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Item 1. Business

2026-02-25 compared with 2025-03-17 · 124 added, 156 removed, 198 unchanged (59% of the section changed)

We are a premier life science technology company that designs, develops, and manufactures advanced sequencing solutions that enable scientists and clinical researchers to improve their understanding of the genome and ultimately, resolve genetically complex problems.

Our products and technology under development stem from two highly differentiated core technologies focused on accuracy, quality, and completeness, which include our HiFi long-read sequencing technology and our Sequencing by Binding (SBB TM ) short-read sequencing technology.

Our products address solutions across a broad set of applications including human genetics, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications.

Lo ng-read sequencing was recognized by the journal Nature Methods as its “method of the year” for 2022 for its contributions to biological understanding and future potential.

Long-read sequencing has been applied to produce telomere-to-telomere genomes of humans, pangenome references, and has been recognized for its ability to provide more complete views of human variation .

Our products and technology, which include our HiFi long-read sequencing technology, address a broad set of applications including human germline sequencing, plant and animal sciences, infectious disease and microbiology, oncology, and other emerging applications.

Our focus is on creating some of the world's most advanced sequencing systems to provide our customers with the most complete and accurate view of genomes, transcriptomes, and epigenomes.

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Recent Developments

In 2024, we launched Vega TM , a revolutionary new benchtop sequencer designed to make accurate long-read sequencing accessible to more laboratories than ever before.

Vega delivers up to 60 gigabases of long reads per run and is designed to provide accurate HiFi reads and high-quality genomic, transcriptomic, and epigenetic data for individual labs.

Additionally, in the fourth quarter of 2024, we launched SPRQ chemistry for the Revio system.

The SPRQ chemistry will increase the efficiency of loading on Revio SMRT ® Cells, reducing DNA input requirements to just 500 ng, a 75% reduction.

These lower input requirements will allow HiFi sequencing to support new sample types, like saliva and tumors.

The chemistry is also expected to improve sequencing performance, providing an approximately 33% increase in sequencing yield per SMRT Cell.

Collectively, these enhancements are designed to enable each Revio instrument to sequence up to 2,500 human whole genomes per year at a cost of just under $500 per human genome.

In the first quarter of 2024, we commenced commercial shipments for the PureTarget repeat expansion panel, a new solution designed to comprehensively analyze 20 genes associated with serious neurological disorders, including challenging-to-sequence genes with tandem repeat expansions.

We also released the Nanobind PanDNA kit as a single kit that supports extraction of high quality DNA from many sample types, and the HiFi prep kit as a scalable and automation-friendly library prep for genomic samples.

On January 30, 2026, we completed the disposition of assets to Illumina Cambridge Limited (the “Buyer”) in accordance with the terms of an Asset Purchase Agreement, dated January 30, 2026 (the “Asset Purchase Agreement”), by and among us, Buyer, and Illumina, Inc.

("Illumina"), solely for purposes of Section 8.16 of the Asset Purchase Agreement, pursuant to which, among other matters, Buyer acquired certain intellectual property and other assets related to our short-read DNA sequencing technology and related clustering, sequencing reagent, and detection technologies (the “Asset Sale”).

As consideration for the Asset Sale, Buyer paid us $50.0 million in cash and assumed certain liabilities (the “Purchase Price”).

In addition, Buyer granted us a non-exclusive license to certain intellectual property included in the purchased assets.

In connection with the Asset Sale, Buyer will pay at our direction 4% of the net proceeds from the Purchase Price to the former equity holders of Apton Biosystems, Inc.

(“Apton”) related to the waiver of all remaining milestone obligations associated with our purchase of Apton in August 2023, which payment is expected in the first quarter of 2026.

As a result, we received approximately $48.1 million in net cash proceeds from the Asset Sale.

Our Mission and Impact

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We believe that unleashing the full potential of genomics will require a level of accuracy and completeness inaccessible to legacy technologies.

Accuracy and completeness are central to our product

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development strategy;

Accuracy and completeness are central to our product development strategy;

thus, we have created some of the most innovative and high-quality genomics solutions on the market.

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In humans, the genome is comprised of approximately three billion DNA base pairs, which are divided into 23 chromosomes ranging in size from 50 million to 250 million bases.

A human carries two copies of the chromosomes, one inherited from each parent.

A human carries two copies of the

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chromosomes, one inherited from each parent.

Approximately 23,000 smaller regions within these chromosomes, called genes, contain the blueprints for protein production.

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Genome sequencing reads the bases of long fragments of nucleic acids.

Initial genome sequencing studies have shown that mutations in these DNA base pairs play a critical role in human disease, contributing to the burgeoning field of genomics.

Since then, recent discoveries have highlighted additional complexities of DNA and RNA.

These discoveries include the presence of chemical modifications to the bases, such as methylation, and post-translational modification, or the processing of RNA molecules after they are transcribed from the genome, both of which can affect protein synthesis.

Initial genome sequencing studies have shown that variation in these DNA base pairs play a critical role in human disease, contributing to the burgeoning field of genomics.

Recent discoveries have highlighted additional complexities of DNA and RNA.

