Pacific Biosciences of California (NASDAQ:PACB) has two sides to its story. It is true that the company didn’t work hard enough to impress the audience it targeted however, it made a one of a kind niche in the market and a highly reputable firm resulted with its ultra high accuracy in sequencing microbial genomes.
The good news here is that these microbial genomes are becoming popular and very important in commercial applications. Hence their demand is overall progressing to an increasing trend. The company partnered with Roche (VTX: ROG) last September in order to diversify its business. This partnership proved well for the overall financial position of the company and it was a major reason for the healthy quarter revenues the company had.
The healthiness of the quarter was due to two major reasons. The first being that it made revenue of $11.7 million from the partnership it had with Roche (VTX: ROG). This included $10 million of hitting a milestone and $1.7 million in the amortization of its quarters. The second reason is that its product revenue increased 15.6% and its service revenue by 34.7%.
The company has around $99.3 million cash at hand which is enough for the company to maintain its operations in Q2 of 2016. By excluding the revenue of its partnership with Roche (VTX: ROG), the company may have a stressful time ahead. Even though the service and product revenue is increasing by around 20% since the last quarter, it’s not doing so well with its operating expenses.
The company is currently expanding and focusing on its improvements like making long DNA strands and is gaining momentum in the commercial customer market. Pacific Biosciences (NASDAQ:PACB) sold two of its systems to Macrogen who is further developing mouse models which will be customized for biomedical research as well as Human Longevity. These will allow humans to have a better lifestyle with age.
Various companies are now using the purchases of both HiSeq X Ten Sequencing Systems in order to reduce costs and gain speed and volume as well as PacBio RS II systems in order to work on genomic regions. With the gaps in the market being filled, the company should work more towards these opportunities as the market demand increases.
With the increase in bookings, demand for the flagship product of Pacific Biosciences of California (NASDAQ:PACB) is increasing. Investors should be pleased with this and in turn invest where it is profitable. Another factor that will encourage investment is that the management of the company is doing so well by focusing on the operating expenses which shows how oriented they are in their work.
However, it may take the company a few years for it to start reaping revenues. There is no reason for investors to look anywhere else as the company certainly has promise. It won’t be long before the company is ahead of the game and supplying to a market with an increasing demand.