Hello, everyone, and welcome to the 44th Annual JPMorgan Healthcare Conference. My name is Max Marks, and I'm an associate on the JPM Healthcare Investment Banking team. It is my pleasure to introduce Christian Henry, CEO of PacBio.
Thank you. Thank you, Max. Thank you to the JPMorgan team for the opportunity to present today. As Max said, my name is Christian Henry, and I'm the President and Chief Executive Officer of PacBio. I'd also like to thank all of you in the room today and those listening online for your time and your attention. Before we dive in, I am going to remind everyone that we may be making some forward-looking statements, and I would ask for you to take a look at our SEC filings on our web page for more details on the risks and uncertainties that are related to our business. But with that, let's get started. Our mission is enabling the promise of genomics to better human health, and we achieve that mission through creating the world's most advanced sequencing technologies.
In today's talk, I'd like to provide you with an overview of the fourth quarter and our 2025 revenue performance. I'd like to update you on our markets and our strategy, and I'd like to discuss some of the focus areas for us in 2026. PacBio is at the forefront of designing and developing and manufacturing advanced sequencing solutions that empower scientists and clinical researchers to solve some of the world's most complex genetic challenges. We have a broad portfolio of products covering the entire sequencing spectrum, from DNA extraction through advanced data analysis capabilities. In fact, today we have currently more than 80 products in our portfolio, with more than 60% of those products just being launched in the past three years. So we've been really quite busy in R&D. And this is critical because over the past few decades, next-generation sequencing has fundamentally transformed biological and clinical research.
There's no question about that. However, these sequencing methods have challenges that limit the ability to completely resolve the whole genome, and this has prevented the community from truly unlocking that power. PacBio's native single-molecule sequencing technology, HiFi, overcomes these challenges and allows you to resolve many classes of variation that just weren't possible in the past. We do this through single-molecule native sequencing with very long reads, up to 25 kB in length. They're highly accurate. We have very comprehensive coverage, and we're a direct single-molecule sequencing technology. This enables us to resolve genetic variations such as structural variation, repeat expansions, the ability to resolve complex regions such as HLA, pharmacogenomic regions, and all of this makes HiFi an excellent choice for clinical applications.
But not only can HiFi resolve all these complex regions of the genome, we can also directly read methylation patterns with no additional library prep or input, and we continue to improve that each and every year. Our products serve a large and growing market that we estimate to be around $9 billion in 2028, and it's growing at about 7% annually. Within this market, we are specifically targeting four key submarkets where our technology and products have very specific competitive advantages, specifically rare disease, oncology, and carrier screening in the clinical market, and population sequencing in the discovery part of the market. This gives us a combined multi-billion dollar market opportunity, and I'm really excited to report that we now have the product portfolio and the competitive economics required to significantly increase our market penetration and drive our growth.
Speaking of growth, I'd like to talk a little bit about our 2025 preliminary results. So we anticipate reporting $160 million in revenue for the year, which represented about 4% growth. As many of you that follow the industry know, we had major headwinds in the academic markets, but we were able to grow in spite of that through growing very quickly in the clinical market. But what was especially encouraging was our fourth quarter. We grew 16% sequentially and 14% on a year-over-year basis to $44.6 million in the fourth quarter, up from $39.2 million in the fourth quarter of last year. This growth was driven by record consumables. In fact, three of the four quarters of 2025 were record consumable quarters. And of course, consumables are the engine that drives not only revenue growth but strong gross margins.
We also had strong instrument placements in the quarter for both our Revio and our Vega product lines, and we're seeing very strong traction in the clinical and hospital markets specifically. We also are in a very strong financial position. At this point, we have around $280 million in cash and investments, and we significantly reduced our cash burn in 2025 down to around $110 million. This was driven because of lower operating expenses as well as higher gross margins, and I look forward to further updating you on our 2025 financial performance and our outlook for 2026 at our earnings call scheduled in February. Now I want to spend just another minute talking a little bit about where our consumable shipment growth is coming from. We had 19% growth in consumable shipments in 2025, and we saw very strong growth in our human-focused markets, such as the clinical market.
