PacBio nets $900M from SoftBank to support its long-read sequencing goals

DNA genomics precision medicine
PacBio aims to expand the commercial reach of its long-read sequencing systems after poaching two Illumina alums for its C-suite earlier this year. (Pixabay)

Just over a year after Illumina’s $1.2 billion bid for its fellow sequencer manufacturer fell apart under federal scrutiny, Pacific Biosciences has secured a new benefactor with a $900 million commitment from SoftBank.

The Japanese conglomerate has signed up to purchase convertible senior notes due in 2028 at $43.50 apiece, or a 30% premium above PacBio’s 30-day closing average, through its SB Management subsidiary.

“We believe that PacBio’s HiFi sequencing will be the de facto standard tool for population genomics fundamentally altering the practice of healthcare,” SB Management CEO Akshay Naheta said.

Illumina, meanwhile, saw PacBio as a means to secure its dominance over the international sequencing market—where its technologies already produce over 90% of the world’s genomic data, according to the Federal Trade Commission, which intervened in the proposed acquisition to say it would have resulted in an unbreachable monopoly.

That deal had been in the works for over a year, and ended with a $98 million fee payment from Illumina to PacBio for its troubles. 

The latter’s systems differ by processing longer threads of DNA, though at times with a higher error rate compared to Illumina’s hardware, which instead breaks up the genetic material into shorter sequences and reassembles the code afterward.

RELATED: Illumina calls it quits after FTC blocks its $1.2B offer for PacBio

This short-read approach can offer more accuracy and faster throughput but can make it more difficult to detect larger variants and structural changes in the genome. With its buyout, Illumina had hoped to deliver the best of both worlds—after estimating that the market for long-read applications in genetic research would grow to about $2.5 billion by 2022.

PacBio reported preliminary financial results in January, saying it expects to see about $27 million from sales of instruments, consumables and services from the fourth quarter of 2020, or about $78 million in total revenue for the full year. This was a drop, however, compared to 2019 due to the spread of the COVID-19 pandemic, the company said

“This strategic investment by SoftBank validates our leadership position in the long-read DNA sequencing market and enables us to further accelerate our growth strategies,” including plans to further expand the company’s product portfolio, said PacBio’s president and CEO, Christian Henry. 

Additionally, last month saw PacBio poach two Illumina alums for its C-suite as it eyes commercial expansion: Mark Van Oene joined for the same role, as chief operating officer, while Peter Fromen was named chief commercial officer after serving as global vice president of population genomics and precision health.