Pacific Biosciences' New CEO Bets on Reusable Chips and AI Data Deals to Reach Cash-Flow Breakeven by 2028
Morgan Stanley 24th Annual Global Healthcare Conference, September 15, 2026
Mark Van Oene, who stepped into the chief executive role at Pacific Biosciences after five years at the company working alongside his predecessor, used his first major investor conference appearance to lay out a narrowly defined execution plan rather than a strategic overhaul. The message to Morgan Stanley's Michael Podoll was blunt: the strategy is set, the job now is delivery, and the next 18 months hinge on a single technical breakthrough finally translating into gross margin.
The Reusable Chip Economics That Could Flip the Margin Story
The centerpiece of Van Oene's pitch is SPRQ-Nx, a reagent platform that began shipping in May and allows PacBio's SMRT Cell chip to be reused up to three times instead of discarded after a single run. Van Oene called this "the biggest breakthrough internally" the company has made, arguing that most external observers still underestimate its significance. "It is the majority of the cost of our sequencing, and it's what's held us back from being able to be economical at large-scale programs because we were throwing away this really expensive chip every time we sequenced," he said. Amortizing that cost over multiple runs has allowed PacBio to cut list prices by 30%, a move Van Oene says is already unlocking larger deals and fleet expansions that were previously out of reach.
The transition has near-term costs. Pull-through revenue per instrument fell to roughly $200,000 in the second quarter as customers worked through early-run yield issues — Van Oene noted first and second runs on the reused chips are performing well, with some yield drop-off on the third run. He expects the adjustment period to last two quarters, with consumable revenue and per-instrument pull-through recovering by year-end. Gross margin, currently below the 40% threshold, is expected to start climbing once the transition completes, a trend management wants investors watching closely into 2027.
Restructuring Savings and a Narrower R&D Focus
PacBio has now been through three restructurings in three years, including an exit from the short-read sequencing business. The latest round is expected to generate $40 million in savings next year from headcount reductions and non-recurring expenses. Van Oene was explicit that he does not intend to add new programs to the pipeline: "I don't want to add a bunch of new stuff to the development pipeline. I want us to be successful in launching, creating and launching our complete portfolio of the three different HiFi sequencing technologies." The company is also in-sourcing manufacturing for its Vega product line into its Menlo Park facility to better utilize existing space.
High-Throughput Platform Is the Real Growth Lever
Beyond SPRQ-Nx, the R&D priority that was explicitly protected from the recent restructuring is a high-throughput sequencing platform targeted for launch later in 2027. Van Oene framed this as the mechanism that ultimately drives both revenue and margin inflection, since high-throughput sequencing represents where "the majority of the revenues are made" and "the majority of the margin comes from." He described the SPRQ-Nx rollout as a deliberate bridge: multi-system Revio deals being signed now are effectively pre-positioning customers for the throughput and economics the next-generation platform will require, since "not many labs have ever run 10,000 genomes a year." Investors should treat 2027 Revio utilization trends as the leading indicator for how smoothly that transition to higher throughput will go.
Clinical Beachhead: Europe Leads, US Lags on Infrastructure
Germline genomics — carrier screening, newborn screening, and rare disease diagnostics — remains PacBio's clearest near-term clinical opportunity, but adoption patterns diverge sharply by geography. Europe has already begun treating whole-genome sequencing with HiFi as a frontline test rather than a reflex option, with academic and medical centers running samples in the thousands rather than tens of thousands. The US market, by contrast, is more fragmented and centralized, pushing early clinical adoption toward targeted panels rather than whole-genome sequencing. Van Oene pointed to Quest's recently launched ataxia carrier screening panel as a template, noting Revio can already handle hundreds of thousands of samples for targeted panels but not yet for whole-genome sequencing at that scale in the US. The high-throughput platform is positioned as the unlock for extending the European whole-genome model to the US and Asian markets.
Government Funding Environment Remains Stuck, Not Improving
Van Oene offered a clear-eyed assessment of NIH funding, noting the pressure predates the current administration but has intensified due to uncertainty rather than outright cuts. "It's the uncertainty of the timing of the funding, it's the uncertainty of the next round of funding," he said, adding that the typical September budget flush has not materialized this year either at PacBio or, to his knowledge, elsewhere in the industry. The US business has been roughly flat as clinical growth offsets NIH shortfalls, a dynamic management does not expect to reverse near-term, though Van Oene said the company is positioned to capture upside quickly if funding resumes.
A New Customer Category: AI Foundation Models Buying Genomic Data
The most novel disclosure was around a commercial relationship with Basecamp Research, a UK-based company building a foundation model of biology from a database described as a 1 trillion gene atlas sourced from global soil samples. Basecamp is now sending PacBio metagenomic soil samples for HiFi sequencing to improve the quality of data feeding its model, which the company believes will aid antibiotic and vaccine discovery. Van Oene positioned this as an early example of a broader shift in PacBio's customer base toward AI and biopharma companies seeking comprehensive, high-quality genomic and transcriptomic data for model training — a category he expects will partially displace shrinking academic and government revenue over time. Notably, Van Oene was careful to flag that none of this is embedded in the company's base-case financial model, framing it purely as optionality rather than a near-term revenue driver.
Path to Cash Flow Breakeven
Van Oene laid out three sequential proof points for investors to track: successful completion of the SPRQ-Nx transition to push gross margin above 40%, sustained 50%-plus growth in clinical consumables reflecting a shift toward routine recurring testing, and a successful high-throughput platform launch next year that drives utilization into 2028. Taken together, management is pointing to 2028 as the year the company reaches cash flow breakeven, contingent on all three levers executing roughly on schedule.