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Pacific Biosciences of California, Inc. Message Board

chromatim46 10 posts  |  Last Activity: Nov 28, 2012 7:44 PM Member since: Nov 28, 2012
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  • Reply to

    Discussion

    by chromatim46 Nov 28, 2012 8:32 AM
    chromatim46 chromatim46 Nov 28, 2012 7:44 PM Flag

    Also, are there any prohibitive measures to liquidation such as contract agreements with clients, etc.

    Anything that would prevent liquidation.

  • Reply to

    Discussion

    by chromatim46 Nov 28, 2012 8:32 AM
    chromatim46 chromatim46 Nov 28, 2012 7:34 PM Flag

    I'm more skeptical of Oxford Nanopore than bullish - as an investor, you never want to buy into hype.

    Some possible reasons for lack of news:

    Parties who have already obtained demo minIONs are constrained by non-disclosure agreements
    - I think this is primarily because PACB made the mistake of releasing data early, when it still had kinks and it was overwhelmingly anti-climatic. They want to avoid that.

    Illumina owns 15% of Oxford Nanopore, so I guess that they have a say in what gets shouted from rooftops

    That still doesn't detract from the fact that Pacbios are overpriced and only occupy an incredibly small niche that's in danger of being disrupted within the next two quarters.

    However...

    I tried hard to think up a bullish case for the stock, since PACB is steamrolling other biotech sequencers in terms of current stock performance and I think this may be the case.

    Even though the company bleeds cash from quarter to quarter, share prices are still trading under cash per share.

    119 cash and cash equivalents from most recent quarter
    - 9 million is probably used up at this point

    110 * .9 ( adjustment for rosy Non-GAAP accounting) =

    99 / 55.7 shares outstanding = $ 1.8 cash per share

    And you can tweak that upwards and downwards due to addition variables such as exercised stock options or liquidating value of PPE, but it will slant upwards.

    In the event of liquidation, that would be approximately how much a share of PACB is worth
    at this moment in time, this value will get lower as the months go by since I do not expect PACB to ever break even much less reach a profit.

    I trust the CEO to be prudent in investing his own capital, by liquidation, but if he want's to steer PACB down it's current path it would be an entirely different story.

    My question for any knowledgeable investor out there is this:

    Is an insider who participates in massive purchases of his company stock, when it is trading below cash per share, allowed to subsequently take measures to begin voluntary liquidation?

    Or is this in bad faith and punishable by securities law?

  • Reply to

    Discussion

    by chromatim46 Nov 28, 2012 8:32 AM
    chromatim46 chromatim46 Nov 28, 2012 9:08 AM Flag

    My understanding of the stock:

    The Pacbio is just too expensive and has an unacceptable error rate of ~14% compared to Ion Torrent or Miseq (error rate of ~1% and ~0.1%).

    Basically Pacbios are relegated to niche status, and will probably never sell in the amounts require to produce a net profit. They will never be massed produced.

    Since they have the longest available reads, they're good for some tasks like de novo assembly, but companies can just do most of the work on Illumina or Life platforms and pay a fee to have one of the few labs that already have a pacbio to patch up gaps.

    There's an upstart company called Oxford Nanospore that has claimed that it can perform 10,000 bp reads (as compared to pacbio's current 3,000 bp reads) for less than $1000 per sequence and no equipment cost (compared to pacbio's $300-$1700 cost rate and $700,000 in sunk equipment cost).

    If Oxford Nanospore can live up to their claims, Pacfic Biosciences is basically dead in the water.

    Oxford Nanospore promised to commercialize their platform in the first half of next year, IMO, this why I think a lot of people don't even bother ordering Pacbios anymore.

    I'm buying the stock for now but I won't be holding it long term.

    If anyone has a different opinion feel free to share.

  • Reply to

    Discussion

    by chromatim46 Nov 28, 2012 8:32 AM
    chromatim46 chromatim46 Nov 28, 2012 9:02 AM Flag

    Sources:

    Comparison of PACB, ILMN and LIFE products:

    Google: BMC genomics, 1471-2164-13-341

    Field guide to 2012 Next Generation Sequencers:

    Google: 2012 NGS Field Guide - molecularecologist

  • Reply to

    Discussion

    by chromatim46 Nov 28, 2012 8:32 AM
    chromatim46 chromatim46 Nov 28, 2012 8:56 AM Flag

    This board won't let me post my sources...

    Anyways, from what I understand Pacific Biosciences doesn't have a competitive sequencer compared to the other major players, so what kinds of recent changes have occured?

  • Reply to

    Discussion

    by chromatim46 Nov 28, 2012 8:32 AM
    chromatim46 chromatim46 Nov 28, 2012 8:42 AM Flag

    IMO, the stock will take a dive once the CEO stops supporting the price movement with his purchases.

    Analysis of PACB:

    The Pacbio is just too expensive and has an unacceptable error rate of ~14% compared to Ion Torrent or Miseq (error rate of ~1% and ~0.1%).