Our three-year human CAGR is 23%, and this has been driven principally by the launch of the Revio system, which offers greater scale than previous systems, and our focus on developing applications that power clinical applications, such as our PureTarget family of products. From a non-human perspective, the business has actually been mostly flat, and this has been due principally to funding challenges not only within the academic segment, which many of you have heard a lot about, but also in the industrial and agricultural markets where we've historically had a very strong business. Moving into some of the instrument performance, the Revio platform, Revio, for those of you that are new to PacBio, is our flagship sequencing platform. And in 2025, the uncertainty in the funding environment drove an overall decrease in Revio placements.
However, over the course of the year, we began seeing momentum, and we finished 2025 on a very strong note with 21 placements in the fourth quarter. And in 2025, the clinical market was actually our biggest growth segment with 20% growth, and 20% of our orders in 2025 were multi-system orders. In other words, customers buying one or more Revio platforms. The reason why that's interesting is because those multi-system orders are the customers that are going to scale up consumable growth in 2026. From a pull-through perspective, we did $242,000 per system per year in the fourth quarter. This is at the high end of our stated expectations, and we are very encouraged by seeing strong growth in all three of our territories over the course of the fourth quarter and the year 2025. Moving to Vega. Vega is our most accessible sequencing platform.
It's a desktop system at a very low entry price point that is very critical to our strategy because it enables customers to get into HiFi technology and start to understand the power of that technology. We launched the product at the very end of December in 2024, and we had 140 placements over the course of the year. Importantly, 65% of those placements went to new-to-PacBio customers, and the entire product line did $24 million in shipments, roughly. Now, why would someone buy a Vega system? Vega has broad appeal in microbial genetics, targeted panels, HLA analysis, small genomes, basically all of the areas where a targeted portfolio of products would serve you well in an entry-type setting. This year, in 2026, we will launch our SPRQ chemistry onto the Vega system.
That is our chemistry that we're leveraging and taking from the Revio system and putting it onto the Vega system. And the reason why that's important is that we will be able to increase the throughput and lower the cost to our customers, which will further drive demand. Now, we've talked a lot about clinical and how clinical is becoming a more important part of our business each and every year. But I want to start back in 2024 and highlight this is where our clinical journey really started. We started seeing adoption of HiFi in large clinical accounts like Quest Diagnostics and Myriad Genetics, where they began the process of leveraging our technology to replace legacy testing technologies.
However, 2025 really was a transformative year for us from a clinical perspective, and I'd like to walk through a few of the examples because what you're seeing is our platform being adopted broadly across a spectrum of clinical use cases. But first, I'll start with Berry Genomics. Last month, I was in Beijing, and our long-term partner, Berry Genomics, I was with them to celebrate the launch and the approval of the first known regulatory approval of any long-read platform in the world. So Berry Genomics got the Sequel II platform approved for thalassemia testing in China. Thalassemia is a test that has hundreds of thousands of samples per year, and so we see this as a big growth opportunity for PacBio. But Berry's not just stopping there. They're expanding their menu to other important areas such as Fragile X, SMA, DMD, etc.
At Stanford, the Stanford Medicine Group, they're using the Revio system in a pharmacogenomic setting, and they are developing the capability to personalize prescriptions using the patient's actual genetic profile. They're leveraging this technology to also look for adverse reactions to medications and also improve the evaluation of ineffective therapies. They believe that this will improve the safety and lower costs and improve adherence, and so we're seeing that at Stanford in pharmacogenomics. Children's Mercy has been a long-time partner of PacBio, and in 2025, Children's Mercy broadly implemented HiFi for genetic disease diagnosis as a first-line therapy. They use HiFi in this first-line way to significantly improve their diagnostic success and substantially reduce turnaround time, providing patients with answers that will drive meaningful clinical impact.
