What happened

Shares of Pacific Biosciences of California (NASDAQ:PACB) jumped over 40% last month after the company announced new multiplexing tools at the American Society of Microbiology (ASM) annual meeting. Multiplexing allows researchers to combine multiple samples and sequence them simultaneously, which provides results more quickly and at lower cost.

While the technique itself isn't new, the company launched upgrades to its existing offerings for microbial research applications. Customers using the PacBio Sequel System will now be able to sequence multiple microbial genomes on a single flow cell in a single day. That will lower costs and make it easier for researchers in infectious disease, healthcare, and industrial biotechnology to advance their experiments and theories.

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So what

When most investors think of DNA sequencing, they inevitably focus on human genomes and medical applications. After all, those comprise the majority of the overall sequencing market, estimated at about $3.5 billion in 2017. However, the current software and hardware combination enabling the PacBio Sequel System means the company's addressable market is actually larger in microbial, plant, and animal studies than in human genomes. But that could soon change.

In the next year or so, Pacific Biosciences plans to introduce upgrades that will drop the consumables cost of sequencing a full human genome, from $12,000 in early 2018 to roughly $1,000 in early 2019. That could result in the company's addressable market opportunity rising from just $660 million last year to $2.5 billion by 2022.

Now what

Although the latest multiplexing tools for microbial analysis aren't game-changers, their launch is just the latest example that Pacific Biosciences is working to increase the long-term utility of its sequencing instruments. Despite the progress, it's still too early to say whether or not the company will succeed or its market share will increase as expected. The business lost almost $24 million from operations in the first quarter of 2018, which means that it'll need to raise additional capital before the end of the year -- and that system upgrades delivered in 2019 could ultimately determine the company's fate.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool recommends Pacific Biosciences of California. The Motley Fool has a disclosure policy.