Rumors Floating Again that Roche or GlaxoSmithKline Might Acquire Bay Area’s Pacific Biosciences

Rumors Floating Again that Roche or GlaxoSmithKline Might Acquire Bay Area’s Pacific Biosciences June 3, 2016
By Mark Terry, Breaking News Staff

Rumors are spreading that Menlo Park, California-based Pacific Biosciences might be an acquisition target by GlaxoSmithKline and Roche .

Pacific Biosciences developed Single Molecule, Real-Time (SMRT) Sequencing technology, which “offers the most comprehensive view of genomes, transcriptomes, and epigenomes—including the full spectrum of genetic variation—by providing the longest average read lengths, highest consensus accuracy, and most uniform coverage of any sequencing technology on the market today.”

On April 26, the company announced a co-marketing agreement with Ankeny, Iowa-based Advanced Analytical Technologies (ATTI). In addition to the PacBio RSII and Sequel Systems, AATI’s Fragment Analyzer quantifies and qualifies nucleic acid samples in a single step.

“We are excited to team with Advanced Analytical,” said Kevin Corcoran, PacBio’s senior vice president of market development, in a statement. “Their Fragment Analyzer will help streamline our large-insert library workflow for de novo assemblies, where it is important to know the size of the libraries before and after size selection. Use of the Fragment Analyzer for accurate sizing will significantly speed the time it takes to make a library and improve the likelihood of project success.”

At the company’s first-quarter financial reporting on April 21, it reported first quarter revenue of $19.1 million, up 8 percent from the same quarter in 2015, which was $17.6 million. Product revenue was $12.4 million, service and other revenue $3.2 million, and contractual revenue was $3.6 million.

Pacific Biosciences traded on Dec. 23, 2015 for $13.45, dropped to $7.74 on Mar. 23, 2016, and is currently trading for $9.67.

This is not the first time an acquisition has been floated. In February, Reuters reported that company insiders indicated that Roche had approached PacBio. In 2013, Swiss-based Roche, inked a partnership agreement with the company to develop and market diagnostic products that used PacBio’s advanced gene technology. Under that deal, PacBio received an upfront payment of $35 million with expectations of another $40 million tied to development milestones. In addition, once the development program wrapped up, PacBio could receive income from the manufacture and supply of instrument, software, and various consumables that Roche would market.

PacBio’s biggest competitor is Illumina . In a 2014 Xconomy article, Keith Robison, a computational biologist with Cambridge, Massachusetts-based Warp Drive Bio, said, “It’s going to be very, very hard for anybody to take on Illumina. But PacBio is a pioneer in finding applications that don’t work well on Illumina.”

Back in January, Amanda Murphy, an analyst with William Blair, noted that Roche was the obvious buyer for the company, and was looking for some type of deal that would expand PacBio’s distribution capabilities. At the same time, the Daily Mail had indicated that GSK was interested in the company, with a theoretical price of $20 per share. Murphy thought a “takeout price of $16 per share would meet shareholder approval and be reflective of the long-term revenue opportunity for the Sequel.”

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