By Diagnostics World Staff
December 15, 2016 Roche is terminating its agreement with Pacific Bioscience. The biotech doesn’t intend to pursue efforts to develop a sequencing instrument for use in the clinical research and clinical market using PacBio’s Single Molecule, Real-Time (SMRT) technology. Roche retains no rights to the technology and PacBio is free to approach any market segments with their SMRT technology.
"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," said Neil Gunn, Head of Roche Sequencing Solutions in a statement. "We are continuing to actively pursue multiple technologies and commercial strategies internally and externally to ensure we address the specific needs of our customers in the clinical diagnostic sequencing market segment."
On an investor call this morning, Mike Hunkapiller, PacBio’s CEO was positive. “While we are disappointed with Roche’s decision, this does not significantly change our near-term plans,” he said. “The performance of this system currently meets the targets we had prescribed for it… both in basic research areas as well as in the clinical space,” Hunkapiller claimed. “Our product and service revenue this year is on pace to grow between 55%-65% over last year.”
Long History
The Roche and PacBio partnership dates back several years. In September 2015, Dan Zabrowski, Head of Roche Tissue Diagnostics and Head of Roche Sequencing Unit, praised the PacBio Sequel sequencing system using the SMRT technology. “This new sequencing platform has significant advantages over existing commercial platforms,” Zabrowski said last year, “and will be used as the basis for the Roche sequencing instrument being developed initially for clinical research, followed later by an IVD instrument launch. We anticipate the initial launch in the second half of 2016.”
The dissolution of the agreement now—instead of launch of a new diagnostics product—may not good news for either company. Roche has had documented bad luck pursuing sequencing: trying and failing to acquire Illumina in 2012 and closing down 454 in 2013, the same year it signed the exclusive deal with PacBio.
For its part, PacBio released what our writer called the “world's best whole genome sequencer” in October 2015. Last month Keith Robison, blogging at Omics! Omics! reiterated the opinion: “Pacific Biosciences has an amazing technology, just short of sorcery,” he raved. But the company has still struggled against Illumina’s market dominance and the buzz of Oxford Nanopore’s long-read capabilities. Robison goes on to outline major threats facing PacBio.
Last week, Mick Watson wrote a near-prophetic post at his blog Opiniomics comparing Sequel data to that of Oxford Nanopore (for which Watson frequently admits bias). “When PacBio announced the Sequel, I was genuinely excited,” Watson wrote. “However, it turns out Sequel isn’t really delivering on promises. Rather than 10Gb runs, folk are getting between 3 and 5Gb from the Sequel.”
Watson referenced some data points shared via Twitter as well as released PacBio and ONT data on read length and throughput. The numbers don’t look great for PacBio. Watson wasn’t ready to ring the death knell just yet, but he called the situation dire. “PacBio are fighting for their lives.”
LTD Future
But Hunkapiller insisted today that the agreement had simply run its course as the market changed.
“Based on the interest level we currently see from customers in this space, we believe that the majority of clinical sequencing market does not want to need such assay-specific kits to be supplied along with the sequencer,” Hunkapiller said. “I don’t want to speak for Roche, but from our perspective, this [the dissolution of the agreement] actually frees us up to go after some of those labs.”
PacBio estimates that well over 95% of sequencing-based tests in the future won’t be in vitro diagnostic tests from kits, but will be laboratory-developed tests. Labs want the freedom to develop their own assays, Hunkapiller said. And based on FDA's November 2016 change of course, more labs will have that opportunity. For now, anyway, FDA has put plans to regulate laboratory-developed tests on hold.
“Given that, particularly as the regulatory environment has changed over what the expectations were three years ago when we did the agreement with Roche, we think we’re still well-positioned to go after that market.”