In the year and a half since its purchase by Illumina was thwarted by the Federal Trade Commission over fears the combination would create a monopoly in DNA sequencing, Pacific Biosciences has had no problem finding ways to bulk up its business on its own.
Earlier this year, the sequencer manufacturer landed a jaw-dropping $900 million investment from SoftBank—a commitment almost as hefty as the $1.2 billion Illumina offered up for the proposed buyout.
Now PacBio is making an acquisition of its own, laying out a deal worth up to $800 million to take over with Omniome, another developer of DNA sequencing technology.
The bulk of the deal is made up of proposed upfront payments totaling around $600 million. That’ll be split between $300 million in cash and 9.4 million shares of PacBio common stock. The remaining $200 million will come from milestone payments dished out as Omniome achieves certain predetermined goals, also to be paid in a mixture of cash and stock.
To help finance the acquisition, PacBio has locked a handful of its existing investors into a private placement of common stock. That transaction is expected to rake in about $300 million in aggregate gross proceeds. Backers including Casdin Capital, SoftBank subsidiary SB Northstar LP and T. Rowe Price Associates will buy up about 11.2 million shares of PacBio stock at $26.75 per share, slightly below the stock’s closing price on the last full day of trading before the buyout was announced.
Once the deal is complete, PacBio will be able to expand the capabilities of its single-molecule, real-time sequencing technology, or SMRT Sequencing, for use by its customers in biomedical and infectious disease research and drug and diagnostic development.
PacBio’s technology focuses on long-read sequencing, which processes long threads of DNA at a time, allowing it to pick up on larger genomic variants and structural changes than short-read methods—though long-read sequencing has a higher potential error rate in those readings.
Omniome, meanwhile, has developed its own short-read technology that focuses on the proteins binding DNA to produce what it describes as more accurate analyses compared to other short-read sequencers.
Merging the two technologies makes something of a mirror image of Illumina’s proposed purchase of PacBio, which would’ve combined the latter’s long-read technology with Illumina’s own short-read sequencing.
“We chose Omniome because of its novel approach, which we believe could result in the most accurate short-read sequencing platform to penetrate large, fast-growing clinical application areas in oncology, transcriptomics, metagenomics and noninvasive prenatal testing,” said PacBio CEO Christian Henry.
The merger represents a major boon for Omniome, which has attracted the attention of a variety of life sciences investors since it was founded in 2013. Each of its last two funding rounds—a mid-2018 series B and early 2020 series C—raised $60 million, bringing the San Diego-based startup’s lifetime funding to nearly $130 million.