Illumina to Acquire Pacific Biosciences for $1.2 Billion to Enhance Genomic Sequencing Capabilities

On November 2, VCBeat (WeChat Official Account: vcbeat) learned from foreign media reports that Illumina, a leading company in the field of gene sequencing, has agreed to acquire its competitor Pacific Biosciences at $8 per share (totaling $1.2 billion) to consolidate its ownership of cutting-edge genetic research.

Founded in 1998, Illumina is a leader in the field of gene sequencing equipment manufacturing. The company reported sales of $2.75 billion, profits of $726 million, and a market capitalization of $46 billion in 2017. The transaction with PacBio marks the largest deal in Illumina’s 20-year history.

“This expands our market opportunities,” said Francis deSouza, who has served as CEO of Illumina since 2016. “This is significant for the market and customers. By combining the data and technologies of both companies, we will provide consumers with a more comprehensive view of the genome.”

Image from the official Illumina website

Illumina has reduced the cost of human genome sequencing from $10 million a decade ago to less than $1,000 today, with the ultimate goal of lowering the cost per genome to $100. However, the technology employed by the company has limitations. Illumina’s machines operate by reading numerous tiny DNA fragments and assembling them, a method known as “short-read” technology. While this approach works well for most of the human genome, it is less effective in cases of structural rearrangements or in regions where DNA patterns are repeatedly duplicated, making it more difficult to piece together the genetic code.

deSouza stated that this is where PacBio comes into play. PacBio’s DNA sequencers can examine individual DNA molecules and decode their long fragments with high precision, albeit at a significantly higher cost. Currently, sequencing a single human genome using PacBio instruments costs $12,000. Following this acquisition, new technological updates are expected to halve this figure. A replacement for the core chips used in current systems is projected to potentially reduce the cost per genome to $1,000 by next year.

PacBio was founded in 2003 by its Chief Technology Officer, Steven Turner, who, together with PacBio’s Chief Scientific Officer, Jonas Korlach, established the company’s foundational technology and entered the gene sequencing market in 2009. To date, the company has secured $360 million in venture capital funding and raised $200 million through its initial public offering (IPO). Following the announcement of the transaction with Illumina, PacBio’s stock price traded at a 71% premium over its previous day’s closing price.

“The deal has just been signed,” deSouza said. “We have long known that the PacBio team is highly talented, and we are delighted to collaborate with them.”