Finally, Radboud umc in the Netherlands has rapidly expanded their use of HiFi on Revio platform as they've demonstrated they can consolidate their current standard of care, actually, onto one test on the Revio platform. This improves diagnosis, reduces cost, and improves the turnaround time. In fact, the rare disease market, if you look at that market, there is nearly $240 million of annual revenue occurring just in Europe alone. On balance, shipments to clinically focused customers in 2025 grew over 40%. We're really encouraged to see HiFi being adopted in the clinic. I want to spend even more time on rare disease because it's so foundational to what we're getting accomplished. Today, there's more than 300 patients globally that suffer from rare disease and that we think are opportunities for HiFi.
To understand and care for the nature, scientists and clinicians are turning to HiFi around the world. The comprehensiveness of our data allows our customers to interrogate and understand the diseases across a broad spectrum of areas. And so, for example, what we're really starting to see is not only the research, like what's going on at the University of Washington Medicine, where they're investigating sudden unexplained death in infants with the goal to try to save hundreds of children per year, to Ambry Genetics, where Ambry Genetics is implementing HiFi in their once study to validate the improved diagnostic yields that you can get from our technology, to the just announced collaboration with the n-Lorem Foundation, where they're establishing HiFi for use with candidates targeted for antisense oligonucleotide therapies.
So what you're seeing is HiFi is being used across the spectrum of rare disease, and it's because of the accuracy of the technology, the ability to see all classes of variants, and now increasingly the advantages of cost that you can get from this technology. And so we're excited to be continuing to support these customers. As I also said, a key area for us is not just the clinical market, but population sequencing. And in 2025, we saw a lot of progress along this front. We're seeing studies like the All of Us study, which published their first sets of data on long-read sequencing in December, I mean, in October, excuse me, the Long Life Family Study that will be starting sequencing nearly 8,000 samples, and the Asian Pangenome Consortium, which is sequencing more than 10,000 samples and creating the most comprehensive pangenome reference ever created.
They're using not only single nucleotide variants and the standard variation, but they're also looking at structural variation, methylation, etc., creating reference genomes that will be world-class and world-standard, but not only these programs. We're engaged in projects now that are with the potential for hundreds of thousands of genomes, and this has been a result of our SPRQ chemistry, which I'll talk about in a few slides, so what's it going to take to drive our next phase of growth? I started by demonstrating the power of HiFi and the quality of the data, the comprehensiveness, because of the nature of our sequencing technology. We have increasingly seen more real-world evidence that clinical clinicians and clinical researchers are demonstrating across the board. The richness of the data is delivering results, and we've seen many examples of that, and finally, it comes down to better economics.
The challenge of the PacBio technology in the past has been its incredible technology, but it's been expensive, and we've been hard at work over the past several years, starting with the launch of the Revio system and now with the announcement of our SPRQ Next Chemistry, to develop capabilities that drive not only the comprehensiveness and power of the technology, but at economics that are competitive with short-read sequencing or other types of sequencing, and so we'll spend the next couple of minutes talking about that. As I said before, it's really about the comprehensiveness and the capability, and I want to highlight the All of Us paper that came out in October. In October, the paper demonstrated that using long-read sequencing and evaluating structural variation, over 50% of disease-driven associations were missed by short-read sequencing technologies, and only with PacBio HiFi could you see these.
The implications are profound in the sense that every test now, assuming the economics could get to where they need to go, should be considered for HiFi because you just see more of the genome, and we see this across the board. Many, many customers are telling us the same thing. We're also seeing that HiFi can identify 100% of the variants, and in this example, what's happening is that the population sequencing market wants to use that variation to get new biological insight, but in the clinical market, the objective is to get a quick diagnosis and drive costs down. Oftentimes, a sample has to be analyzed multiple times with different technologies in order to obtain the answer the clinician is looking for.
And with HiFi, it's been shown that you can consolidate a number of different assays onto one test, which not only gets you results faster, but it simplifies the workflow, and it actually saves cost. And so this is going to be an important hallmark of our push forward into the clinical market. It all starts with data, data, data, data. And PacBio's HiFi platform has been the fastest growth in data generated. In fact, our customers generated 60% more data in 2025 than they did in 2024. This growth in data is outpacing all of our peers. It's just doubled in the last 18 months, where some of our competitors have grown maybe in the 10% sort of range. We need this diversity for rare disease and just fundamentally understanding biological insight. And of course, with high-quality data at scale, AI starts to enter into the conversation.
