Pacific Biosciences Gains As HudsonAlpha Picks Sequel System

Pacific Biosciences of California, Inc.’s (NASDAQ:PACB) advanced Sequel Sequencing System, also known as PacBio Sequel, is currently being used by the Alabama-based HudsonAlpha Institute for Biotechnology with a view to study more than 500 children and their parents.

The goal of the evaluation is to ensure a significant increase in diagnostic success rates while treating formidable pediatric cases. Interestingly, scientists at HudsonAlpha have been using PacBio Sequencing technology in their agricultural biology work as well.

Notably, the institute’s NIH-funded Clinical Sequencing Exploratory Research (CSER) project is applying Pacific Sciences’ genome sequencing to comprehend the genetic basis of intellectual and developmental disabilities in children. The system is also being applied in plant sciences.

Shares Get a Boost

Following the announcement, shares of Pacific Biosciences jumped 5.3% to close at $2.58.

We believe the latest development will provide cushion to Pacific Biosciences’ shares which have declined 46.8%, against the industry’s gain of 14.7% in a year’s time.

PacBio Sequel System – A Cornerstone

PacBio Sequel Sequencing System is a cost-effective Single Molecule Real-Time (SMRT) sequencer which can provide characterization of a wide variety of genomic variation types, including complex short-read sequencing technologies thus helping treat undiagnosed genetic diseases in children.

In the fourth quarter of 2017, the PacBio Sequel Systems accounted for a 75% increase in consumable revenues of the company. Per management, Sequel-generated revenues grew more than eight-fold in the quarter, representing a whopping 80% of fourth-quarter revenues.

Additionally, BGI China ordered 10 Sequel Systems, making it one of the primary growth drivers of Pacific Biosciences.

Since the past year, a number of studies have been using or planning to use the PacBio whole-genome sequencing with a goal to increase the rate of cure of genetic diseases. These studies include Stanford University School of Medicine; the European Solve-RD Consortium, which is performing a 500-individual rare disease study; and Novogene, which has announced plans to sequence 1,000 Chinese genomes.

Market Prospects

Per a study by Markets and Markets, the global Genomics market was valued at $13.45 billion in 2016 and is expected to see a CAGR of 10.2% to reach $23.88 billion by 2022.

The growth can be attributed to the growing demand for personalized medicine, increasing investments, grants and funds by the government, and rise in research activities in the field of genomics. Furthermore, North America is expected to account for the largest share of the global Genomics market in the forecast period.

Zacks Rank & Key Picks

Pacific Biosciences carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are BIOHAVEN PHARM (NYSE:BHVN) , Bio-Rad Laboratories, Inc. (NYSE:BIO) and Envision Healthcare Corp. (NYSE:EVHC) .

BIOHAVEN has an expected earnings growth rate of 50% for the current quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bio-Rad has an expected long-term earnings growth rate of 20%. The stock has a Zacks Rank #2 (Buy).

Envision has an expected long-term earnings growth rate of 13%. The stock has a Zacks Rank #2.

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