4. PacBio Is Innovating in the Next-Generation DNA Sequencing Space
In a deliberate and calculated move last week, Epic Games updated Fortnite and declared war with a direct payment channel that will circumvent Apple’s and Google’s 30% fee on in-app purchases. In response, both Apple and Google removed Fortnite from their app stores. Epic Games then filed suit against both Apple and Google, released a smear ad using Apple’s famous “1984” commercial, and started the hashtag “FreeFortnite” which has gone viral. Apple and Google seem to have played right into Epic’s paign.
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Important to note, this attempted coup involves more than Epic Games, Apple and Google. CEO Tim Sweeney claims that Epic Games is “fighting for open platforms and policy changes equally benefiting all developers.” Epic Games doesn’t want a sweetheart deal: it wants radical reform.
Now the question is: will this revolt devolve into background noise as was the case with Hey’s stance against Apple, or will it set a new precedent for the digital economy?
This week, Pacific Biosciences of California (PACB) raised nearly $87 million in a secondary equity offering, causing some excitement and an approximate 23% pop in the stock. With a strong balance sheet, PacBio should be able to improve its flagship Sequel II platform, enrich its clinical footprint, and expand its value proposition for translational research customers. Once upgraded, we believe Sequel II could be superior to category leader Illumina (ILMN) as measured by cost, accuracy, and features.
Unlike short-read sequencers, Sequel II uses high-fidelity (HiFi) long-read chemistry. While less expensive and more efficient, short read systems fail to recognize certain types of mutations, importantly structural variants. They also can be biased by upstream chemistry steps and are unable to detect epigenomic changes like DNA methylation without specialized reagents.
Though historically more expensive, HiFi long reads can overcome all of these challenges. In the recent precisionFDA challenge, an open competition among sequencing platforms and analysis pipelines, 96% of the winners used PacBio HiFi reads. Compared head-to-head with the same analysis tools, Sequel II had 2.5x fewer errors than Illumina’s NovaSeq and roughly 30x fewer errors than Oxford Nanopore’s PromethION system. In our view, with time Sequel II could have more advantages beyond superior accuracy and comprehensiveness.
According to our analysis, given its track record and access to capital, PacBio could optimize Sequel II to sequence whole human genomes for less than $1,000 within the next 24 months. Sequel II also should be able to generate as much data per day as the NovaSeq, perhaps forcing Illumina to lower reagent prices or integrate super-resolution optics into its high-throughput instruments more rapidly than otherwise might be the case.
5. The Polestar 2 Has Launched in the US and With It, Google’s Android Automotive Operating System
An EV brand spun out of Volvo and Geely, Polestar 2 is migrating from Europe to the US at a base price of $59,900. Early reviews suggest that this EV sedan is well-made and fun to drive. Though its drivetrain is less efficient than that of a Tesla, its fit and finish is better.
Piquing ARK’s interest, the Polestar 2 is the first car using Google’s Android Automotive Operating System (OS). Unlike Android Auto and Apple CarPlay which connect smartphones to vehicles, Android Automotive is a deeply integrated OS, allowing voice commands to control infotainment systems, climate controls, and other basic functions.
While its functionality seems limited relative to Tesla’s OS today, ARK is keen to learn how Google ‘s OS will improve and evolve in the global automotive ecosystem.