of units across China, whether it’s with Haoray or with our other distributors as well.

Mhmm.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Do you think there’s any read through right now from China, around, like, scrutiny on American NGS products? Have you been seeing any of that?

Unidentified speaker: You know, it is a it is a complex area. Obviously, some of our competitors have have been blacklisted, so to speak, you know, and and I think that that, that creates an interesting dynamic. But for PacBio and and for HiFi sequencing in general, there really there really is no alternative in China for our technology. And so I would be surprised if, just because we’re a US company, that we, you know, that we see a a kind of a read through from the other parts of the sequencing market. Mhmm.

We haven’t seen any indication of that yet. In fact, we’ve seen enthusiasm from our customers to keep pushing forward as we drive, you know, the cost of sequencing down and the scale of sequencing Mhmm. Of what we can do up. And so, you know, although we are certainly not immune to the tariff Yeah. The the tariff situations and the political, the political environment, what we’re seeing so far is is we’re seeing the Chinese market very friendly to us.

Mhmm. And, there are no alternatives. And so I I think, you know, until there were alternatives, I would be surprised to see any change.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Yeah. That’s great. And kind of continuing on the scope of broadening the long reach market, your efforts to integrate whole genome sequencing for newborn screening in Thailand. So you announced that project in May. Maybe talk a little bit about that and kind of what’s going on there.

Unidentified speaker: Yeah. This is this is actually really, really exciting. Mhmm. This is this is really a national initiative led by Chula Longhorn University. That’s a mouthful when you try to say that.

And they are have an ambitious goal to, you know, introduce newborn sequencing using newborn screening, using HiFi, you know, across the country. And so we have we’ve teamed up with them. In fact, you know, this evening, there’s a major, a major meeting, so I’ll get the latest update, on that 10:00 meeting this evening. And so I think that that that program is really we’re seeing seeds of programs like that in lots of places around the world where, you know, people wanna have the most comprehensive look at the genome that they can if they’re going to invest in in newborn screening. And so that means looking at at not only the the variation of the DNA, but also the epigenome and and so the epigenetics associated with that.

And our technology enables you in the same run to be able to look at, you know, the SNPs and the indels as well as major structural variations of the genome, and we’re able to see the whole genome where other technologies just can’t. And on top of that, you get a phased genome. So you look at the contribution from the mother’s side and the contribution from the father’s side with every single run. And in a newborn screening context, now that we have, more scale and better economics, it just makes sense Mhmm. To move, towards these kind of third generation technologies like what we have.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Yeah. No. That’s really great. And kind of on that topic, other players in the space have talked about kind of the underpenetrated market in in newborn screening and kind of the big opportunity there. Where do you kind of see the sequencing opportunity growing there and evolving over time and kind of alignment with your product offerings?

Unidentified speaker: Well, I I do think that, you you know, it’s funny. I’ve been in I’ve been in the sequencing business for, gosh, over over twenty years at this point, and, and it’s always been the dream that every baby born, gets their genome sequenced. And, know, if you follow the evolution of this, first, there wasn’t the technical capability, then there wasn’t the economic viability. Now we’re we’ve got not only the technical capability, but the economic viability and the ability to see see the whole picture. And that’s really in that’s really kind of the spark that is lighting the fire to enable this around the world, and we’re seeing you know, Thailand’s just one Mhmm.

Small example. In The UK, they’re looking at this. In The United States, of course, there are, programs already in place, not at whole genome scale yet, but that’s moving moving along, you know, quite quickly. The infrastructure is now largely in place, so electronic health records, you know, actually, that was an impediment for a long time because, okay, you get all this data. What do you do with it?

How do you how does it follow how does it follow the child around through their lifetime? Because the point is get the point is not only uncovering any issues with the baby at birth, but really having that reference for the span of their life to see see how the genome changes over time, starts to help you understand, you know, early cancer detection. And and I think we finally have a lot of those pieces together. Now reimbursement is still you know, who pays for it? How much is it?

That’s still major questions that are getting worked out. Mhmm. But we’re seeing, you know, we’re seeing major tens of thousands of scale projects happening now, and I think that’s really just the beginning of you know, there’s 4,000,000 births in The United States every year, so that’s always been kind of a, you know, kind of a holy grail number where, okay, if every baby born gets a whole genome sequence

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Yeah.

