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Pacific Biosciences of California, Inc. (PACB)

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  • c
    chengis khan
    PacBio Enters a Binding Agreement to Acquire Omniome
    Pacific Biosciences announced today that they are slurping up short read sequencer startup Omniome for around $800M. Omniome has been developing an interesting clonal read technology. On the conflict-of-interest side, many years ago (and I think an entire management team different) Omniome treated myself and my family to a weekend in San Diego (it was my son's birthday weekend) so I could look at their technology back then -- my NDA has expired but so has most of my memory of what I saw at that meeting! Also the periodic reminder that PacBio Christian Henry sits on the board of my employer, though we haven't met. Simon Barnett of ARK Investments (which is a major holder of PacBio stock) has a very nice explainer on the Omniome Sequencing-By-Binding (SBB) chemistry and his bullish perspective on the acquisition and there is a proof-of-concept publication of the technology. I'll briefly explain the tech and then outline my somewhat more bearish view. It's also interesting to note that the FTC's actions on Illumina-PacBio and Illumina-Grail have analysts jumpy about this acquisition attempt.

    The Proof of Concept paper outlines the key steps of the SBB process, though according to Simon probably about every detail of the detection method will probably be replaced. The core chemistry involved annealing a primer and then interrogating the next base by flowing sequentially flowing in each of the four nucleotides in the presence of a polymerase which can't incorporate the nucleotide. In the PoC paper this was cleverly detected label free on single molecules using plasmon resonance, but that would not allow great densities so apparently the company will be switching to fluorescently labeled nucleotides. After each interrogation flow and detection, the complex is washed off. The greatest signal is obtained for the correct base. Upon completion of interrogation, a mix of four (must be terminators, though the preprint says dNTP) nucleotides is flowed in with an extension-competent polymerase to extend the primer. Deblock the terminator and proceed with another round of incorporation.
  • c
    chengis khan
    In the year and a half since its purchase by Illumina was thwarted by the Federal Trade Commission over fears the combination would create a monopoly in DNA sequencing, Pacific Biosciences has had no problem finding ways to bulk up its business on its own.

    Earlier this year, the sequencer manufacturer landed a jaw-dropping $900 million investment from SoftBank—a commitment almost as hefty as the $1.2 billion Illumina offered up for the proposed buyout.

    Now PacBio is making an acquisition of its own, laying out a deal worth up to $800 million to take over with Omniome, another developer of DNA sequencing technology.

    The bulk of the deal is made up of proposed upfront payments totaling around $600 million. That’ll be split between $300 million in cash and 9.4 million shares of PacBio common stock. The remaining $200 million will come from milestone payments dished out as Omniome achieves certain predetermined goals, also to be paid in a mixture of cash and stock.

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

    To help finance the acquisition, PacBio has locked a handful of its existing investors into a private placement of common stock. That transaction is expected to rake in about $300 million in aggregate gross proceeds. Backers including Casdin Capital, SoftBank subsidiary SB Northstar LP and T. Rowe Price Associates will buy up about 11.2 million shares of PacBio stock at $26.75 per share, slightly below the stock’s closing price on the last full day of trading before the buyout was announced.

    Once the deal is complete, PacBio will be able to expand the capabilities of its single-molecule, real-time sequencing technology, or SMRT Sequencing, for use by its customers in biomedical and infectious disease research and drug and diagnostic development.

    PacBio’s technology focuses on long-read sequencing, which processes long threads of DNA at a time, allowing it to pick up on larger genomic variants and structural changes than short-read methods—though long-read sequencing has a higher potential error rate in those readings.

    Omniome, meanwhile, has developed its own short-read technology that focuses on the proteins binding DNA to produce what it describes as more accurate analyses compared to other short-read sequencers.

    RELATED: Illumina faces months-long EU antitrust probe over Grail acquisition: report

    Merging the two technologies makes something of a mirror image of Illumina’s proposed purchase of PacBio, which would’ve combined the latter’s long-read technology with Illumina’s own short-read sequencing.

    “We chose Omniome because of its novel approach, which we believe could result in the most accurate short-read sequencing platform to penetrate large, fast-growing clinical application areas in oncology, transcriptomics, metagenomics and noninvasive prenatal testing,” said PacBio CEO Christian Henry.

    The merger represents a major boon for Omniome, which has attracted the attention of a variety of life sciences investors since it was founded in 2013. Each of its last two funding rounds—a mid-2018 series B and early 2020 series C—raised $60 million, bringing the San Diego-based startup’s lifetime funding to nearly $130 million.
  • R
    RV
    If what Simon B says is going to happen: PACB will change from $6 B company to become a serious competitor for ILMN which is $70 in Valuation.

    Simon Barnett
    @sbarnettARK
    Thought?

    (If) SBB accuracy meets expectations, and devices are FDA-approved (years away), running IVDs could be easier because there would be fewer third-party capture kits to validate/run in parallel and an ostensibly easier informatics burden for community clinics.
    10:35 AM · Jul 24, 2021·Twitter for iPhone
    19
    Likes
  • R
    RV
    Accelerating long-read analysis on modern CPUs

    Saurabh Kalikar1, Chirag Jain2, Vasimuddin Md1 and Sanchit Misra1*
    Intel Labs, 560103 Bangalore, India. 2Department of Computational and
    Data Sciences, Indian Institute of Science, 560012 Bangalore, India.