These discoveries include the presence of chemical modifications to the bases, such as methylation, and post-transcriptional modification, or the processing of RNA molecules after they are transcribed from the genome, both of which can affect protein synthesis.

Our Principal Markets

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Improving rare disease research and understanding

According to a World Health Organization publication, it is estimated that 400 million people worldwide are affected by up to 8,000 distinct rare diseases, with 80% of these believed to be genetic in nature.

According to global health organizations, there are currently over 6,000 distinct rare diseases worldwide, affecting approximately 300 million people, and over 70% of these conditions are believed to have a genetic origin.

These genetic diseases are DNA differences, called variants, in the affected individuals.

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• identify and characterize pathogens to inform regional, national, and global public health agencies for preparation and response to rapidly evolving microorganisms;

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• characterize complex microbial communities to understand their role in human, animal, and environmental health.

Enable the discoveries of underlying causes of cancer, progression, and relapse

Understanding tumor cells' cellular and molecular complexity is critical in developing more effective targeted cancer therapies.

Single-cell transcriptomics is particularly impactful in defining cellular identity and function;

however, other technologies miss critical information by only sequencing a portion of RNA.

Our long-read RNA sequencing method, single-cell Iso-Seq (scIso-Seq), accurately detects molecular events such as RNA isoforms and expressed mutations and provides gene expression information at the single-cell level.

We believe scIso-Seq is uniquely positioned to enable discoveries by researchers of the underlying causes of cancer initiation, progression, and relapse, as well as the discovery by researchers of novel diagnostic, prognostic, and predictive biomarkers that may inform future clinical tests.

As novel discoveries continue to be made using our long-read sequencing technology, we believe our SBB short-read sequencing technology will enable us to meet customers' demands in the expanding non-invasive testing market in oncology.

Due to the small amounts of circulating tumor DNA (ctDNA) present in the blood of early-stage cancer patients and those with minimal residual disease (MRD), the presence of cancer often goes undetected, and a more sensitive assay will be required.

Based on testing internally and at beta customer sites, we believe our SBB technology has the potential to offer higher accuracy than competitor sequencing technologies, which may in the future support our customers’ development of more sensitive tests for the purpose of earlier detection and more robust monitoring of cancer.

Enabling discovery of cancer biology, progression, and relapse

Our HiFi sequencing technology supports oncology research by enabling highly accurate, long-read analysis of both DNA and RNA, providing researchers with deeper insight into cancer biology.

HiFi RNA sequencing allows generation of full-length transcript data from complex tumor samples, capturing isoforms, fusion transcripts, and alternative splicing events associated with tumor biology.

By providing a more complete view of transcript diversity, these approaches support research into biomarkers and molecular mechanisms related to tumor progression and therapeutic response.

HiFi whole-genome sequencing ("WGS") of tumor and matched normal samples supports comprehensive characterization of genomic alterations across cancer types.

The combination of long reads and single-

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molecule accuracy enables detailed analysis of structural variants, copy-number changes, methylation patterns, and other somatic alterations associated with oncogenesis and treatment resistance.

Researchers increasingly use HiFi tumor/normal WGS to resolve complex genomic rearrangements and to investigate genome-wide mutational processes that are difficult to assess with short-read sequencing technologies.

Plant and Animal Sciences:

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Our Technology, Products, and Solutions

We have developed HiFi long-read sequencing based on Single-Molecule Real-Time (SMRT) technology, which accurately detects the nucleotide sequence and epigenetic status of individual DNA molecules.

We are also expanding our genomic solutions with our short-read SBB chemistry, which offers sensitive sequencing for short-read applications.

Our sales consist of sequencing instruments, nanofluidic chips (SMRT Cells), and reagents for preparing DNA and performing sequencing based on our SMRT technology;

flow cells and reagents for preparing DNA and performing sequencing based on our SBB technology, reagents for DNA extraction based on our Nanobind technology;

and the services we perform for customers.

Our HiFi long-read sequencing approach is based on Single-Molecule Real-Time ("SMRT") technology and enables highly accurate detection of the nucleotide sequence and epigenetic status of individual DNA molecules.

HiFi sequencing delivers long, highly accurate reads that support analysis of complex genomic and transcriptomic features that are difficult to resolve using conventional short-read sequencing technologies.

Our offerings include sequencing instruments, nanofluidic chips ("SMRT Cells"), reagents for DNA extraction, library preparation, and sequencing, application-specific sequencing workflows, as well as services we perform for customers.

HiFi Long-Read Sequencing

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Customers use our HiFi long-read sequencing platforms in a wide range of sequencing applications, including whole genome sequencing and de novo genome assembly, long-range phasing, targeted sequencing, full-length RNA and single-cell sequencing, characterization of metagenomic communities and other mixed DNA samples, viral genome sequencing, and others.

Our technology is also capable of detecting epigenetic markers

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simultaneously by analyzing the kinetics of DNA polymerization that is affected, and thereby detectable, by epigenetic markers such as 5-methylcytosine or N 6 -methyladenine.

