Pacific Biosciences Still Can't Catch A Break

The way things have been going for a while with Pacific Biosciences (PACB) (“PacBio”), it seems as though any news is almost always bad news. PacBio saw its deal with Illumina (ILMN) collapse on antitrust worries in both the U.K. and U.S., saw an adverse patent decision back in March, and then saw investors go decidedly risk-averse as Covid-19 started sweeping around the world.

Although the breakup payments from Illumina can fund PacBio’s cash needs for over a year, including an assumed uptick in SG&A spending to support the ongoing launch of the Sequel II, the outbreak is likely to have a significant impact on near-term equipment orders and consumables usage. Maybe the world will get back closer to normal in the second half of the year and PacBio will exit 2020 with a strong backlog and order momentum … or maybe not.

Words like “could”, “presumed”, and “maybe” underline a lot of the risk in this story – while PacBio has good technology and has developed a good product for a high-potential market, staying solvent long enough to achieve a leverageable user base is no sure thing. I continue to believe that PacBio has speculative appeal, but I don’t want to underplay the risk that goes with the “speculative” part of that equation.

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Pacific Biosciences Still Can't Catch A Break