Dive Brief:
- Pacific Biosciences said last week that it will lay off about 195 employees, or nearly 25% of its workforce, as part of a plan to reduce operating expenses.
- Among those affected in the workforce reduction are 71 employees in Menlo Park, California, where the company is based, and 108 employees at a facility in San Diego that is slated for closure, according to Worker Adjustment and Retraining Notification letters filed with the state’s Employment Development Department. Both actions are effective June 28.
- Pacific Biosciences, which sells gene sequencing equipment, announced the layoffs on Thursday along with its first-quarter results, reporting a net loss of $78.2 million and flat revenue growth. The company’s results were hurt by weaker-than-expected instrument placements and soft consumables utilization, Kyle Mikson, an analyst at Canaccord Genuity, wrote in a Friday note to investors. Mikson believes the company can re-accelerate revenue growth and reduce its cash burn.
Dive Insight:
The job cuts come amid an industry-wide slowdown in laboratory equipment purchasing.
The reductions affect nearly all functions within the company, Pacific Biosciences executives said on an earnings call. Some consumables manufacturing for reagents and flow cells was consolidated from San Diego to Menlo Park during the quarter to lower production costs.
Business directors and managers, engineers, scientists and IT professionals were among the positions impacted, according to the letters filed with the state.
Several employees in the San Diego office are receiving relocation offers to the Menlo Park office, where the company plans to consolidate much of its research and development work, Pacific Biosciences spokesperson Todd Friedman said in an email. The remaining affected employees work remotely across the U.S. and the globe, Friedman added.
Pacific Biosciences CEO Christian Henry said on the earnings call that an increasing number of customers delayed instrument purchases in the quarter, and he expected some of the demand issues to persist throughout 2024.
“We believe that the sales cycle increased primarily because of uncertainty surrounding the timing of funding for new capital equipment, particularly in the United States and China,” Henry said.
“There’s no doubt that PacBio and our industry are facing increasing headwinds this year,” he added. “However, we remain incredibly optimistic about our business and the prospects for long-read sequencing.”
Pacific Biosciences is working with low-volume customers to improve sales of its Revio platform and implementing promotions to ease upfront capital equipment requirements, Canaccord Genuity’s Mikson wrote. He noted the company is committed to achieving positive cash flow by the end of 2026.
“Although it is unclear how long the headwinds and issues that hindered 1Q24 results will linger, the company understands it is accountable and is taking aggressive actions to re-accelerate growth while driving toward cash flow break-even,” said Mikson.