PacBio Posts Flat Revenues in Q3, Names Mike Hunkapiller New Executive Chairman

10/27/11Follow @xconomy

Pacific Biosciences saw its sales flatten in its second quarter on the market with a new breed of DNA sequencing instrument, and now it’s shuffling things around a bit on the org chart to see if it can kickstart its growth.

The Menlo Park, CA-based company (NASDAQ: PACB) said today it generated $10.5 million in total revenue in the quarter ended Sept. 30, just a smidge lower than the $10.6 million in revenues it reported in the prior three-month period, which was its commercial debut. PacBio’s net loss widened to $29.3 million in the most recent quarter, up from $22.5 million in the prior quarter.

Separately, the company announced that board member Mike Hunkapiller is taking on a more active role as executive chairman of the board. Hunkapiller, a general partner with Alloy Ventures, is best known as the co-founder and former president of Foster City, CA-based Applied Biosystems during that company’s rise to prominence in the sequencing instrument market. Hunkapiller will come in to work three days a week, and work with president and CEO Hugh Martin, according to PacBio spokeswoman Nicole Litchfield. Martin will not scale back his duties at the company, and is “doing fine” physically, Litchfield says. (Martin has multiple myeloma, a cancer of the bone marrow. He looked fine when I saw him Monday at an Xconomy genomics event.)

PacBio’s slowing sales performance shouldn’t come as a surprise. The company is selling a new $700,000 DNA sequencing instrument during a shaky economy, at a time when scientists are nervous about potential cuts to the National Institutes of Health—the principal agency that allows researchers to buy fancy new tools. The company cut 130 jobs, about 28 percent of its staff, in September when it became more clear that sales were going to be slower than hoped. PacBio is also slugging it out in a fast-moving, competitive field with Illumina (NASDAQ: ILMN), Life Technologies (NASDAQ: LIFE), and Complete Genomics (NASDAQ: GNOM) all pushing for a growing piece of mindshare and revenue in this new wave of sequencing.

Hugh Martin

“I have spent much of my career on the leading edge of sequencing technology and I believe PacBio’s single molecule, real-time technology will disrupt the sequencing market,” Hunkapiller said in a PacBio statement. “I am delighted that Hugh and the Board asked me to take on this newly created role and look forward to devoting more time to advising the company on how to accelerate adoption of their products in important applications.”

The company, which went public a year ago at $16 a share, began life as a public entity with an $800 million valuation. Today its stock closed at $4.07, giving it a valuation of about $207 million.

PacBio’s valuation suggests that Wall Street is assigning almost zero value to its technology. The company closed September with about $193.7 million in cash reserves, down from $216.6 million in cash it had at the end of June.

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