Unidentified speaker: We we fundamentally believe in health care will be improved, and also the scale of sequencing, you know, will continue to grow.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Yep. And on the topic too of HiFi continuing, methylation detection. Mhmm. So you talked about that with the University of Hong Kong and kind of that project. Where do you kind of see this improving areas, for the HiFi tech and kind of, when that will be implemented?

Unidentified speaker: Yeah. So so we already have, methyl c detection on our systems today, and it performs actually really quite well. It with the launch of our Spark chemistry, which we launched in December, which is kind of the up our our latest upgrade of our sequencing chemistry, we improved our methylation detection substantially. However, we partnered with the Chinese University of Hong Kong to license some of their technology that allows us to not only improve our methyl c collar, but also introduce hydroxy methyl c onto our sequencing. So with every run, you would get a hydroxy methyl c status of of the genome and also methyl a, methyl a color.

Now in humans, you don’t see a lot of methyl a. It’s that’s really more in in, you know, microbial biology, etcetera. But what’s interesting is there’s applications that leverage, methyl a, to look at chromatin binding and to look at how you know, for those of you that are kind of uninitiated in all of this, it’s how you regulate the genome. And so having those advanced callers on this on the system that you get for free with every single run really give us give researchers and clinicians a lot more flexibility and really comprehensive understanding. We’ll implement the technology associated with our partnership with, Chinese University Hong Kong, with our our next kind of our our next rounds of software releases.

Because, really, what this is is is, these are software releases that allow us to interpret the signals that we get from our sequencer more efficiently or more effectively. And so that will happen kind of over the course of this year and and into next year.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: And kind of just to round out in terms of market dynamics. So I guess where are you seeing alumina recently talked about their constellation reads and they plan to go into the long read market? Maybe just talk a little bit about the competitive dynamics for the long read market and kind of where you guys see that changing over time.

Unidentified speaker: Yeah. You know, it it is it is quite interesting that, you know, major competitors like Illumina have been trying to look more like a long read company over the last several years because there’s a growing recognition that short read sequencing technologies are just not adequate for for, germline human genetics. Mhmm. You know, they may do really well in in some of the oncology testing. Mhmm.

But in, you know, humeline, human germline genetics, there’s just so much more information that short read technologies are leaving off the table. And so there’s no wonder that, companies are trying to figure out, can we can we sort of fit a square peg in a round hole by introducing, you know, kind of synthetic read technologies or other kinds of technologies to try to make their reads longer? And and the first thing I’ll the first thing I’ll say is, so they’re certainly more expensive, number one. Number two, the reads are certainly not longer. You know, they are they are when they talk about long reads, they’re not talking, you know, 15 to 20 kilobases of DNA per, per per read that we’re looking at.

They’re talking, you know, a few thousand. Mhmm. And in some applications, that may help them. In other in most applications, it’s gonna be cheaper and more effective to run HiFi. And so it’s, for us, it’s a great acknowledgment of how important long read sequencing truly is here and how we’re making inroads.

And as we drive our economics to improve the overall cost of the sequencing, as we improve our workflow from end to end, which we’ve made major major leaps forward over the last three years, we become, you know, we’ve become much, much more competitive, and we’re we’re winning projects like newborn screening projects, for example Yeah. Because of that. So our competitive positioning, quite frankly, has never been better. Mhmm. And we are you know, with the launch of the Vega system, we are expanding the number of customers, and we expect a very strong ramp of that.

Mhmm. And, of course, that’s that’s really important in this uncertain time with all of the capital funding, you know, capital funding challenges. But as you grow the the number of customers, ultimately, they go from the lower throughput instruments to the higher throughput instruments, which is all kinda core to our strategy and makes us quite competitive against, you know, all of the sequencing players, quite frankly.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: That’s great. Maybe since you noted it about Vega, jump into some, questions there. You said about 50% of Vega shipments in Q1 were new customers. Maybe kind of what’s the breakdown of these customers and kind of where are you seeing or what’s driving adoption in these new customers?