PacBio has been using AI, actually, for a number of different years, and if you think about the AI journey in life sciences and sequencing, you can actually think about it in three different tiers. In the first tier down at the bottom, it's how do you improve the quality of your hardware, the quality of the results that you're given. With the launch of the Revio system, in collaboration with Google, we developed deep learning algorithms and capabilities to call all of our bases better. Now we're in this middle tier where we're helping enable large HiFi training sets that will enable the top tier, the future AI applications, but not only that, we've developed federated data infrastructure that allows customers to leverage the samples and cohorts from other customers around the world so that they can get deeper insights faster with more data.
Ultimately, as the data scales, the opportunity to create multi-omic foundation models that'll drive deeper biological insight will result in digital diagnostics, agentic R&D, clinical and scientific co-pilots. Basically, there are so many different uses, and the foundation of it is predicated on the quality and capability of HiFi data. And so we're really excited about our AI journey here powering the next generation of informatics. Here's an example of how federated data actually works. We've helped to create the HiFi Solves Consortium, and there's more than 15 members in this consortium today. It's a rare disease consortium, and it's giving people more access to larger data sets because they can ask questions of the data that they don't actually have in their database.
This gives them the opportunity to look for the rare disease needle in a haystack that others may have if you don't have a big enough cohort. It actually empowers people to get started because they know they have the customers know they have federated data sets that they can leverage as they create their own scale and contribute to this. We intend to have this network drive tens of thousands of samples over time, really improving the power of long-read sequencing in terms of the ability to diagnose patients. Our SPRQ Next Chemistry was announced in October at the ASHG conference, and this is a fundamental breakthrough in our ability to drive competitive economics. We announced this product and started our beta test in November on time. What it is, it's a consumable. It's our next version of consumables, and it leverages the power of multi-use SMRT cells.
Our most expensive component in our sequencing is the substrate or the SMRT cell itself, our semiconductor-based technology. We've developed capabilities now where you can use that SMRT cell multiple times, which allows us to amortize the most expensive cost over multiple runs and effectively lower our price per sample to our customers. But this is one of the rare times where not only can we lower the cost to our customers, but we can also expand our gross margins at the same time. So it's a very unique moment in our history. This also allows us to increase the throughput of our system. So on our systems, the Revio platform today runs each run with four of these SMRT cells. We've increased the throughput 25% on each SMRT cell with every single run.
And in our beta program, you can see in the chart on the right, we're seeing incredible results from our beta customers. So this is customer-driven data that you see up here. And one of the most important things that we were looking for in the beta was that the first run and the second run would have effectively equivalent output. And this output really drives the value proposition. The beta's gone so successful, we're expanding it internationally into an early access program starting next month, and we will continue to roll this out and expand it over the course of the year so that all of our customers can get the power of the SPRQ chemistry. And at the end of the day, this is where the economics really come into play.
We can now price whole genomes with the power of HiFi, with the full resolution at $300 a genome, which is very competitive in today's market. So in 2025, we really focused on building the commercial foundation, and we continue to drive innovation. As we move into 2026, we're going to be focused on how does HiFi become the sequencing standard of care. And there's really several key elements to the plan and our strategy. First is to launch the SPRQ Next Chemistry successfully and broadly around the world to dramatically improve the economics of HiFi. By improving the economics of HiFi with the full product solution that we already have in place, we believe that we will drive significant market penetration into those four key markets that I discussed earlier.
We're going to continue focusing on accelerating clinical adoption, supporting customers like Berry Genomics as they push and expand their menu, supporting other customers in rare disease such as Radboudumc and the HiFi Solves network to drive further expansion of data and results across the world. We're going to really drive population sequencing studies. And so, as I said before, we have hundreds of thousands of samples in various stages of negotiation and approval. These studies and tests, the implementation actually takes time. They're complicated. They're usually government-run, so they have long sales cycles. But the ability to use HiFi data and drive next-generation AI through these large-scale cohorts is an area that we're going to clearly focus on. Finally, we continue to drive innovation.