Our technology is also capable of detecting epigenetic markers simultaneously by analyzing the kinetics of DNA polymerization that is affected, and thereby detectable, by epigenetic markers such as 5-methylcytosine or N 6 -methyladenine.

SMRT Technology

Our proprietary SMRT Technology enables the observation of DNA synthesis as it occurs in real-time by harnessing the natural process of DNA replication, which in nature is a highly efficient and accurate process actuated by DNA polymerases.

DNA polymerases attach to a strand of DNA to be replicated, examine the individual base at the point it is attached, and then determine which of the four building blocks, or nucleotides (A, C, G, or T), is required to complement that individual base.

After determining which nucleotide is required, the polymerases incorporate that nucleotide into the growing strand being produced.

SMRT Sequencing is based on following the activity of DNA polymerase on individual DNA molecules in real time that occurs on our SMRT Cells that are monitored and analyzed within our HiFi long-read sequencing systems:

the Revio system, Vega system, Sequel ® system, Sequel II system, and Sequel IIe system.

Carried out on SMRTbell ® templates, which attach hairpin adapters to the ends of double-stranded DNA molecules to be sequenced, SMRT sequencing allows for the successive sequencing of both the forward and reverse strands of the individual DNA molecule occurring multiple times, thereby allowing for the same base of the same molecule to be sequenced more than once in a sequencing run.

The base calls from the serial observation of the molecule can be processed to generate the final base call in an analytical procedure called circular consensus sequencing, leading to what we have defined as our HiFi sequence reads, which have high accuracy typically being defined as having greater than 99% read accuracy, but often exceeding greater than 99.9% accuracy, according to research we performed in collaboration with other researchers, subsequently published in Nature Biotechnology in 2019.

HiFi reads typically are 15-20 kilobases in size, depending on the input fragments, providing sufficient read length with our accuracy to support a multitude of applications across human health, plant and animal, and microbiology, according to research we performed in collaboration with other researchers, subsequently published in Scientific Data in 2020.

According to an article published by Genome Research in 2024, users are able to increase rare disease solve rates using HiFi over short read sequencing.

HiFi was also cited as having the ability to resolve complex rearrangements in rare disease cases, subsequently published in an article on Nature.com in 2024.

The ability to generate single-DNA molecule sequence reads that are both long and highly accurate allows researchers to obtain more contiguous, complete, and accurate genomic data, thereby allowing for greater insights into the complexity of biological systems.

HiFi Long-Read Sequencing Instruments:

Our proprietary SMRT sequencing technology enables the direct observation of DNA synthesis in real time by monitoring the activity of individual DNA polymerase molecules as they incorporate nucleotides into a growing DNA strand.

Using optical nanostructures known as zero-mode waveguides ("ZMWs"), SMRT sequencing detects fluorescently labeled nucleotides as they are incorporated, providing a precise, single-molecule record of DNA sequence and polymerase kinetics without amplification or cloning steps.

Each DNA molecule is prepared as a circularized SMRTbell template, allowing both strands of the same molecule to be sequenced multiple times.

These repeated observations are combined through circular consensus sequencing ("CCS") to generate highly accurate HiFi reads, typically achieving median accuracies above Q30 with average read lengths of 15–20 kilobases.

The resulting data combines long-range context with base-level precision, enabling the detection of all major classes of genetic variation—including single-nucleotide variants, structural variants, tandem repeat expansions, and DNA methylation—in a single workflow.

HiFi sequencing has been shown to improve the resolution of complex genomic regions and to increase diagnostic yield in rare disease research.

Across multiple clinical studies, HiFi whole-genome sequencing has approximately doubled the solve rate for previously undiagnosed cases compared to short-read methods.

HiFi sequencing also supports the construction of complete, telomere-to-telomere human reference genomes and pangenomes, further establishing it as a standard for high-accuracy, comprehensive genome analysis.

Collectively, these attributes position SMRT sequencing as a leading technology for achieving complete and accurate views of the genome.

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Revio system, Vega system, and Sequel systems

Our Revio, Vega, Sequel, Sequel II, and Sequel IIe instruments conduct, monitor, and analyze single-molecule biochemical reactions in real time.

The instruments use extremely sensitive imaging systems to collect the light pulses emitted by fluorescent reagents allowing the observation of biological processes.

Computer algorithms are used to translate the information that is captured by the optics system.

Using the recorded information, light pulses are converted into either an A, C, G, or T base call with associated quality metrics.

Once sequencing is started, the real-time data is delivered to the system’s primary analysis pipeline, which outputs base identity and quality values.

Our Revio, Vega, and Sequel instruments conduct, monitor, and analyze single-molecule biochemical reactions on SMRT Cell microchips.

The instruments use highly sensitive imaging systems to capture fluorescent signals generated during nucleotide incorporation and translate those signals into base calls and quality scores through integrated computational analysis.

The Vega and Sequel systems sequence one SMRT Cell at a time, while the Revio system can run up to four SMRT Cells simultaneously to increase throughput.

All instruments feature automated pipetting and reagent handling, on-board basecalling, perform consensus read generation, barcode demultiplexing, and methylation analysis, reducing the need for external computing resources.

