Pacific Biosciences of California, Inc. Announces Second Quarter 2020 Financial Results

Rhea-AI Summary

Pacific Biosciences (PACB) reported Q2 2020 revenues of $17.1 million, down from $24.6 million in Q2 2019. Instrument revenue fell to $8.9 million from $12.7 million, while consumables dropped to $4.8 million from $8.6 million. The company recorded a net loss of $23.1 million compared to a $24.6 million loss last year. Cash and investments increased to $120.0 million, up from $49.1 million at year-end 2019. The ongoing COVID-19 pandemic impacted operations, leading to lower product revenues.

Positive

• Cash and cash equivalents increased to $120.0 million, providing financial stability.
• Operating expenses decreased from $34.0 million in Q2 2019 to $30.1 million in Q2 2020.

Negative

• Total revenue declined by $7.5 million year-over-year.
• Instrument revenue decreased by $3.8 million compared to Q2 2019.
• Consumables revenue fell by $3.8 million year-over-year.
• Net loss of $23.1 million reflects ongoing financial challenges.

MENLO PARK, Calif., Aug. 03, 2020 (GLOBE NEWSWIRE) -- Pacific Biosciences of California, Inc. (NASDAQ: PACB) today announced financial results for its second quarter ended June 30, 2020.

Total revenue for the second quarter of 2020 was $17.1 million, compared with $24.6 million for the same period of 2019. Instrument revenue for the second quarter of 2020 was $8.9 million, compared with $12.7 million for the same period of 2019. Consumables revenue for the second quarter of 2020 was $4.8 million compared with $8.6 million for the same period of 2019. Service and other revenue for the second quarter of 2020 was $3.3 million compared with $3.4 million for the same period of 2019.

Gross profit for the second quarter of 2020 was $6.6 million, resulting in a gross margin of 38.7%. Gross profit for the second quarter of 2019 was $9.6 million, resulting in a gross margin of 39.0%.

Operating expenses for the second quarter of 2020 totaled $30.1 million, compared to $34.0 million for the same period of 2019. Operating expenses for the second quarter of 2020 and 2019 included non-cash stock-based compensation of $2.8 million and $3.6 million, respectively.

Net loss for the second quarter of 2020 was $23.1 million, compared to $24.6 million for the same period of 2019.

Cash, cash equivalents and investments, excluding restricted cash, at June 30, 2020 totaled $120.0 million, compared to $49.1 million at December 31, 2019.

As previously announced, in January 2020, we and Illumina mutually agreed to terminate the Agreement and Plan of Merger (as amended, the “Merger Agreement”). As part of our agreement to terminate the Merger Agreement, Illumina paid us a $98.0 million reverse termination fee in January 2020, from which we paid our financial advisor associated fees of $6.0 million in April 2020, which is less than the amount we initially expected. The $98.0 million in cash we received from Illumina is recorded as a short-term liability and is expected to be subsequently recorded as other income after September 30, 2020 when all contingency clauses are expected to lapse. In addition, during the first quarter ended March 31, 2020, as previously agreed to pursuant to the terms of the Merger Agreement, Illumina paid us cash payments (“Continuation Advances”) of $34.0 million, which resulted in a gain of $34.0 million for the quarter ended March 31, 2020 and six months ended June 30, 2020.  

Impact of COVID-19 Pandemic

We have implemented various measures to help protect our employees while continuing to support our customers.  In accordance with local and state guidelines, a large number of our Menlo Park-based employees are working remotely from their homes. Additionally, we have implemented health and safety practices in accordance with evolving government and public health agency guidelines. However, as Pacific Biosciences is a designated essential business, we continue to provide direct support to our customers, including those customers working on COVID-19 related research, testing, treatment, and prevention. This support includes consumable and instrument shipments, field support, and limited wet-lab activities. 

Financial results for the first six months of 2020 were negatively impacted as many of our customers in multiple regions around the world shut down operations for various periods of time in efforts to curb the spread of the COVID-19 pandemic. This resulted in lower product revenues for the first six months of 2020 compared to the same period of 2019. Due to the uncertain scope and duration of the pandemic, we cannot reasonably estimate the future impact to our operations and financial results.

As noted above, there were provisions in the Merger Agreement to provide us with significant funding in the event that the merger did not close. As a result, we ended the second quarter of 2020 with $120.0 million in Cash and Investments. However, we will continue to monitor our operating expenses and cash flows in response to the evolving market conditions. 

Quarterly Conference Call Information 

Management will host a quarterly conference call to discuss its second quarter ended June 30, 2020 results today at 4:30 p.m. Eastern Time. Investors may listen to the call by dialing 1.888.366.7247, or if outside the U.S., by dialing +1.707.287.9330, using Conference ID # 7079947. The call will be webcast live and will be available for replay at Pacific Biosciences’ website at https://investor.pacificbiosciences.com/.

