Specialist
Former Senior Field Application Scientist at Pacific Biosciences of California Inc
Agenda
- Short-read and long-read sequencing – recent trends and developments
- Pacific Biosciences' (NASDAQ: PACB) expansion into short-read sequencing via the pending acquisition of Omniome
- Competitive landscape, highlighting major players' key differentiations
- H2 2021 outlook and longer-term growth expectations
Questions
1.
What sequencing industry trends, dynamics or developments have you noticed since our last Interview together on Pacific Biosciences [see Pacific Biosciences – Illumina Merger Failure & Business Outlook – 5 November 2020]?
2.
Are you surprised by Pacific Biosciences’ Omniome acquisition to enter the short-read sequencing segment and by the timing of that acquisition?
3.
Do you expect any hesitation or issues for Pacific Biosciences’ Omniome acquisition? You noted Illumina as a competitor to Pacific Biosciences and mentioned the former’s failed acquisition of the latter but that it continually attempts to enter new segments. Its reacquisition of Grail also faces a lot of scrutiny.
4.
To what extent would you expect Pacific Biosciences to be a competitive threat to Illumina with the combination of long and short read from the Omniome acquisition? Illumina is largely the biggest player, but with somewhat limited growth prospects, given the FTC pushback. How might it impact long-read sequencers such as Oxford Nanopore?
5.
You mentioned Oxford Nanopore’s accuracy has improved significantly and instrument cost is quite different to Pacific Biosciences. How might Oxford Nanopore continue improving? What might that mean for Pacific Biosciences?
6.
Last time we spoke you mentioned potential hurdles with Pacific Biosciences’ platform and that instrument stability, reagent costs and the initial amount of DNA would somewhat limit the platform’s uptake. Can you expand on this, including any gaps you have noticed, especially for long read vs Oxford Nanopore?
7.
Last time you also mentioned that you would prefer to stick with Illumina as it is more proven and has a strong support system. Do you think that largely still applies to Illumina? How do you think Omniome will fare when customers analyse providers?
8.
What criteria do you think would be key for Omniome data or the Omniome approach that would move the needle? What would be essential for Omniome to have to meaningfully impact cost, throughput and positioning?
9.
What hurdles might Omniome or any other firm face when coming to market with a new platform? We know Illumina is the leader and have heard from many client types that switching NGS [next-generation sequencing] provider is quite difficult, costly and, depending on the use case, would require doing a lot of work again, particularly in diagnostics. What is the appetite for a new provider, cost aside? What feedback or demand would you expect?
10.
Not a lot is known of Omniome’s approach, but a 2018 proof of concept paper states that the company was using surface plasmon resonance to perform base calling without fluorescent labels. How likely is it that its approach has changed since? Might it be materially different? Do you think it will introduce fluorescent labels?
11.
What changes might you expect for the Omniome platform, given Pacific Biosciences’ approach to long- read sequencing and your experience with the company?
12.
Pacific Biosciences mentioned that Omniome’s accuracy is going to be an order of magnitude higher than Illumina. How do you think Omniome can achieve that using scar-free binding, particularly given that Illumina’s accuracy is already significantly high? Is leaving a molecular scar more of an issue affecting the Illumina machine now?
13.
What do you think can be done to increase Illumina’s accuracy, given Omniome potentially poses a threat in this capability?
14.
What do you think is making a difference to Omniome’s accuracy that deems it an order of magnitude higher than Illumina according to Pacific Biosciences, beyond the aspects we have discussed? How could a smaller player such as Omniome do this, given Illumina is the most significant player here? Do you think that could reach even higher, particularly with the expected changes under Pacific Biosciences?
15.
You mentioned changes do not seem likely for Illumina. Do you think financials are the key reason it would not be able to increase accuracy further? Do you think that positions Omniome better in certain use cases or customer groups?
16.
You mentioned that Pacific Biosciences still has a lot of work to do on Omniome. Do you think the company has enough financial or research resources to improve long-read machines and develop Omniome short-read sequences concurrently? Is there a technology-sharing synergy in acquiring Omniome for combining short- and long read as well as cross-selling that would make this easier?
