PacBio Acquires Omniome, a DNA Sequencing Startup, for up to $800 Million

Pacific Biosciences has had no trouble growing its business on its own in the year and a half since its acquisition by Illumina was blocked by the Federal Trade Commission due to concerns that the combination would establish a monopoly in DNA sequencing.

Earlier this year, the sequencer manufacturer received a staggering $900 million investment from SoftBank—a commitment almost as large as the $1.2 billion promised by Illumina for the planned acquisition.

PacBio is now making its acquisition, setting out a deal for up to $800 million to acquire Omniome, another provider of DNA sequencing technology.

The majority of the transaction is comprised of planned upfront payments totaling about $600 million. This will be paid out in $300 million in cash and 9.4 million shares of PacBio common stock. The additional $200 million will come from milestone payments made when Omniome meets certain specified objectives, which will also be paid in a mix of cash and shares.

PacBio has committed a small number of its current investors to a private issue of common stock to fund the acquisition. The total gross proceeds from this deal are expected to be about $300 million. Casdin Capital, SoftBank subsidiary SB Northstar LP, and T. Rowe Price Associates are among the investors who will buy approximately 11.2 million shares of PacBio stock for $26.75 per share, which is slightly less than the stock's closing price on the last full day of trading before the buyout was announced.

PacBio will be able to extend the capabilities of its single-molecule, real-time sequencing technology, or SMRT Sequencing, for use by its clients in biomedical and infectious disease research, as well as therapeutic and diagnostic development, after the transaction is completed.

PacBio's technology is based on long-read sequencing, which analyzes long strands of DNA at a time and can detect larger genomic variants and structural changes than short-read methods—though long-read sequencing has a higher potential error rate in those readings.

Meanwhile, Omniome has created its short-read technology that concentrates on the proteins that bind to DNA to generate what it claims are more accurate analyses than existing short-read sequencers.

Combining the two technologies is reminiscent of Illumina's planned acquisition of PacBio, which would have merged the latter's long-read technology with Illumina's short-read sequencing.

The merger is a significant boost for Omniome, which has attracted several life sciences, investors since its inception in 2013. Each of its most two funding rounds—a series B in mid-2018 and a series C in early 2020—raised $60 million, bringing the San Diego-based startup's total funding to over $130 million.