New PacBio CEO Has Been Preparing for His Moment
Like a Hemingway bankruptcy, Mark Van Oene’s rise to the top job at PacBio was gradual and then sudden.
Like a Hemingway bankruptcy, Mark Van Oene rose to the top job at Pacific Biosciences gradually, and then suddenly.
“This was always the plan,” Van Oene told Ion Genomics, dating back to 2021 when ex-CEO Christian Henry recruited him to PacBio from Illumina. “The conversation from the beginning was, ‘Mark, come help me transform PacBio and round out your career and we’ll work through a succession plan when the timing’s right,’” he said.
According to Van Oene, that succession plan was officially put in place with the board last year. He took another step closer earlier this year when PacBio removed its VP of Global Sales, prompting Henry, who had been overseeing the company’s commercial operation, to swap responsibilities with Van Oene, who had been in charge of operations and R&D. This swap was documented in a filing with the US Securities and Exchange Commission.
When Van Oene and Henry cut PacBio’s payroll with yet another round of layoffs in recent weeks, they decided it was time to make the switch.
“The timing of the decision was more recent, but the plan was always there for this transition to happen here over the course of this year,” Van Oene said.
Given the layoffs —– the company’s third round in as many years —– and the fact that they’d have to soon report second quarter revenue below the prior-year period and Wall Street’s expectations, it’s worth considering whether other forces were in play. After a year of recovery against a bad 2024, progress on revenue growth has stalled the past two quarters. However, whether Henry’s seat was actually getting hot, and where that heat may have been coming from, is unclear. Henry isn’t leaving the board yet and will continue to advise Van Oene in an official capacity until the end of the year.
Regardless of how he got here, Van Oene is now strapped into a two-stage rocket of Henry’s making. Over the next year or two, Van Oene will need to pull off a transition to new reusable consumables that allow PacBio a price per genome that is at least competitive with short-read sequencing. Following that, he’ll need to correctly time and execute the launch of PacBio’s next instrument, a production-scale long-read sequencer that can make use of the lower sequencing costs while meeting the demands of larger human sequencing endeavors, such as clinical and population sequencing.
How he pilots this stretch will determine whether PacBio finally takes off or if it crashes back down.
For his part, Henry said he has “no regrets.” That includes the 2021 acquisition of Omniome —– which cost $316 million in cash and approximately $250 million in stock upfront, plus at least $96.2 million in cash milestones —– and the 2023 acquisition of Apton Biosciences for $110 million. These deals fed the launch of Onso, a benchtop, mid-throughput, short-read sequencing platform that performed poorly amidst strong competition. Earlier this year, PacBio sold the scraps of its short-read technology portfolio, mostly from Apton, to Illumina for just $48.1 million.
“The decision about believing in the short-read side didn’t play out the way we had hoped,” Henry told Ion Genomics. However, he defended the strategy behind those decisions. “If interest rates and the academic market hadn’t blown up, it likely would have worked.”
Kyle Mikson, a stock analyst at Canaccord Genuity who covers PacBio, agreed. “In the moment it was the time to make these aggressive decisions and high growth potential. Money was flying [around],” he said. “But looking back, stuff didn’t work out. You only get so many chances.”
While a steep price to pay, the ability to launch Onso along with Revio appears to have placed PacBio salespeople into more conversations and deal rooms. Those likely helped set the stage for new conversations Van Oene will have as he tries to capitalize on the move to cheaper pricing and higher-throughput, albeit only for long reads.
On their Q2 call with analysts, PacBio officials noted that the transition to the SPRQ-Nx reusable consumables is providing a drag on revenue, as customers work through stockpiles of older products.
At the same time, “customer enthusiasm for SPRQ-Nx has remained strong since full launch,” Van Oene said on the call. Customers are installing the software needed to facilitate usage of SPRQ-Nx and “many of our high-throughput customers are currently in the process of validating the new multi-use workflows in their own laboratories,” he added.
The high-throughput long-read instrument is coming soon. PacBio officials said that they’ll soon be “[moving] past development spending” on it. Van Oene added that he knows he needs to “keep it on track.”
“The challenge has always been the throughput of the technology and the economics,” Van Oene said. “We’re finally at that point with SPRQ-Nx, where it’s getting close enough that it’s getting people to pay attention to using our data for much larger scale projects.”
Van Oene has given a lot of thought to where PacBio is headed. He even took responsibility for the recent layoffs in marketing, saying he “really wanted to refocus the commercial energy towards the clinical opportunity we’re seeing for rare disease and whole genome sequencing in Europe.”
What he hasn’t yet given thought to is who might succeed him, whenever that time comes. “I am a huge fan of succession planning and developing talent from within,” he said. “So it will be a priority for me, but not immediately.”