17.
The combination of short- and long-read sequencing is something that’s been looked at for a while, particularly with Illumina’s failed Pacific Biosciences acquisition. On what timeline do you think Omniome can develop more data or products or for it to be commercially launched? What potential M&A or organic work do you think is needed to make that happen at other firms?
18.
Can you discuss players’ combination potential, beyond Pacific Biosciences? Illumina aimed to develop a combination with an organic long-read technology. What are your expectations on long-read players acquiring or creating short-read technologies and vice versa?
19.
There are not many longer-read M&A options. What advantage might that give Pacific Biosciences if its ongoing efforts with the Omniome platform bear fruit? There’s a broader discussion on the use cases for short- vs long-read technology, with mixed commentary on the extent to which long read will replace short read. Do you think the leader must have both to succeed in the longer term?
20.
How do you think Oxford Nanopore will fare as a standalone? In our last Interview, you mentioned Pacific Biosciences was somewhat dismissive of Oxford Nanopore a few years ago, and considered it to be five years behind the curve. However, you also indicated Oxford Nanopore outperformed those initial expectations and that its lower price point means it is difficult to switch clients. Is that still the case, and what might that suggest about the firm's potential as an acquisition target?
21.
Can you share any thoughts on Thermo Fisher? Illumina’s path is quite limited, but do you think there is a chance of Thermo acquiring Oxford Nanopore? Do you think this would make sense or is likely in the near term? There are many incentives to drive Oxford Nanopore adoption.
22.
In which scenarios might another combination player come about, either organically or inorganically? Omniome’s data is quite far behind and is not commercial. What is the likelihood of other players doing this internally? How successful do you think that would be?
23.
What do you think is Illumina’s path forward in short-read sequencing in the short and long term? The company is trying to drive costs down and there is increased competition from BGI in the US.
24.
You mentioned that making the library prep less complex would benefit Illumina in the longer term. What else do you think is important to continue addressing to drive further adoption of its short-read portfolio? Do you have any concerns around the company being the longer-term segment leader in the next 10 years?
25.
Pacific Biosciences’ short-term catalysts are in long read. Can you expand on your comparison of the company vs Oxford Nanopore? You seem more hopeful for Pacific Biosciences than Oxford Nanopore but in which use cases might Oxford Nanopore win vs Pacific Biosciences?
26.
Where do you think Pacific Biosciences should partner with another firm? We last discussed this before the proposed Omniome acquisition, so to what extent has your assessment of partnerships or further M&A changed since we last spoke?
27.
We discussed the potential of Pacific Biosciences being acquired by another player in November 2020, where you considered Agilent, Danaher and Thermo, and said Thermo would need to boost its positioning. Do you think a Pacific Biosciences acquisition is likely after its proposed Omniome acquisition? Has your assessment changed?
28.
You seem more optimistic on Pacific Biosciences than when we spoke in November 2020 and you mentioned that there’s nothing the company can do that Thermo or Illumina can’t, with the upside being against Oxford Nanopore. What do you think has changed other than the company’s proposed acquisition? Has it addressed some of the concerns you mentioned last time, such that you are now more hopeful?
29.
What do you think is the best- and worst-case scenario for Pacific Biosciences with there being many expectations around the Omniome platform and how that might be once launched?
30.
What would be your assessment of and outlook for Pacific Biosciences in a worst-case scenario in which the Omniome platform is not as exciting or differentiated as hoped or has a worse-than-expected performance? You mentioned that this acquisition solves a lot of the hesitation or issues you had with the firm’s standing.
31.
Can you discuss the potential cross-sell ability, assuming the merger progresses well in a best-case scenario? What might the Omniome platform be able to present? Could it be the first fully fledged, launched commercial combination? Do you think the company will take more of a bundling approach or two separate routes? Might it be similar to LC-MS [liquid chromatography-mass spectrometry], where different competitors play in different areas?
32.
Illumina is working on decreasing prices quite significantly, partially due to the prospects of the Grail acquisition. Might this complicate the potential cross-sell ability you noted?