    Long read sequencing is now routinely used at scale for genomics and transcriptomics applications. Mapping of long reads or a draft genome assembly to a reference sequence is often one of the most time consuming steps in these applications. Here, we present techniques to accelerate minimap2, a widely used software for mapping. We present multiple optimizations using SIMD parallelization, eficient cache utilization and a learned index data structure to accelerate its three main computational modules, i.e., seeding, chaining and pairwise sequence alignment. These result in reduction of end-to-end mapping time of minimap2 by up to 3.5⇥ while maintaining identical output

    See figure 3 on page 4. Both Pacbio HiFi and CLRs are so much faster than ONT.
  • R
    RV
    Two part:
    PART 1 Questions:

    Genomics Cow
    @GenomicsCow
    ·
    Jul 21
    Replying to
    @sbarnettARK
    Thnx, I learned a bit. A few thorts:
    1. A lot hinges on SBB's superior accuracy. Think that we need to see it in more customers' hands before judging that. Many, if not most, seq technologies tout great accuracy in alpha/beta settings

    Genomics Cow
    @GenomicsCow
    ·

    2. If accuracy really is right up there, why didn't their neighbors Illumina purchase them? I'm sure they scouted and considered. (Honest q)

    3. What kind of company is PACB actually? Didn't they focus on head office operations, not massive marketing/sales across the regions? So even if they develop great short read tech, its a different structure to roll it out and replace Illumina.
    4. Also covered by
    @OmicsOmicsBlog
    , PACB have many frontiers to cover as it is with HiFi. Can you imagine the prioritization discussions now? HiFi is their culture. But market size is larger today for short reads. Tricky trade-offs to make.
    Thnx again for all the analysis.
  • D
    Daniel
    Omniome deal- I’ve been reading more and reflecting on the aquisition/partnership. Seems very smart/strategic and well orchestrated. The intent it demonstrates to take on Illumina and to dominate the market was enough for me to ‘average up’ and nearly double my holding in last few days. Prospects here medium term are incredible
  • R
    RV
    https://www.genengnews.com/news/pacbio-adds-short-read-capabilities-with-up-to-800m-omniome-acquisition/

    By offering short- and long-read technologies, PacBio reasoned, it could potentially double its market opportunity and better satisfy the preference of customers that need both. PacBio delivers long-read sequencing through its Single Molecule, Real-Time (SMRT®) technology, designed to deliver a comprehensive view of genomes, transcriptomes, and epigenomes, with the aim of enabling access to the full spectrum of genetic variation in any organism.
  • c
    chengis khan
    Shorts are in full force today, they want to get out prior to earnings.
  • R
    RV
    This is huge guys- Adam Ameur (Associate professor at
    @scilifelab
    , Uppsala University. Computational biology and new sequencing technologies with focus on human/medical applications.)

    leveraged the unbiased droplet multiple displacement amplification (dMDA) step of Xdrop® to prepare long fragments of genomic DNA from a single cell for HiFi PacBio sequencing. This application of long-read sequencing to single cells, once believed to be impossible, revealed structural variation beyond what is visible with short-read sequencing.

    https://samplix.com/join-us-at-eshg2021?utm_source=Twitter&utm_medium=organic&utm_campaign=2106_ESHG_2
  • D
    DNA
    I can't help but to speculate that the real reason for the acquisition is to integrate omniome's technology iwith PACB's smrt sequencing to deliver improved single pass accuracy.
  • R
    RV
    Merger - will help with liquid biopsies accuracy at decreased cost- this from Simon B write up:

    Many of the fastest-growing clinical NGS applications, which I’ll expand upon momentarily, require accuracies far exceeding the Q30 standard.

    Accuracy is everything in clinical sequencing, especially in applications where the starting DNA sample is degraded or present at low concentration — such as single-cell sequencing or cell-free DNA (cfDNA) sequencing. The two primary clinical markets for cfDNA sequencing are non-invasive prenatal testing (NIPT) and liquid biopsy. I’ll focus on the latter as I believe SBB offers a substantial value proposition over SBS for research and clinical labs conducting liquid biopsies. As a reminder, liquid biopsies scour the blood for very faint DNA-based signals of cancer. Liquid biopsies are applicable across the entire cancer care continuum from earlier detection (screening) to minimal residual disease (MRD) testing, to advanced cancer therapy optimization, to long-term disease surveillance.
    To accommodate for a lower baseline level of accuracy (~Q30), SBS sequencers need to amplify and oversample low-frequency DNA to confidently detect cancer. Oversampling is a significant contributor to cost and has slowed the adoption of precision liquid biopsies. Leading molecular diagnostic companies such as Natera (NTRA), Guardant Health (GH), Invitae (NVTA), Exact Sciences (EXAS), and many others collectively have spent hundreds of millions of dollars developing chemical and bioinformatic tools to
    suppress SBS sequencing errors.