At the core of who PacBio is, we're a company that drives groundbreaking innovation for our customers so that they can achieve their goals and really achieve our mission. So as we kind of wrap up here, I just want to remind you we had a very strong fourth quarter. It sets the stage for 2026. We've built the foundation. We're feeling like we've built some strong momentum. We still expect the academic funding market to be challenged, but we are making up for it in our clinical push. The depth and the quality of our data amplified by AI does position us to unlock new biological insights, which will create value for patients, customers, and shareholders. And finally, our SPRQ chemistry fundamentally resets the economics of long-read sequencing. It makes it highly competitive and a compelling value proposition for customers around the world.
We look forward to continuing to grow, and we look forward to spending more time with you at our earnings call in February. Thank you for your attention.
Thank you very much.
I guess I can stand still.
One question that we often get is, can you walk us through how Q4 revenue performed across the major regions and what drove the differences?
Yeah. So we actually had a very strong fourth quarter across the world, with Europe continuing to be strong. Europe was strong all year long. It was our fastest-growing territory, growing strong double digits for the year. Americas actually had a nice comeback quarter. It's been a tough year in the Americas region for us because of the academic funding constraints. In fact, over the course of the entire year, we only placed a handful of Revio systems. We're starting to see some seeds of that returning to a more normalized fashion. And then Asia-Pacific was basically on target, if not just a bit above. But the real strength came from Europe, followed by the Americas.
Awesome. Yeah, that makes sense. And how should investors think about the contrast between the EMEA strength and U.S. funding pressure?
You know, I think what's going on in EMEA is that EMEA is a clinical story, and we're seeing this play out, for example, at Radboudumc in the Netherlands. If you saw on the slides, in the past, they were saying they would sequence up to 5,000 genomes in 2026. Now they're saying at least 5,000. So they're rapidly expanding as the human genome testing has become their first-line test. We're seeing strength in the Nordic countries where they're using HiFi in a rare disease context. We're seeing strength in Germany as well. And so Europe, you're seeing this clinical story play out. And in the Americas, the scale of the testing in the Americas from a clinical perspective is more on the targeted sequencing scale, looking at carrier testing. Those tests are starting to roll themselves out, which will start to help in 2026 and beyond.
But the academic funding was really the story in the Americas in 2025, where the uncertainty in February that really started in February kind of manifested itself basically for a freeze for the entire year.
Got it. Thank you, and you also mentioned APAC. What stood out in APAC, specifically during Q4?
Certainly the approval of the Sequel II platform at the NMPA in China. That was a landmark deal for us. The Pangenome Project, the Asian Pangenome Projects have been an important part. And we're seeing our service providers, particularly in China, continue to scale and grow. And they've been very busy. We have a concentrated customer base in China right now with those service providers. But with the launch of Vega, we're starting to see more diversity of customers in China, which I think will serve us really well.
Thank you. And what characterized Revio demand in Q4 new customers or expansions?
It was a combination, but we did see several multi-unit orders. And multi-unit orders are important, as I said in my remarks, because it's demonstration that people are in the process of scaling up, which will drive consumable revenue in the following year. And so in the fourth quarter, we saw some new customers, but we also saw some scale-ups. And so we saw a nice broadening of placements across, quite frankly, across the world and across different customer types, really still driven by those clinical accounts as opposed to the academic accounts.
Got it. And with Vega, how did Vega perform in Q4 compared with earlier in the year? And what was sort of driving the demand today?
We had our best Vega quarter of the year with 42 placements. We did 32 placements in the third quarter, so we had a substantial uptick. The sales funnel continues to improve. And what's interesting is that we're starting to see intra-quarter deals come. So basically, a deal comes to us at the beginning of the quarter and closes in the quarter, which is nice because that starts to just create a flywheel and an acceleration. We saw demand for Vega around the world, diversity of different customers, even some of the academic customers. And so it was actually a very strong quarter for Vega. At 140 placements for the year, that's actually a really nice first year of the product. We'll continue to improve the product in 2026, and I think we can challenge the team to grow our placements in 2026 over 2025.