    Basically Pacbios are relegated to niche status, and will probably never sell in the amounts require to produce a net profit. They will never be massed produced.

    Since they have the longest available reads, they're good for some tasks like de novo assembly, but I don't see why companies can't just do most of the work on Illumina or Life platforms and pay a fee to have one of the few labs that already have a pacbio to patch up the gaps.

    Lastly, there's an upstart company called Oxford Nanospore that has claimed that it can perform 10,000 bp reads (as compared to pacbio's current 3,000 bp reads) for less than $1000 per sequence and no equipment cost (compared to pacbio's $300-$1700 cost rate and $700,000 in sunk equipment cost).

    It's a lot of hype and they haven't presented any solid data, but if they can live up to their claims, Pacfic Biosciences is basically dead in the water.

    Oxford Nanospore promised to commercialize their platform in the first half of next year, this why I think a lot of people aren't showing up to PACB seminars or purchasing their machines anymore.

    Can anyone share with me the bull case on this stock?

  • chromatim46 by chromatim46 Nov 28, 2012 8:32 AM Flag

    Can anyone share with me the bull case for the stock? Besides the insider purchases?

  • chromatim46 by chromatim46 Nov 28, 2012 8:29 AM Flag

    As geneticists gather in San Francisco, sequencing companies are strutting their stuff. Oxford Nanopore drew crowds by displaying its sleek, cheap machines that promise to disrupt the market place – but the company remains coy about when exactly it will release data or start taking orders. Pacific Biosciences has announced advances in its sequencing chemistry. And Illumina unveiled cloud-based collaborations to help turn raw data into information.

    Sequencing technology from Oxford Nanopore promises the best of everything: quick, cheap sequencing data that can detect variants invisible to other methods. It made a huge splash at the annual meeting of Advances in Genome Biology & Technology (AGBT) in February; five thousand dollars of equipment would reportedly sequence an antire human genome in fifteen minutes, with machines to be ready by the end of the year. Since then, scientists’ wait for Nanopore’s sequencing data has been like waiting for Godot, and no data were forthcoming at today’s meeting of the American Society of Human Genetics.

    Chief Executive Officer Gordon Sanghera spent some time telling me how the technology could tag proteins or microRNA with specially-made DNA strands and be used for detection, but he wouldn’t say a word about the company’s timeline for DNA sequencing. Instead, he urged patience. “What we said at AGBT, we will make good.”

    Unlike nanopore technology, which reads changes in electrical conductance as DNA strands move through tiny holes, commercially available sequencing techniques work by shredding DNA, and then copying the fragments with chemical reactions that reveal the sequence. The biggest challenge is computationally putting these sequenced fragments, or ‘reads,’ back together.

    While small mutations can be detected relatively reliably, larger duplications, deletions and rearrangements are more-or-less invisible. The longer the reads, the easier it is to put the genome back together. Roche 454 announced some software tweaks to lengthen its reads, boasting read lengths of 1000 basepairs and beyond. A customer quoted in the company’s press release says that its most frequent length was 820.

    Meanwhile, Pacific Biosciences announced that it had boosted the lengths of its reads from an average of 3,000 basepairs to about 5,000 basepairs, with some reads as long as 20,000. That’s compared to 200 or so basepairs produced by Illumina’s technology. PacBio made these improvements both with software and chemistry. The machine can record data from the sequencing reaction from a longer length of time, and a faster DNA polymerase reads more bases each second. Today, the company described using its technology to sequence single molecules of HIV collected from Zambia.

    At $700,000, machines are severalfold more expensive than those of its competitors, and users tell me machines are finicky. PacBio reads also have much higher error rates than its competitors. When I asked director of product management Edwin Hauw about this, he told me the company would soon announce an error-correction technique that uses previously discarded short reads to create a consensus sequence in its standard 5 kb reads. Earlier this year, the company and other research groups described a similar approach using reads from other sequencing technology. Last quarter, revenues at the company were down 73% but the company has booked sales for at least four machines. The company still lags far behind its competitors in market share.

  • Reply to

    CEO buys shares

    by o08o.ugh64w Nov 27, 2012 10:54 AM
    chromatim46 chromatim46 Nov 28, 2012 8:07 AM Flag

    Think it's closer to 2%, or 1.1 million shares owned by Hunkapiller over 55 million total shares outstanding.

    My point is that PACB has a daily volume of about 300k and usually 2/3 of that is back and forth trading, since Hunkapiller accumulated 600k shares in under a week, so we know that he's the one supporting the stock price with his open market purchases.

  • Reply to

    CEO buys shares

    by o08o.ugh64w Nov 27, 2012 10:54 AM
    chromatim46 chromatim46 Nov 28, 2012 6:42 AM Flag

    I don't think hedge funds are buying up the stock. From what it looks like, it's the CEO who's buying most of the open shares on the market.

    Sentiment: Buy

PACB
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