Together, these capabilities deliver fast, highly accurate, and efficient sequencing for applications ranging from large-scale population studies to focused translational research.

HiFi Consumables

Customers purchase proprietary consumable products to run their PacBio systems, including our SMRT Cells and reagent kits.

One SMRT Cell is consumed per sequencing reaction, and scientists can choose the number of SMRT Cells they use per experiment.

Typically, one SMRT Cell is consumed per sequencing reaction, and scientists can choose the number of SMRT Cells they use per experiment.

In the second half of 2025, we introduced our latest SMRT Cell Nx products which are designed to support multiple sequencing reactions on a single SMRT Cell, improving flexibility and lowering per-sample cost.

Beta testing of SPRQ-Nx chemistry on the higher throughput Revio commenced in 2025, with full commercial availability planned in 2026.

We offer several reagent kits, each designed to address a specific step in the core sequencing workflow.

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Our core sequencing kits contain reagents required for on-instrument, real-time sequencing, including phospholinked nucleotides.

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We have developed and are offering a new line of Kinnex TM kits with companion SMRT Link software to enable high-throughput, scalable, cost-effective RNA applications including bulk RNA, single-cell RNA, and 16S rRNA sequencing.

The Kinnex kits are built upon the Multiplexed Array Sequencing (MAS-Seq) method for concatenating smaller amplicons into larger fragments to sequence on PacBio's long read sequencers, significantly increasing the molecular yield.

Throughput increase in these key RNA applications where the dynamic range of different RNA isoforms (bulk and single-cell) or microbial species (16S) can vary by orders of magnitude, enables characterization of these complex RNA samples while drastically reducing sequencing need.

S BB Short-Read Sequencing

In contrast to SMRT sequencing, SBB reads short fragments of DNA (hundreds of bases instead of kilobases) in a massively parallel manner.

Current short-read next generation sequencing technologies available in the market incur various rates of errors in results.

Researchers deploy multiple tactics to try to mitigate these effects, including oversampling or implementing complex library preparation methods, yet still face challenges, including missing rare variants.

We believe our proprietary SBB approach will enable researchers to address the gap in detecting rare variants, especially in complex heterogenous samples.

Employing a two-phase sequencing chemistry, the SBB approach binds a dye-labeled nucleotide without incorporation into the DNA chain, then removes that base, then blocks and extends with a terminated nucleotide.

Using nucleotides with single modifications, we incorporate more native bases, avoiding potential scarring due to fluorescent linker presence.

This design helps avoid raw errors and we believe can help us develop a product with substantially greater accuracy than currently marketed short-read sequencing products.

SBB enables simplified upfront library preparation, redefines coverage requirements, and reduces bioinformatic workload for downstream analysis.

The accuracy of our novel sequencing approach has the potential to advance translational cancer research, drive higher fidelity single-cell applications, and broadly enable clinical sequencing—even in regions of the genome prone to sequencing errors with other short-read sequencing technologies.

SBB Short-Read Sequencing Instrument:

Our Onso instrument conducts, monitors, and analyzes SBB biochemical reactions.

The instrument uses extremely sensitive imaging systems to collect the light emitted by fluorescent reagents allowing the observation of biological processes.

Computer algorithms are used to translate the information that is captured by the optics system.

Using the recorded information, light pulses are converted into either an A, C, G, or T base call with associated quality metrics.

Once sequencing is started, the imaging data is delivered to the system’s primary analysis pipeline, which outputs base identity and quality values.

SBB Consumables

To complement our Onso instrument, we also sell a range of SBB consumable products including flow cells, clustering, and sequencing reagent kits.

One flow cell and associated sequencing reagent pack is consumed per sequencing reaction.

Each flow cell contains two lanes and scientists can choose to sequence different samples in each lane while additionally combining any number of flow cells needed per experiment.

We offer several reagent kits, each designed to address a specific step in the core sequencing workflow.

A library preparation kit is used to convert DNA into SBB compatible, double-stranded DNA library formats and includes typical molecular biology reagents, such as ligase, buffers, and exonucleases.

Additionally for library preparation, our conversion kits include reagents to enable scientists to convert existing sequencing libraries into an SBB compatible format.

Finally, our clustering and sequencing kits contain all reagents required for generating sequence ready clusters on flow cell and performing SBB sequencing reactions on instrument, respectively.

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Our Kinnex TM kits with companion SMRT Link software enable high-throughput, scalable, cost-effective RNA applications including bulk RNA, single-cell RNA, and 16S rRNA sequencing.

The Kinnex kits use a molecular concatenation approach to link smaller amplicons into longer fragments for sequencing on PacBio long-read systems, significantly increasing molecular yield.

Our PureTarget™ panels and reagent kits for targeted sequencing applications, including repeat expansion analysis and carrier screening, leverage HiFi sequencing accuracy to detect complex variants and repeat expansions with single-molecule resolution, enabling efficient, scalable targeted analysis.

Our Strategy for Growth

Our main objectives are to grow revenue and expand gross margins through the following four activities:

• Enabling the full-scale release of the Vega benchtop platform to broaden our market reach.