So I look forward to sharing more about how we're thinking about our guidance specifically in February.
Thank you. And with SPRQ Next, what is the sort of initial feedback that you're hearing? And is it already influencing buyer behavior?
Yeah, actually, our ASHG this year was really the turning point. Once we announced SPRQ Next and the ability to drive the economics of the whole genome down into a competitive range, we're seeing not only customers wanting to do bigger projects, but more customers wanting to engage with us to start. So SPRQ Next is already influencing Revio placements. But when you look at the feedback across the board, people see that they get all of the comprehensiveness of HiFi at a much lower price. And in the beta program, the customers are finding that the workflow is straightforward. It's worked effectively out of the box. We worked really hard to make this a beta where the product just works rather than it's an experiment.
In fact, this was a paying beta where our customers had to pay to be in the beta, which isn't typical, but we felt the technology was far enough along that we could do that. We are very encouraged by the early results, very encouraged by the 25% boost in output, which will provide even more value for our customers and help us grow.
Awesome. Thank you. And with rare disease, how did rare disease perform in Q4 and also carrier screening as well?
We'll start with carrier screening. Carrier screening is emerging. We have several large customers that are developing carrier screening assays. The intent is for them to use the carrier screening assay alongside other short-read genome tests to eliminate all the legacy technologies. We have some large customers that are in the process of validating that. Hopefully, they'll come to market later in 2026. 2025 was really a validation year. In spite of that, we saw significant growth because those are research programs that use substantial amounts of reagents and assays. We were actually quite pleased with how that's going.
Thank you. And with PureTarget, how is PureTarget performing? And what role does it play in clinical traction?
PureTarget is the engine that is driving initial clinical traction with the bigger customers. Now, with the launch of SPRQ chemistry, we'll start to see whole genome applications in a scaled clinical context over the next year or so. But PureTarget was really our entrée as a targeted sequencing technology that allows you to interrogate the genes that are difficult for other technologies to look at. And therefore, they get better results and less expensive results than legacy methods, and they can do something that short-reads can do. So PureTarget was really the foundation to get us started. And then on the rare disease side, you're seeing mostly whole genome approaches.
Thank you. And consumables, again, were a highlight. What drove that in the fourth quarter?
Customers are using their instruments, and they're using them a lot. We had increased levels of utilization. We had very strong pull-through, as you saw. We had some. We didn't really have any stocking orders or anything like that. This was bread-and-butter demand. We didn't really see a significant year-end budget flush of any kind, particularly on the consumable side. This is really where we're seeing the growth. This is why you've seen three of the last four quarters have been all-time record consumable revenues for the company. I think it's going to continue that way.
Thank you. And where did pull-through exit for the year?
For the year, Jim, you know that for the year. I know the fourth quarter was 242K. It was probably just a bit under that for the full year. So yeah.
And sort of lastly, what gives you confidence coming out of the last quarter?
Yeah, I think what really gives me confidence is that we've seen the demand curve fundamentally inflect because of the SPRQ chemistry and the economics, so that's the first thing that we've seen. The second thing is that we've worked really hard in this heavy period of uncertainty, and we had a very significant gap in academic revenue coming from the United States as funding got worse and worse relative to 2024, and we were able to overcome that by driving into the clinical markets, and we've seen this momentum really building in the clinical markets. We had 40% shipment growth in clinically relevant counts during the year, and we don't see that slowing down, and so we see customers using this. And over time, the clinical market is certainly a more durable set of revenues.
Our technology has fundamental competitive advantages over others that really give us the opportunity to penetrate that combined multi-billion dollar opportunity for us over the next several years, starting with 2026.
Awesome. Thank you. Well, with that, I think we're about at time. Thank you to the PacBio team and have a great rest of the conference.
Thank you. Thank you very much, everyone. Thank you for your time.