    "IMPOSSIBLE" is the key word:

    Even with error-correction, labs often sequence samples to >3,000X depth to catch 1% variants (advanced cancer) and >30,000X depth to catch 0.1% variants (early cancer). The variant allele frequencies of many cancer types can be even lower — sometimes as low as 0.01% — which can be prohibitively expensive or IMPOSSIBLE to detect using legacy SBS approaches.

    SBB’s accuracy should require an order of magnitude less sequencing depth — so 1% variants could be caught with ~300X coverage instead of ~3,000X, for example. Moreover, the same error-correction methods should apply to SBB, enhancing accuracy even further and enabling a much lower limit-of-detection (LOD) for cfDNA applications.
    My take - less depth in sequencing - decrease costs and improve yield.

    This from Al Vilella to look for companies in liquid biopsy and single cell genomics:

    https://twitter.com/AlbertVilella/status/1413132865894633481/photo/2
  • R
    RV
    1.4 M shares despite 10% dilution PACB by ARK Funds in three days after merger- ARK shows CONVICTION - could be related to merger and like Phil put it the collaboration with Invitae is moving at a good pace.
  • R
    RV
    First buy of 250 shares @$30. Never had bought a share over $9 in the past.
  • A
    Anonymous
    PACB acquires Omniome: Another building block on the road to market domination. Smart move. Until actual profitability begins to ramp, the share price will continue to gyrate based upon market and sector direction.
    If you accept the PACB thesis, it'd be wise not to allow the share price dictate your short-term decisions...or your emotions.
  • R
    RV
    Another view from Cambridge, UK:

    Martin Pollard
    @TechnicalVault
    ·
    11h
    Replying to
    @SanDiegOmics
    and
    @PacBio
    I think this is more of an IP buy, looking for specific items which allow PB to push the envelope on their own tech. Buyouts can sometimes be cheaper than licensing, especially if you want their R&D staff too.
  • c
    chengis khan
  • c
    chengis khan
    38 sequels installed in Q2, total now 282 installed.
  • R
    RV
    Some more news about merger:

    For 16 years
    BatteryHigh voltage signDNA Chris DNA High voltage signBattery
    @cscarroll
    ·
    2h
    Replying to
    @sbarnettARK
    It appears Richard Shen, current CEO of Omniome, played an instrumental role in Illumina’s growth while there. Do you see his addition as an important part of this merger and, if so, what role do you see him playing at
    @PacBio
    post merger?
    Simon B:
    1. Yes, Richard was/is instrumental, in my opinion.

    2. He'll likely have a significant role bringing Omniome's technology to market and bringing the R&D teams together between companies.

    I would recommend folks scour LinkedIn/search patents to see Omniome's guilded lineage.
  • R
    RV
    Market manipulation:
    #1: This volatility isn't anything new necessarily, but there are some very interesting dynamics at play. Namely, the selectiveness of targeted growth plays versus broader growth indices.
    #2: What is strange is - generally when interest rates go up- equities go down. But what is strange is drop in 10 year yields- ntensifying selling for select growth plays has occurred concurrently. The real culprit in my opinion is the generational divide, that corresponds strongly with the legacy-based centralized mindset for Big Tech, Big Corporate America, and Big Everything and some may blame the big government too- but that is because Big everything controls them.
    #3: rom a day-to-day ground-level perspective, it appears that Wallstreet is attempting to shake-out investors through volatility. This is a gut-reaction to the pressure that has taken storm for more recent trading tactics, be it Wallstreetbets, memes, yolo, or many others. We are witnessing a highly extreme version of volatility as a result in 2021. To a degree, this makes sense, especially for weaker companies recently going public, or not necessarily meriting multiple expansion based on the fundamentals.
    Examples: But it makes no sense for a company like Amazon, Inc. (AMZN) to be up double-digits and MercadoLibre, Inc. (MELI) to be down double-digits. There's a lot of noise surrounding many points and pieces of information. Apple, Inc. (AAPL) comes out with a Buy Now-Pay Later, BNPL announcement and companies like Affirm Holdings (AFRM) and PayPal Holdings (PYPL) get hit. There's far too many examples to highlight, but the idea is clear, that there are many select growth companies being targeted in a basket of more broadly perceived risky companies.
    #4: For a mid- or long-term investor, the level-up trajectory is important as a mitigation strategy against short-term volatility. The longer a SP remains in a depressed range, the better opportunity for accumulation and mid- and/or long-term gains. Warren Buffet has always been credited with statements to this, preferring accumulation opportunities remain in order to maximize longer term potential. In essence, the combat to an attempted shake-out is to hold ground, and wait for the inevitable wipe-out for short-term traders.
  • R
    RV
    PacBio’s HiFi LRS chemistry generates ~25,000 base pair reads, which has required the company to develop more “gentle” DNA polymerases and dyes. By incorporating this technology, SBB users may have the flexibility to increase read lengths or increase accuracy even further depending upon the application.