We believe this platform broadens the long-read market opportunity.

• Accelerating samples onto the Revio platform via SPRQ chemistry and application kits.

The SPRQ chemistry enables the sub-$500 HiFi genome, improves methylation detection capabilities, and achieves a 75% reduction in DNA input requirements for human whole genome sequencing.

These features can drive more samples onto HiFi sequencing than ever before.

• Investing in future product launches to diversify our offerings.

We continue to develop sequencing systems designed to increase throughput and lower the cost to sequence a genome, which we believe will allow us to address an even larger part of the market.

Additionally, we continue to develop kitted-solutions, like our Kinnex Full-length RNA kits and PureTarget, and enhance our on-market sequencers with products like SPRQ chemistry to drive more sequencing volume.

• Progressing our clinical strategy to improve outcomes and create durability.

In 2024 Revio was increasingly being used in laboratory-developed test (“LDT”) and clinical research settings to consolidate multiple tests and address complex genetic challenges.

Our main objectives are to grow revenue and expand gross margins through the following five activities.

These initiatives are designed to improve the economics of HiFi sequencing, expand adoption across clinical and research markets, and drive durable growth across our platform portfolio.

• Accelerate samples onto the Revio platform through SPRQ-Nx chemistry and application kits.

SPRQ-Nx is designed to lower the cost of sequencing and improve sequencing efficiency, which we believe will support higher throughput, increased sample volumes, and broader adoption of HiFi sequencing in large-scale research studies and clinical applications.

• Expand the capabilities of the Vega benchtop platform to broaden our market reach.

We plan to enable faster run times and enhanced user experience through software improvements, which are intended to support broader adoption and improve the overall economics of HiFi sequencing.

• Progress our clinical strategy to improve outcomes and create durability.

Revio is increasingly being adopted in laboratory-developed test ("LDT") and clinical research settings, supporting consolidation of multiple tests, addressing complex genetic challenges, and driving sustained utilization of HiFi sequencing.

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• Advance data-driven interpretation through scalable HiFi datasets and analytics.

We are focused on leveraging the accuracy of HiFi sequencing and growing datasets to support advanced data analysis and AI-assisted interpretation approaches.

Collaborative initiatives, such as the HiFi Solves Global Consortium, are designed to aggregate large, well-characterized HiFi datasets, which we believe can support improved understanding of complex genetic variation and disease biology while maintaining expert oversight.

• Invest in future product launches to drive platform innovation.

We continue to develop sequencing solutions designed to increase throughput, simplify workflows, lower the cost to sequence a genome, and enhance downstream data analysis and interpretation capabilities, which we believe will allow us to address a larger portion of the market.

Marketing, Sales, Service, and Support

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We plan to continue to invest in growing our marketing, sales, service, and support resources as we drive continued adoption of products, launch new products, and expand our customer base.

Our customers include academic and governmental research institutions, commercial testing and service laboratories, genome centers, public health labs, hospitals and clinical research institutes, contract research organizations ("CROs"), pharmaceutical companies, and agricultural companies.

In general, our customers will isolate, prepare, and analyze genetic samples using PacBio systems in their own laboratories, or they will send their genetic samples to third-party service providers who in turn will sequence the samples with PacBio systems and provide the sequence data back to the customer for further analysis.

For example, customers in academic research institutions may have bacteria, animal, or human DNA samples isolated from various sources while agricultural biology companies may have DNA samples isolated from different strains of rice, corn, or other crops.

Our customers include academic and governmental research institutions, commercial testing and service laboratories, genome centers, public health labs, hospitals and clinical research institutes, CROs, pharmaceutical companies, and agricultural companies.

Our customers isolate, prepare, and analyze genetic samples using PacBio systems in their own laboratories, or send their genetic samples to third-party service providers who in turn sequence the samples with PacBio systems and provide the sequence data back to the customer for further analysis.

We receive a significant portion of our revenue from a limited number of customers, many of whom make large purchases on a purchase-order basis.

For the years ended December 31, 2025, 2024, and 2023, no customer accounted for 10% or more of our total revenue.

For the year ended December 31, 2022, one customer exceeded 10% of our total revenue.

We believe that the majority of our current customers are early adopters of sequencing technology.

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In general, the broader adoption of new technologies by mainstream customers can take a number of years.

As of December 31, 2024, our product backlog was approximately $31.2 million, compared to $18.7 million as of December 31, 2023.

As of December 31, 2025, our backlog was approximately $ 49.2 million, compared to $58.6 million as of December 31, 2024.

We define backlog as purchase orders or signed contracts from our customers, which we believe are firm and for which we have not yet recognized revenue.

We expect to convert the majority of this

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backlog to revenue during 2025;

We expect to convert approximately 80 % of our backlog to revenue in 2026, approximately 16 % in 2027, and the remainder thereafter;

however, our ability to do so is subject to customers who may seek to cancel or delay their orders even if we are prepared to fulfill them.

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Some of the components required in our products are currently either sole sourced or single sourced.

