Thread by @investing_city

Genomics Thread #3

Let's move onto some companies!

Up first is Pacific BioSciences...

1/ When talking about genomics, the first company that comes to mind for people is likely Illumina.

They really led the charge in short-read sequencing and played a HUGE role in decreasing the overall costs to sequence a genome.

2/ Even now, Illumina has roughly 90% market share in all DNA that has been sequenced. In other words, it's the real giant in this space.

However, the next decade looks more uncertain for Illumina because long-read sequencing is actually superior in some important ways.

3/ For one, it's more thorough. Short-read sequencing (SRS) is usually only 70-400 base pairs at a time and the DNA is copied through PCR (polymerase chain reaction) millions of times.

Then, the gaps are filled in through software and a reference genome (basically a model).

4/ The positives with SRS is that it's extremely cost-effective and fast.

The negative is that it can miss some really important pieces of the transcriptome (transcriptome is to RNA what genome is to DNA).

SRS is great for detecting small genetic variations (like SNPs).

5/ But there is something called alternative splicing. The high-level view is that genes can code for multiple proteins.

SRS has a hard time picking up on the full picture because the genetic material needs to be broken up rather than understanding the longer chain.

6/ I'm sure a geneticist reading this would be rolling their eyes but that broad difference between SRS and LRS is important for understanding really complex diseases.

In summary: the longer the read length, the easier it is to assemble the genome and transcriptome.

7/ There are definitely split views over the future of LRS and SRS.

I think the broader consensus is that LRS has much more potential but that SRS will continue to be important for things like liquidy biopsies where LRS isn't as good at detecting cfDNA (cell-free DNA).

8/ My understanding is that LRS will do a lot to help researchers discover ground-breaking drugs and treatments.

That's where Pacific BioSciences comes into play. It's the only pure-play LRS company on the market. The other popular one, a private co, is Oxford Nanopore.

9/ While there are some synthetic LRS companies like 10xGenomics and Bionano (we'll discuss them in later threads), let's focus on PacBio for now.

Now that we understand why it's important, let's talk about the product and the company a little bit.

10/ In 2018, Illumina tried to merge with PacBio but a year later, the FTC (Federal Trade Commission) blocked it for anti-trust reasons.

Strange for such a small company at the time but it's a testament to PacBio's technology.

It's called SMRT (single molecule, real-time).

11/ I won't get into the details of exactly how it works. If you're interested, check out this video:

A great thing about the gene sequencing business model is that it's very "razor-and-blades."

12/ The razor is the sequencer but then they also sell high-margin consumables like reagents & test kits that enable the sequencing process.

One other thing you should know is that Oxford Nanopore won a lawsuit against PACB for infringing on a few patents.

13/ This lawsuit wasn't detrimental to PacBio but it's important to note.

If Oxford Nanopore ever goes public, that would be interesting.

Back to PACB, its latest product, the SMRT Cell 8M can sequence up to 8 million molecules simultaneously, consisting of 20k base pairs.

14/ Importantly, the costs of LRS are coming down quickly. Previously, this was a big negative against the technology but now it's looking much more promising.

Instead of only 400 base pairs, SMRT technology can sequence 20k base pairs with 99.9% accuracy.

End/ The company's revenue is split roughly 50/50 domestic and internationally, selling to research institutions.

Lastly, about 17% of revenue comes from one Chinese distributor.

Thanks for reading part 3! Next up we'll talk about those synthetic LRS companies...