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PacBio (PACB) to Leverage Google's Deep Learning Technologies

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Pacific Biosciences of California, Inc. (PACB - Free Report) , also popularly known as PacBio, recently entered into a research collaboration with Alphabet's (GOOGL - Free Report) Google.  PacBio will leverage Google’s genomic analysis, machine learning and algorithm development tools to advance its highly accurate variant calls for HiFi sequencing runs, revealing new insights from PacBio sequencing data. The terms of the deal, however, have been kept under wraps.

The collaboration builds on prior PacBio and Google research. A recent bioRxiv publication titled: “Deep Consensus: Gap-Aware Sequence Transformers for Sequence Correction,” demonstrated improvements in variant calling and suggested that Google’s DeepConsensus machine learning tool can expand the yield of 99.9% accurate HiFi reads by approximately another 27% per instrument run.

This collaboration is likely to bolster PacBio’s highly accurate HiFi Sequencing technology.

Strategic Benefits of the Collaboration

The collaboration between PacBio and Google is expected to help the former’s customers further improve the quality and output of HiFi data by lowering the number of sequencing passes required to attain high confidence in base accuracy. Management at PacBio expects the advances in accuracy and data analysis to allow more customers to benefit from long-read sequencing as part of their research and translational projects, resulting in a positive impact on the implementation of genomics in precision health.

By incorporating Google’s deep learning technology into future product launches, PacBio intends to enhance the utility and overall value of HiFi data for applications such as whole-genome sequencing, full-length isoform and targeted sequencing applications.

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Per management at Google, the latest partnership with PacBio represents a significant step forward in collaborating with the genomics community to maximize the value of genomic data.

Industry Prospects

Per a report published in MarketsandMarkets, the global genomics market is anticipated to witness a CAGR of 19% during the forecast period (2020 to 2025). Factors such as higher government funding for genomics projects, growing applications of next-generation sequencing in cancer research, entry of new players and start-ups in the genomics market and greater application areas of genomics are driving the market.

Given the substantial market prospects, PacBio’s latest collaboration with Google seems well-timed.

Notable Developments

PacBio engaged in a couple of significant developments this month.

The company announced a collaboration with Berry Genomics-- a China-based clinical genomics and life science company-- to deliver the PacBio long-read sequencing technology to the China clinical market. PacBio will create its first long-read desktop sequencing platform with funds and guidance from Berry Genomics under the terms of the deal.

The company also partnered with Genomics England to study its technology for finding genetic variants in unexplained rare disease cases. This collaboration is part of PacBio’s broader strategy to demonstrate the benefits of its HiFi sequencing in identifying rare diseases following short-read genome sequencing.

Share Price Performance

The stock has underperformed its industry over the past year. It has declined 68.3% compared with the industry’s 3.9% fall.

Zacks Rank and Key Picks

Currently, PacBio carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space that investors can consider are Baxter International Inc. (BAX - Free Report) and Apollo Endosurgery, Inc. (APEN - Free Report) .

Baxter, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 9.5%. Baxter’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 10.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baxter has outperformed its industry over the past year. BAX has gained 8.8% against the 10.3% industry decline.

Apollo Endosurgery, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7%. Apollo Endosurgery‘s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 25.6%, on average.

Apollo Endosurgery has outperformed its industry in the past year. APEN has gained 50.4% versus the industry’s 4.8% fall.