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Research and Development

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Our research and development efforts focus on programs to develop new and existing platforms, as well as increasing throughput and decreasing costs on behalf of our customers.

We are currently developing higher throughput platforms that utilize our HiFi long-read sequencing and SBB short-read sequencing technologies.

In addition to platform development, we also innovate across end-to-end workflows to improve usability, as well as develop new applications for the advancement of human health.

We also innovate across end-to-end workflows to improve usability, as well as develop new applications for the advancement of human health.

Intellectual Property

Developing and maintaining a strong intellectual property portfolio is an important element of our business.

We have sought, and will continue to seek, patent protection for our SMRT kit and SBB technology, for improvements to our SMRT kit and SBB technology, as well as for any of our other technologies where we believe such protection will be advantageous.

Our current patent portfolio, including patents exclusively licensed to us, is directed to various technologies, including SMRT nucleic acid sequencing and other methods for analyzing biological samples, zero-mode waveguide ("ZMW") arrays, surface treatments, phospholinked nucleotides and other reagents for use in nucleic acid sequencing, optical short-read nucleic acid sequencing, nucleic acid preparation, and purification components and systems, processes for identifying nucleotides within nucleic acid sequences, and processes for analysis and comparison of nucleic acid sequence data.

We have sought, and will continue to seek, patent protection for our technology, for improvements to our technology, as well as for any of our other technologies where we believe such protection will be advantageous.

Our current patent portfolio, including patents exclusively licensed to us, is directed to various technologies, including SMRT nucleic acid sequencing and other methods for analyzing biological samples, ZMW arrays, surface treatments, phospholinked nucleotides and other reagents for use in nucleic acid sequencing, nucleic acid preparation, and purification components and systems, processes for identifying nucleotides within nucleic acid sequences, and processes for analysis and comparison of nucleic acid sequence data.

Some of the patents and applications that we own, as well as some of the patents and applications that we have licensed from other parties, are subject to U.S.

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There are a significant number of companies offering nucleic acid sequencing equipment or consumables.

These include, but are not limited to, Illumina, Inc.

(“Illumina”), BGI Genomics (also known as MGI or Complete Genomics), Thermo Fisher Scientific Inc.

These include, but are not limited to, Illumina, BGI Genomics (also known as MGI or Complete Genomics), Thermo Fisher Scientific Inc.

(“Thermo”), Oxford Nanopore Technologies Ltd.

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(“Bionano”), Ultima Genomics, Inc.

(“Ultima”), Singular Genomics Systems, Inc.

(“Singular”) and 10x Genomics, Inc.

(“Ultima”), and 10x Genomics, Inc.

These companies may have different levels of financial, technical, manufacturing, administrative, and support resources available to them.

We expect continued intense competition within the overall nucleic

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acid sequencing market as there are several companies developing new sequencing technologies, products and/or services.

We expect continued intense competition within the overall nucleic acid sequencing market as there are several companies developing new sequencing technologies, products and/or services.

Increased competition may result in pricing pressures, which could harm our sales, profitability, or share of supply.

In order for us to maintain and increase our sales, we will need to demonstrate that our products deliver superior performance and value as a result of our key differentiators.

Our HiFi long-read sequencing will need to continue to deliver very high consensus accuracy and long-read lengths and include single-molecule, real-time resolution, with the ability to detect real-time kinetic information, fast time-to-result and flexibility, as well as support the breadth and depth of current and future applications.

Our HiFi long-read sequencing will need to continue to deliver high consensus accuracy and long-read lengths, include single-molecule, real-time resolution, detect real-time kinetic information, provide fast time-to-result and flexibility, and support the breadth and depth of current and future applications.

Government Regulation

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Food and Drug Administration ("FDA") under the Federal Food, Drug, and Cosmetic Act ("FDCA") and comparable state and foreign regulatory agencies.

FDA defines a medical device as an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component part or accessory, which is (i) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or (ii) intended to affect the structure or any function of the body of man or other animals and which does not achieve any of its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.

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mitigation, treatment, or prevention of disease, in man or other animals, or (ii) intended to affect the structure or any function of the body of man or other animals and which does not achieve any of its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.

Medical devices to be commercially distributed in the United States must receive from the FDA either clearance of a pre-market notification, known as 510(k), or pre-market approval pursuant to the FDC Act prior to marketing, unless subject to an exemption.

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In 2013, the FDA issued a final guidance on products labeled for research use only, which, among other things, reaffirmed that a company may not make any clinical or diagnostic claims about an RUO product, stating that merely including a labeling statement that the product is for research purposes only will not necessarily render the device exempt from the FDA’s clearance, approval, or other regulatory requirements if the totality of circumstances surrounding the distribution of the product indicates that the manufacturer knows its product is being used by customers for diagnostic uses or the manufacturer intends such a use.

These circumstances

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may include, among other things, written or verbal marketing claims regarding a product’s performance in clinical diagnostic applications and a manufacturer’s provision of technical support for such activities.

These circumstances may include, among other things, written or verbal marketing claims regarding a product’s performance in clinical diagnostic applications and a manufacturer’s provision of technical support for such activities.