About Pacific Biosciences
Pacific Biosciences of California, Inc. (NASDAQ:PACB), is empowering life scientists with highly accurate long-read sequencing. The company’s innovative instruments are based on Single Molecule, Real-Time (SMRT®) Sequencing technology, which delivers a comprehensive view of genomes, transcriptomes, and epigenomes, enabling access to the full spectrum of genetic variation in any organism. Cited in thousands of peer-reviewed publications, PacBio® sequencing systems are in use by scientists around the world to drive discovery in human biomedical research, plant and animal sciences, and microbiology.

Forward-Looking Statements
All statements in this press release that are not historical are forward-looking statements, including, among other things, the accounting treatment of cash payments we received from Illumina, the impact of COVID-19 on our business including whether customers take delivery of our systems, Pacific Biosciences’ potential development and commercialization of products, future uses, quality or performance of, or benefits of using, products or technologies, and other future events. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, changes in circumstances and other factors that are, in some cases, beyond Pacific Biosciences’ control and could cause actual results to differ materially from the information expressed or implied by forward-looking statements made in this press release. Factors that could materially affect actual results can be found in Pacific Biosciences’ most recent filings with the Securities and Exchange Commission, including Pacific Biosciences’ most recent reports on Forms 8-K, 10-K and 10-Q, and include those listed under the caption “Risk Factors.” Pacific Biosciences undertakes no obligation to revise or update information in this press release to reflect events or circumstances in the future, even if new information becomes available.

The condensed consolidated financial statements that follow should be read in conjunction with the notes set forth in the Pacific Biosciences’ Quarterly Report on Form 10-Q when filed with the Securities and Exchange Commission.

Contact:
Trevin Rard
650.521.8450
ir@pacificbiosciences.com

Pacific Biosciences of California, Inc.
Unaudited Condensed Consolidated Statement of Operations
 (amounts in thousands, except per share amounts)

	Three Months Ended June 30,								Six Months Ended June 30,
	2020				2019				2020				2019
Revenue:
Product revenue	$	13,756			$	21,250			$	26,049			$	34,707
Service and other revenue		3,321				3,371				6,626				6,339
Total revenue		17,077				24,621				32,675				41,046
Cost of Revenue:
Cost of product revenue		8,225				11,980				13,646				20,598
Cost of service and other revenue		2,239				3,028				4,928				5,718
Total cost of revenue		10,464				15,008				18,574				26,316
Gross profit		6,613				9,613				14,101				14,730
Operating Expense:
Research and development		15,010				14,910				30,260				30,395
Sales, general and administrative		15,127				19,083				40,074				38,849
Total operating expense		30,137				33,993				70,334				69,244
Operating loss		(23,524	)			(24,380	)			(56,233	)			(54,514	)
Gain from Continuation Advances from Illumina		—				—				34,000				—
Interest expense		—				(644	)			(267	)			(1,269	)
Other income, net		438				428				676				863
Net loss	$	(23,086	)		$	(24,596	)		$	(21,824	)		$	(54,920	)
Basic and diluted net loss per share	$	(0.15	)		$	(0.16	)		$	(0.14	)		$	(0.36	)
Shares used in computing basic and diluted net loss per share		154,172				152,776				153,229				152,029

Pacific Biosciences of California, Inc.
Unaudited Condensed Consolidated Balance Sheets
 (amounts in thousands)

	June 30,			December 31,
	2020			2019
Assets
Cash and investments	$	119,963		$	49,099
Accounts receivable		11,346			15,266
Inventory		16,768			13,312
Prepaid and other current assets		2,862			3,369
Property and equipment, net		27,733			30,070
Operating lease right-of-use assets, net		31,435			32,827
Long-term restricted cash		3,500			4,000
Other long-term assets		41			42
Total Assets	$	213,648		$	147,985
Liabilities and Stockholders' Equity
Accounts payable	$	7,436		$	8,368
Accrued expenses		12,203			13,242
Deferred gain from Reverse Termination Fee from Illumina		98,000			—
Deferred revenue		8,463			9,561
Operating lease liabilities		43,966			45,801
Notes payable		—			15,871
Other liabilities		2,188			225
Stockholders' equity		41,392			54,917
Total Liabilities and Stockholders' Equity	$	213,648		$	147,985

FAQ

What were Pacific Biosciences' Q2 2020 earnings results?

Pacific Biosciences reported Q2 2020 revenues of $17.1 million, a net loss of $23.1 million, and cash and investments of $120.0 million.

How did COVID-19 impact Pacific Biosciences' financial performance?

The COVID-19 pandemic led to lower product revenues due to customer shutdowns, negatively affecting financial results.

What is the outlook for Pacific Biosciences following Q2 2020 results?

The company indicated uncertainty about future impacts due to COVID-19 but ended Q2 with strong cash reserves.