Unidentified speaker: Yes. You know what’s really exciting for us is Vega is helping penetrate into the biopharma market, which we haven’t had strong penetration in the past. And so, you know, in so that’s that’s a core area that we’re focused on. And why are these pharma companies using it? It’s because it’s got the right level of throughput to look to, you know, to look in kind of drug discovery mode at at genomes, at epigenomes, etcetera.

But they also, looking at AAV and and making sure that when you do your edits, you you get the right edits. And so the, Vegas system is exactly the right throughput, and it’s a it’s a great value in terms of the cost of the capital. It’s not super expensive. The, other area where we’re penetrating more deeply is microbiology and, small genomes, the microbiome research, metagenomics is becoming a more important more important aspect of of our offering. And customers are using Vega because, quite frankly, they can get, you know, they can get a tremendous level of scale for those smaller genomes Mhmm.

For a very, very affordable price. We can do things that no other company can do Mhmm. Which I think is really, really powerful. So those are a few core areas where we’re getting, you know, new new customers. We’re also seeing, Vega uptake from Core Labs that may already have a Revvio system, our flagship long read sequencer.

But for shorter, you know, for shorter turnaround projects or the Vega’s already being used and doing a doing a short run on a on a, Vega system. We’re seeing that as an opportunity. And in fact, you know, this is the fastest we’ve ever been able to build a substantial funnel. And so we expect to see scale up of Vega unit shipments over the course of the year with we shipped, like I said before, 28 in the first quarter, and we think we can grow certainly from that number, over the course of the year.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: And you also noted for, Vega run rate reaching run rate production in 02/2025. Is that still kind of

Unidentified speaker: a goal? Yes. So so what’s happening right now is is, you know, we’ve been scaling up Vega with our manufacturing partner. And, at the end of the second quarter, we switched from the kind of r and d production line, to the full kind of standard production line. Now there’s two benefits to that.

The first is we can we can we can manufacture at higher scale if we so choose. And the second benefit is there’s substantial reduction in the cost Mhmm. Per unit because it’s now you’re using the manufacturing technicians, not the r and d engineers, to manufacture the system. And so part of our part of our, core strategies here right now, of course, are to drive gross margins up. Yep.

And we have lots of opportunities to do that. And with Vega Mhmm. We’re gonna naturally see a substantial uptake in gross margin in the second half of the year, which will help contribute to us exiting the year, in our view, well over 40% gross margin.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: No. That’s great. And kind of to kind of go back into 1Q a little bit, there’s been some stock movements since, you reported reduced guidance of $5,000,000 1 hundred 50 million dollars at the lower end from China and NAH headwinds. Maybe could you walk us through some of the things that you saw in the first quarter and maybe some early positive signals in 2Q that kind of lead you to kind of your expectations into February?

Unidentified speaker: Sure. So when we start, you know, first of all, we we lowered the low end of our guidance. We didn’t we didn’t lower the top end of our guidance because we still see incredible opportunity over the course of this year. Mhmm. We just wanted to recognize that there is uncertainty in the market right now and that, you know, the market for higher end capital equipment is certainly, challenging and has been challenging.

But when you look at the highlights of q one, the first thing you have to point your point at is the fact that we had all time record consumable revenue. So for those of you that don’t know, this is a razor razor blade business where we sell instruments, and then we sell, proprietary consumables that go on those instruments. We had, over $20,000,000 of consumable revenue in the first quarter, which was an all time record for the company, which shows that the customers are using their system Yeah. And they’re generating more data than than ever before. And and, you know, you can go back and look at the the the exponential curve that’s been created with the number of petabytes being generated of of sequence.

Why does that matter? Because that helps drive future. You know, the more sequencing that gets done, it begets more sequencing. And and we’re in that we’re in we’re starting that snowball phase where you’re seeing, you know, you’re really seeing this exponential growth in the data. So that’s the first first real highlight of the quarter.

The second was, of course, the Vega in its first full quarter of launch in the backdrop of a tough capital environment shipped twenty eight twenty eight instruments. And what was exciting to see, as you said before, half those customer half of them were new customers. And also on top of that, the sales cycle is dramatically shorter. And so we saw a, you know, a much shorter sales cycle even with the new customers. And and I think that shows that there’s more enthusiasm and more uptake for sequencing, you know, for HiFi sequencing in particular with PacBio.