If FDA were to determine, based on the totality of circumstances, that our products labeled and marketed for RUO are intended for diagnostic purposes, they would be considered medical devices that will require clearance or approval prior to commercialization.

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If no legally marketed predicate can be identified for a new device to enable the use of the 510(k) pathway, the device is automatically classified under the FDCA as Class III, which generally requires pre-market approval, or PMA approval.

However, the FDA can reclassify or use “de novo classification” for a device that meets the FDCA standards for a Class II device, permitting the device to be marketed without PMA approval.

However, the FDA can reclassify or use “de novo classification” for a device that meets the FDCA standards for a Class II device,

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permitting the device to be marketed without PMA approval.

To grant such a reclassification, FDA must determine that the FDCA’s general controls alone, or general controls and special controls together, are sufficient to provide a reasonable assurance of the device’s safety and effectiveness.

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The FDA has issued warning letters to genomics labs for illegally marketing genetic tests that claim to predict patients’ responses to specific medications, noting that the FDA has not created a legal “carve-out” for LDTs and retains discretion to take action when appropriate, such as when certain genomic tests raise significant public health concerns.

As laboratories and manufacturers

Fiscal 2024 Form 10-K

develop more complex genetic tests and diagnostic software, the FDA may increase its regulation of LDTs.

Legislative and administrative proposals to amend the FDA's oversight of LDTs have been introduced in recent years, including the Verifying Accurate Leading-edge IVCT Development Act of 2021 (the “VALID Act”).

In September 2022, Congress passed the FDA user fee reauthorization legislation without substantive FDA policy riders, including the VALID Act.

In May 2024, the FDA issued a final rule that phases out its enforcement discretion for most LDTs and amends the FDA’s regulations to make explicit that in vitro diagnostics are medical devices under the FDCA, including when the manufacturer of the diagnostic product is a laboratory.

This final rule is being challenged in federal courts.

On March 31, 2025, a U.S.

District Court in Texas ruled that the FDA exceeded its authority and vacated and set aside this LDT final rule in its entirety.

Further, in June 2024, the U.S.

Supreme Court overruled the Chevron doctrine, which gives deference to regulatory agencies’ statutory interpretations in litigation against federal government agencies, such as the FDA, where the law is ambiguous.

This landmark Supreme Court decision may invite various stakeholders to bring lawsuits against the FDA to challenge longstanding decisions and policies of the FDA, including this LDT final rule.

The new Trump administration, including changes in the leadership at the FDA, may issue new policies and regulations that can impact the compliance status of our products or that of our customers.

This landmark Supreme Court decision may invite various stakeholders to bring lawsuits against the FDA to challenge longstanding decisions and policies of the FDA.

The government may issue new policies and regulations that can impact the compliance status of our products or that of our customers.

If our products become subject to FDA regulation as medical devices, we would need to invest significant time and resources to ensure ongoing compliance with FDA quality system regulations and other post-market regulatory requirements.

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Commercialization of such regulated medical devices can increase our exposure under additional laws.

For example, medical device companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business and may constrain the financial arrangements and relationships through which we research, as well as sell, market and distribute any medical products for which we obtain marketing authorization.

For example, medical device companies are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and

Fiscal 2025 Form 10-K

foreign jurisdictions in which they conduct their business and may constrain the financial arrangements and relationships through which we research, as well as sell, market and distribute any medical products for which we obtain marketing authorization.

Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, data privacy and security, and transparency laws and regulations related to payments and other transfers of value made to physicians and other healthcare providers.

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Foreign Corrupt Practices Act, the U.K.

Bribery Act, and other local laws prohibiting corrupt payments to governmental

Fiscal 2024 Form 10-K

officials, anti-competition regulations and sanctions imposed by the U.S.

Bribery Act, and other local laws prohibiting corrupt payments to governmental officials, anti-competition regulations and sanctions imposed by the U.S.

Office of Foreign Assets Control, and other similar laws and regulations.

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Any of these risks could harm our international operations and negatively impact our sales, adversely affecting our business, results of operations, financial condition, and growth prospects.

Fiscal 2025 Form 10-K

Human Capital

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Talent Acquisition and Retention

We recognize that our employees largely contribute to our success.

To this end, we support business growth by seeking to attract and retain best-in-class talent.

Our talent acquisition team uses internal and external resources to recruit highly skilled candidates globally.

We recognize that our employees are the driving force behind our success.

To support our continued growth, we are committed to attracting, developing, and retaining best-in-class talent across the globe.

Our Talent Acquisition team leverages both internal and external partnerships, data-driven strategies, and a strong employer brand to identify and recruit highly skilled professionals who align with our mission and values.

Total Rewards

Our total rewards philosophy has been to invest in our workforce by offering competitive and fair compensation and benefits packages.

We provide employees with compensation packages that include base salary, short-term incentives such as annual bonuses and commissions, and long-term equity awards.

We also offer comprehensive employee benefits, which vary by country and region, such as life, disability, and health insurance, health savings and flexible spending accounts, time off benefits, paid parental leave, Employee Stock Purchase Program, and a 401(k) plan.

