Filed by Illumina, Inc.
Pursuant to Rule
14a-12
under the
Securities Exchange Act of 1934, as amended
Subject Company: Pacific Biosciences of California, Inc.
Commission File No.:
001-34899
On November 1, 2018, the following article was published by Forbes Media LLC at the website:
https://www.forbes.com/sites/matthewherper/2018/11/01/dna-sequencing-giant-illumina-will-buy-pacific-biosciences-for-12-billion-
exclusive-ceo-interview/#49b86da87c78.
DNA Sequencing Giant Illumina Will Buy Pacific Biosciences For $1.2 Billion Exclusive CEO Interview
By: Matthew Herper, Forbes Staff
Illumina, the dominant maker of
DNA sequencing machines, has agreed to purchase smaller rival Pacific Biosciences for $8 a share, or $1.2 billion, in an effort to cement its ownership of cutting-edge genetic research.
The deal represents a 79% premium to yesterdays closing price for Pacific Biosciences stock. The deal would be the largest that Illumina, which made
$726 million on $2.75 billion in sales in 2017 and sports a $46 billion market capitalization, has done in its
20-year
history.
This extends the market opportunity in front of us, says Francis deSouza, who has been Illuminas chief executive since 2016. He argues that
the two companies technologies are very different, but their cultures are complementary. This will lead to more discoveries and faster growth. What it will mean for the market and customers is that by combining these two approaches and
the data from these two companies we will give consumers a more perfect view of the genome.
Illumina has driven the cost of sequencing a human
genomea nearly complete sequence of a single persons DNA codedown from $10 million a decade ago to less than $1,000 now, leading to an explosion of scientific research and medical uses for patients with cancer and rare
diseases. DeSouza has said that he expects that Illumina will be able to eventually lower the cost per genome to $100 per person.
But there are
limitations to the technology used by the company, which is based in San Diego. Illuminas machines work by reading many tiny fragments of DNA and assembling them. This is known as short-read technology. For most parts of the human
genome, this works fine, but it is not as useful in cases where the DNA has been structurally rearranged, or in areas where a pattern in the DNA repeats again and again, making it harder to puzzle the code together from tiny pieces.
Thats where PacBio comes in, deSouza says. PacBios DNA sequencers can look at a single molecule of DNA and decode long stretches of it
with high accuracy. But the cost is much higher. Currently, it would cost $12,000 to sequence a single human genome with PacBio machines. A new technology update should cut that figure in half. A replacement of the core chip the system uses,
expected next year, could eventually bring the cost down to $1,000 per genome. Illumina expects the long-read market to grow from $600 million today to $2.5 billion in 2021. Were going to make that technology more accessible
around the world, deSouza says. Illumina isnt the only one excited about PacBios upcoming improvements. Its starting to have a place in human genetics, says Stacey Gabriel, senior director of the Genomics Platform
at the Broad Institute of MIT and Harvard.
The Illumina and PacBio technologies do not have to be used separately. Researchers could also use
PacBios long-read machines, which sell for $350,000 each, in combination with Illuminas instruments, which can approach $1 million each, to produce more complete genomes of any organism.
There is competition in the long-read market, most notably from Oxford Nanopore, which has created a smaller and portable technology. DeSouza argues that
after the forthcoming advances, the PacBio technology will be more accurate. The reason is that the errors made by PacBio are random, which means that if you can sequence a DNA molecule more times, they eventually go away. The errors of nanopore
technology, which works by passing a strand of DNA through a tiny hole, are not random and may not be fixable using brute force.