January 8, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Pacific Biosciences of Californa (NASDAQ: PACB ) jumped 17.8% today on news that the company's Single Molecule, Real-Time (SMRT) technology will be used in a major study conducted by the U.S. Food and Drug Administration, Aligent Technologies (NYSE: A ) , and UC Davis.
So what: The 100K Pathogen Genome Project is an expansive study that will look at the genetic sequencing of 100,000 foodborne pathogens. It will help to provide insight on how bacterial infections evolve. While this is a great story and may provide some valuable data for scientists to help us fight disease, it doesn't change the investment thesis for Pacific Biosciences. It's a young company that has yet to become profitable, but it has developed an interesting product that could be very useful in unlocking the secrets of DNA.
Now what: SMRT is the flagship product for Pacific Biosciences, and the outcome of the company is largely dependent on the adaptation of this technology in the world of genetics. The industry is a highly competitive space that can change with the development of a new technology. Pacific Biosciences has relied heavily on issuing new shares to keep afloat while it slowly marches toward profitability, so an investment in the company can get diluted fast. Investors who have a very high tolerance of risk might want to take a flyer on this company, but a more prudent investor should wait to see strong revenue growth.