It is our expressed intent to be an employer of choice in our industry by providing market-competitive compensation and benefits packages.

At PacBio, our Total Rewards philosophy centers on investing in our people - the foundation of our success.

We are committed to offering competitive, equitable, and comprehensive compensation and benefits that recognize performance, support well-being, and promote long-term growth.

Our compensation packages include base salary, short-term incentives such as annual bonuses and commissions, and long-term equity awards that align employees with the company’s success.

In addition, we provide a broad range of benefits tailored by country and region, including life, disability, and health insurance;

health savings and flexible spending accounts;

generous paid time off;

paid parental leave;

and retirement savings plans such as our 401(k) program.

Employees also have the opportunity to share in PacBio’s growth through our Employee Stock Purchase Program.

We strive to be an employer of choice in our industry by ensuring our Total Rewards are not only market-competitive, but also reflective of our commitment to supporting employees’ financial, physical, and emotional well-being.

Health, Safety, and Wellness

The health, safety, and wellness of our employees is a priority in which we have always invested and will continue to do so.

We provide our employees and their families with access to a variety of innovative, flexible, and convenient health and wellness programs.

Program benefits are intended to provide protection and security, so employees can have peace of mind concerning events that may require time away from work or that may impact their financial well-being.

These programs are highlighted and updated regularly on our internal benefits platform.

Fiscal 2024 Form 10-K

The health, safety, and overall well-being of our employees are fundamental to our success and culture.

We are deeply committed to investing in programs and resources that help our employees and their families thrive.

We offer a wide range of i nnovative, flexible, and accessible health and wellness programs designed to promote physical, mental, and financial well-being.

These benefits provide employees with security and peace of mind, supporting them through life events that may require time away from work or impact their financial stability.

To ensure employees can make the most of these offerings, our programs are regularly reviewed, enhanced, and featured on our internal benefits platform, keeping our workforce informed and engaged with the resources available to them.

Diversity, Equity, and Inclusion

We believe a diverse workforce is critical to our success.

Our mission is to value differences in races, ethnicities, religions, nationalities, genders, ages, sexual orientations, as well as education, skill sets and experience.

We offer training programs on diversity awareness to help employees understand, recognize, respond, and prevent bias throughout the employee lifecycle.

We are focused on inclusive hiring practices, fair and equitable treatment, organizational flexibility, and training and resources.

We believe that diversity drives innovation and strengthens our organization.

A diverse, equitable, and inclusive workforce enables us to better serve our global community and achieve lasting success.

Our mission is to embrace and value differences including race, ethnicity, religion, nationality, gender, age, sexual orientation, education, experience, and perspective.

We are committed to fostering a workplace where all employees feel respected, empowered, and supported to contribute their best.

Fiscal 2025 Form 10-K

To advance these principles, we provide training and development programs that build awareness, promote inclusion, and help employees recognize and mitigate bias throughout the employee lifecycle.

Our ongoing efforts focus on inclusive hiring practices, fair and equitable treatment, and organizational flexibility, supported by tools and resources that enable every employee to do their best work.

Training and Development

We believe in encouraging employees to become lifelong learners by providing ongoing learning and leadership training opportunities.

We provide a scaled learning platform of on-demand and virtual classroom learning focused on personal and professional development.

While we strive to provide real-time recognition of employee performance, we have a formal annual review process not only to determine pay and equity adjustments tied to individual contributions, but to identify areas where training and development may be needed.

We are committed to fostering a culture of continuous learning and growth.

We encourage employees to be lifelong learners by offering ongoing opportunities for professional and leadership development.

We provide required compliance training for employees, along with targeted, function-specific training where applicable, and ongoing learning through cross-functional collaboration and knowledge sharing.

While we emphasize real-time recognition of employee performance throughout the year, we also conduct a formal annual review process.

This process not only informs pay and equity adjustments based on individual contributions but also helps identify areas where additional training and development can support each employee’s continued success.

Available Information

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The address of the site is www.sec.gov.

Additionally, we use our website (including the blog section of our website) as well as our X (formerly Twitter) account ( @pacbio ) as a channel of distribution for important company information and to comply with our disclosure obligations under Regulation FD.

Additionally, we use our website (including the blog section of our website at www.pacb.com/blog ) as well as our Bluesky (@pacbio.bsky.social), X ( @pacbio ), and LinkedIn (www.linkedin.com/company/pacific-biosciences) accounts as channels of distribution, where important company information is routinely posted and accessible, and to comply with our disclosure obligations under Regulation FD.

Important information, including press releases, analyst presentations, and financial information regarding us, as well as corporate governance information, is routinely posted and accessible on the “Investor Relations” section of the website, which is accessible by clicking on the tab labeled “Company - Investors” on our website home page.

In addition, important information is routinely posted and accessible on the blog section of our website, which is accessible through our website at www.pacb.com/blog , as well as our X account ( @pacbio ).

The contents of our website and our X account are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website or X account are intended to be inactive textual references only.

The contents of our website and our social media accounts are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website or X account are intended to be inactive textual references only.

Fiscal 2025 Form 10-K

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business