Menlo Park sequencing company Pacific Biosciences announced Tuesday that it plans to buy San Diego biotech Omniome for up to $800 million.
The Bay Area firm boasts the deal will make it the only company with the tools to read both long and short stretches of DNA, allowing it to do everything from uncovering rare genetic diseases to spotting cancer earlier. That would push the firm further into competition with San Diego sequencing giant Illumina, which unsuccessfully tried to buy PacBio for $1.2 billion in 2018.
PacBio will pay Omniome $600 million up front, equally divided between cash and stock, with another $200 million if the startup’s team can bring its sequencing technology to market. The deal should close by late August or early September, according to Mark Van Oene, PacBio’s chief operating officer.
“This (will) enable us to fully address all of the clinical needs of the market,” Van Oene said. “That’s the exciting part.”
DNA is the book of life, and there’s a lot we can learn by reading it, from tracking the spread of coronavirus variants to unraveling how life evolved to selecting which drugs to give a patient.
PacBio’s approach has been to read DNA in large chunks. Doing so allows scientists to spot places where there are extra copies of a DNA segment, or where a segment has moved into a new part of the genome — changes often seen in cancer cells and in patients with genetic diseases.
But if you’re looking for rare mutations at individual spots in the genome, rapidly sequencing short bits is a better way to go, says Van Oene. And that’s where Omniome, founded in 2013, comes in. The company has fine-tuned its approach to be more efficient and accurate than other short DNA reading approaches, such as Illumina’s, according to Richard Shen, Omniome’s president, whose background includes a 16-year stint at Illumina. A 2018 report submitted by the company’s founders to the American Chemical Society says its technology works by detecting binding of a DNA fragment to a metal surface, which generates distinct electrical signals based on the sequence.
Shen says that while Omnione has had success in developing and fine-tuning its sequencing technology, PacBio’s got the resources to make sequencing data easier to interpret for customers and that the Bay Area company is already set up to sell, and install sequencing equipment.
The acquisition is a reunion of sorts. While at Illumina, Shen worked for a team headed by Christian Henry, who is now PacBio’s CEO.
Whether the deal closes by September will depend in part on whether the Federal Trade Commission thinks the acquisition is anti-competitive, which is the position the agency has taken against Illumina’s $7.1 billion bid to buy cancer diagnostic firm Grail Therapeutics. Van Oene doesn’t think the FTC is likely to intervene, noting that PacBio’s a far smaller company than Illumina and is looking to acquire a biotech that doesn’t yet have a product on the market.
“We’re in a very different market than Illumina was in when (it) tried to buy PacBio,” he said. “We believe that, over time, this will create some competition in the market, which, in our view, is what the FTC is charged with accomplishing.”
Omniome employs about 120 people in Sorrento Valley, all of whom will be able to stay on after the acquisition. Both Shen and Van Oene expect the Omniome team to expand.
