Menlo Park, CA 12/15/16; Pleasanton, CA 12/15/16—Roche has announced that it plans to end its agreement with Pacific Biosciences for development and supply of an NGS system for the clinical market. “As a result of this decision, we will have greater focus on our internal development efforts and drive our long-term strategy, which is to be a leader in clinical diagnostic sequencing,” commented Neil Gunn, head of Roche Sequencing Solutions. Consequently, Pacific Biosciences will be free to sell the system into any end-market. “The clinical research and sequencing market and regulatory environment have evolved during the three years since we entered into this agreement with Roche. While we are disappointed with Roche’s decision to terminate the agreement, we are already familiar with this market and Roche’s decision does not significantly change our near-term plans for expanding our business to address this market,” stated Pacific Biosciences CEO Dr. Michael W. Hunkapiller. “The long-term goal of this agreement was for Roche to pursue the in vitro diagnostic market with regulated, assay-specific tests based on the Sequel platform and, to that end, Roche was focused on developing certain targeted assays and additional software features on the Sequel System.” Pacific Biosciences stated that it was prepared to pursue the segment of the clinical research market that does not require assay-specific kits. Pacific Biosciences expects 2017 sales to grow 40%–60%.

The Roche sequencing system’s release had been scheduled for early to mid-2017, according to Pacific Biosciences. Describing the issues that Roche may have encountered, Dr. Hunkapiller stated on a conference call, “What they’ve explained to us, in a sense, is that it is more of a timeline of when they wanted to get their system out on some specific assays that was the issue.” In general, he noted that “based on the interest level we currently see from customers in this space, we believe the majority of the clinical sequencing market does not want or need such assay-specific kits to be supplied along with the sequencer.” The company intends to sell the Sequel system into the LDT market, noting that many of these labs are also its research customers. “As the sequencing market for diagnostics or clinical testing has developed, it is less daunting, even for a company our size, to go at it aggressively than it looked like it was going to be three years ago,” said Dr. Hunkapiller. The company will also consider partnerships with test developers and regional distributors. Pacific Biosciences emphasized that its system had met all the technical requirements of the Roche agreement.