PacBio Stock Surges 75% on Landmark China Gene-Sequencing Approval
Company and partner Berry Genomics secure the first-ever regulatory clearance for a clinical long-read gene sequencer in the crucial Chinese market.
Shares of Pacific Biosciences of California (NASDAQ: PACB) have rallied more than 75% over the past month, driven by a landmark regulatory achievement that grants the biotechnology firm unprecedented access to China's vast clinical genomics market.
The Menlo Park-based company announced Tuesday that its partner, Berry Genomics, received approval from China’s National Medical Products Administration (NMPA) for the Sequel II CNDx system. The decision marks the first regulatory clearance for a clinical long-read gene sequencer in China, a significant milestone for PacBio and its proprietary high-fidelity (HiFi) sequencing technology.
In Tuesday morning trading, PacBio shares were changing hands around $2.24, pushing its market capitalization to over $700 million. The recent surge builds on strong momentum for the company, which has seen its technology gain traction in the highly competitive genomics landscape. The approval opens a new, substantial revenue stream, with an initial focus on screening for thalassemia, a common genetic blood disorder in Southern China, as well as other rare diseases.
"China’s regulatory approval of Sequel II CNDx reflects not only the quality and performance of HiFi sequencing, but also its readiness to improve clinical outcomes on a global stage,” said Christian Henry, President and Chief Executive Officer of PacBio, in a statement.
Strategic Inroad to a Key Market
The NMPA's decision is the culmination of a long-standing partnership with Berry Genomics, a leading Chinese company in genetic testing. The approved system provides an end-to-end workflow for hospitals and diagnostic labs, combining PacBio's advanced sequencing hardware with Berry's clinical thalassemia assay and software.
The strategic importance of the region for PacBio cannot be overstated. According to company reports, revenue from the Asia-Pacific region grew 53% in the second quarter, highlighting it as a critical growth engine. This regulatory green light transitions PacBio’s powerful long-read technology from a predominantly research-oriented tool to a clinically-validated diagnostic instrument in one of the world's largest healthcare markets.
Long-read sequencing, which can analyze long stretches of DNA with high accuracy, is particularly adept at identifying complex structural genetic variations that are often missed by the more common short-read technologies. This capability is crucial for diagnosing inherited diseases.
Expanding Clinical Applications
While thalassemia testing is the initial application, both companies have signaled broader ambitions. The partnership plans to expand the system's use to a range of other complex single-gene disorders.
“We plan to expand this capability to more clinical assays like congenital adrenal hyperplasia, fragile X syndrome, spinal muscular atrophy, Duchenne muscular dystrophy, and other complex single-gene disorders and panels,” said Dr. Aiping Mao, Vice Director of R&D at Berry Genomics.
This expansion plan could significantly increase the total addressable market for PacBio's technology in China and solidify its competitive position.
Investor and Analyst Reaction
The market's positive reaction reflects growing confidence in PacBio's growth trajectory. The stock's recent performance has attracted significant institutional interest, including from Cathie Wood's ARK Invest, which reportedly increased its holdings substantially in October.
Analysts currently hold a consensus "Buy" rating on the stock, with a collective price target of $2.16. The recent rally has pushed the stock price slightly above this target, and investors will be closely watching the company's upcoming third-quarter financial results, scheduled for release on November 5, for further signs of operational execution and an updated financial outlook.
The successful entry into China's clinical market provides PacBio with a powerful new narrative as it works to scale its technology and challenge established players in the genomics sector. The focus will now shift to the speed and success of the commercial rollout with Berry Genomics and the expansion into new clinical indications.