But the simple fact of the matter is the funding environment continues to be extremely challenging.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Mhmm.

Unidentified speaker: On the flip side, you know, the Vegas is or the Revio system, we didn’t ship we we shipped 14 systems during the quarter in q one, and, you know, that was an okay result, but we and and it was around our expectation. Mhmm. But but, you know, there the market for Revvio is significantly more than that, but we’re sitting in this this funding environment. So now you you roll into the second quarter, you know, what we’re seeing is we are seeing the funnel continue to build very strongly for Vega. We’re seeing we’re seeing the clinical customers with adopting Revvio and launching and actually launching real LDT tests.

And and so for PacBio, you know, that’s a big deal because that’s that’s durable revenue. That’s revenue that will reduce our dependence on NIH funded sources. We’re also seeing very strong European European business. We saw that in the first quarter, and I think we’ve said on both our calls, both the the q four call in February and the the call last month for q one that, you know, we we see the European market as actually probably being our strongest market this year. And we had some great, you know, we had some great wins in q one at, you know, for example, the Imagination Institute in in Paris.

This is in rare disease. Lurie Children’s, another rare another rare disease. And so in the germline genetics market, we are really gaining traction, particularly in in rare disease, and we’re seeing and that’s continuing on. And I think that will be a common theme. And, you know, when you think about it, when you look at the totality of the sequencing market, you know, by 2027, sequencing market will probably be $89,000,000,000, give or take, you know, depending on what kinds of reports you look at.

And the germline part of that, the human genetics germline part of that market is, you know, well over three point, it’s about 3,200,000,000.0 is by our estimates. And, the reality is is that we’re, you know, we’re just at the beginning of our penetration curve there, and we have the product now. We have the we have portfolio of workflows, the automation, the informatics, lower DNA input quantities, which allows access to millions more samples that even twelve months ago we couldn’t access. And so the combination of those things will give us the opportunity to penetrate that market substantially more. And this isn’t this isn’t creating greenfield new market.

This is replacing legacy old technologies like short read sequencing with, you know, effectively third generation sequencing technology, the most comprehensive view of the genome you can have. And so, you know, I think the second quarter, the capital environment continues to be tough. I don’t think anyone’s gonna gonna going to say anything any differently. People are people are using their instruments. Mhmm.

The cycle time for Vega sales is, has continued to be very strong. And so on balance, we’re very we’re we’re very happy with how the business is performing right now. Mhmm. Now June is always the busiest month, and so we’ll see how we end up for the quarter. But but I’m quite I’m really excited about all of the progress we’re making as a company.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: No. That’s great. And then just one on Revio, a two parter. You mentioned 90% of revenue re aging kits nearly now are with Spark Chemistry. Maybe talk to a little bit about, in 1Q, the shipments, the benefit of this chemistry over time, you expect all systems kind of incorporate it.

And then on Revu as well, you talked about cost improvements, going into for systems and consumables in 2H. Maybe what’s driving

Unidentified speaker: Yeah. So we’ll start with the spark chemistry. So the spark chemistry we launched we announced it at ASHG, which is our a major conference in November. Mhmm. We started shipping it really at scale in in January.

And and what this chemistry does is it lowered our DNA input requirement fourfold down to 500 nanograms. And as I just said, at 500 nanograms, we can access effectively the whole market. It it really is enabler of the newborn screening market, for example, because you imagine, you can’t really get that much DNA out of a baby or that that baby the DNA is precious, you wanna make sure you use as little as possible to put through your system. So we’ve enabled we enabled lower input, which allows more, you know, more samples to come to our system. We also the chemistry, you know, we improved the chemistry such that we’re getting more throughput.

And so one of the hallmarks of our company is that we continue to improve our on market systems both through the hardware and the soft the hardware software and the chemistry itself. And this chemistry improvement is giving some customers up to a, what, a 46% increase in the amount of data for the same price. And so we’re effectively improving their economics, enabling them to do larger scale projects. And so, you know, with any new chemistry, customers will typically will finish their current projects before they start new projects on new chemistry. And so during the first quarter, we were actually quite, pleased to see how quickly people were recognizing, wow.

This is a major breakthrough. We need to we need to move on to this chemistry really quickly. And so now by, you know, by the second quarter, most of most of our customers are gonna be, you know, I don’t I don’t I don’t ever wanna say it’ll be 100%, but it’ll certainly be high nineties that will be using the chemistry because of the value that it provides. Mhmm. On the hardware side, we’ve made major progress on improving, the software and the algorithms that actually call the base call the bases.

And as a result, we’ve been able to take NVIDIA GPUs out of our system and use lower lower level NVIDIA GPUs. And so that’s what’s driving the cost reductions on Revvio. The way the inventory system works, right, the ones that the the older the older manufactured instruments that have those, the more expensive GPUs are sitting in inventory. As those get sold down, the new ones, you know, come come to customers. And so we think by the third quarter, we’ll be seeing, we’ll be seeing the benefit of that.

It’s a pretty significant benefit. And so the combination of improving Vega Yeah. Margins, improving Revvio margins, and increasing consumable revenue driving that product mix forward will be what’s pushing the gross margin up over the course of the year.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: That’s awesome. Yeah. Maybe a little bit on the Salesforce. Like, what size of the Salesforce right now if you’re planning to expand, if you’re kind of segmenting between Vega shipments and Revvio shipments? Just a little bit color on there.

Unidentified speaker: Yeah. So the Salesforce we have right now, we we, you know, we we have our Salesforce sells all the products. It’s one portfolio of products, and and they do we do that by design because we don’t ask, well, what instrument do you want? Well, the question I want our sales team to ask is, what problems are you trying to solve? So that we can help them in that in solving that technological problem.

And so today, we have a global Salesforce. We use distributors in of course, we use distributors principally in Asia Yeah. A little bit in Southern Europe as well. But but we have about, you know, about sixty sixty sales reps Mhmm. That are in the in the sales process.

We have made some structural changes. We did a restructuring Yep. In in April, And and so we restructured a little bit, but we really didn’t change any of the fundamentals of of how we go to market.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: That’s great. Actually, on the topic of restructuring, you noted it’s a lower annualized OpEx as part of the restructuring plan, about 45,000,000 to $50,000,000 Could you maybe talk about that? It talks about prioritizing long reads, kind of ending short reads with Onso. Any strategic interest there, kind of the plan with the restructuring?

Unidentified speaker: Sure. So we coming off of a very strong q one, we did announce a restructuring because, you know, the reality is is that, you know, we know, the world is highly uncertain, and we wanted to make sure that we, you know, that we stayed laser focused on achieving positive cash flows exiting ’27. So that is a fundamental mantra that we are pushing. And we believe we can achieve our business objectives of continuing to grow, expanding gross margin with a low with a lower cost base. And so that’s, you know, that’s why we did the restructuring.

Now as part of that, we recognize that our our our strongest core competencies and strongest competitive advantages sit in the long read side of the market, and we’ve made so much technological breakthrough in the last twelve, eighteen months to enable, enable us to to see very clearly how we will get to the next generation of instrument, which will drive, which will drive cost so that we can effectively be at cost parity with short read sequencing and scale parity as well. And so by having both of those, and we’re seeing the clear technical path on how to get those products to market, it made more sense to focus and double down on that than to continue driving, the high throughput short read sequencer. And so we put that program on pause. We have the Onso short read sequencers sitting on the market today. We continue to fully support that market.

We’re continuing to sell the Onslow systems. And so it’s not that we’re we’re because there are parts of the market where that product makes some sense, but we are we are really putting our focus on the long read part of the business because, like I said before, this is really third generation technology, and it’s the ability to at scale and prices fundamentally competitive with short read sequencing to enable researchers and clinicians to fundamentally see the whole genome, see the whole epigenome, see all of the structural variation. And we think with that, we will drive, expanding we will we will drive revenue growth, expanding gross margins, and ultimately positive cash flows exiting ’27.

Lauren Timmons, Life Science Tools and Diagnostics team, Jefferies: Great. And that’s a great end. We came to the end of time, but thank you so much for being here, and it was a great discussion.

Unidentified speaker: Yeah. Thank you.

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