Overview	9 Months Ended
Sep. 30, 2019
Overview [Abstract]
Overview	NOTE 1. OVERVIEW Product We design, develop and manufacture sequencing systems to help scientists resolve genetically complex problems. Based on our novel Single Molecule, Real-Time (SMRT®) sequencing technology, our products enable: de novo genome assembly to finish genomes in order to more fully identify, annotate and decipher genomic structures; full-length transcript analysis to improve annotations in reference genomes, characterize alternatively spliced isoforms in important gene families, and find novel genes; targeted sequencing to more comprehensively characterize genetic variations; and real-time kinetic information for epigenome characterization. Our technology provides high accuracy, ultra-long reads, uniform coverage and the ability to simultaneously detect epigenetic changes. PacBio® sequencing systems, including consumables and software, provide a simple and fast end-to-end workflow for SMRT sequencing. The names “Pacific Biosciences,” “PacBio,” “SMRT,” “SMRTbell,” “Sequel” and our logo are our trademarks. Merger with Illumina On November 1, 2018, we entered into an Agreement and Plan of Merger with Illumina, Inc. (“Illumina”) and FC Ops Corp. (“Merger Subsidiary”), a wholly-owned subsidiary of Illumina (the “Merger Agreement”) pursuant to which Illumina will acquire us for $8.00 per share of our common stock in an all-cash transaction and Merger Subsidiary will be merged with and into us (the “Merger”), with us surviving the Merger and becoming a wholly-owned subsidiary of Illumina. Completion of the transaction is subject to terms and conditions set forth in the Merger Agreement, including expiration or termination of any waiting periods applicable to the consummation of the Merger under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and clearance under the antitrust laws of certain non-U.S. jurisdictions. At a Special Meeting of Stockholders held on January 24, 2019, our stockholders, among other things, approved the adoption of the Merger Agreement. The Merger has been notified to the United States Federal Trade Commission (“FTC”) and to the Competition and Markets Authority of the United Kingdom (“CMA”) and is under review by both the FTC and the CMA. On October 24, 2019, as part of its Phase 2 review, the CMA announced that it had reached the provisional view that the proposed acquisition could lead to a substantial lessening of competition. We are reviewing the CMA’s provisional findings and continue to work with Illumina to address the CMA’s concerns. We and Illumina also continue to work cooperatively with the FTC. On September 25, 2019, we, Illumina and Merger Subsidiary entered into Amendment No. 1 (the “Amendment”) to the Merger Agreement. The Amendment, among other things, extends the End Time (as defined in the Merger Agreement) to December 31, 2019, subject to Illumina’s unilateral right to further extend the End Time to March 31, 2020. In addition, the Amendment provides that Illumina will make cash payments to us of $6.0 million on or before each of October 1, 2019, November 1, 2019 and December 2, 2019 and we have received the October 1, 2019 and November 1, 2019 cash payments. If Illumina elects to further extend the End Time to March 31, 2020, then Illumina will make cash payments to us of $6.0 million on or before each of January 2, 2020, and March 2, 2020, and a cash payment of $22.0 million on or before February 3, 2020. We will use these payments, which are collectively referred to as the “Continuation Advances,” to fund our continuing operations. Up to the full amount of the Continuation Advances actually paid to us are repayable without interest if (1) the Merger Agreement is terminated and (2) within two years of termination, we enter into certain change-of-control transactions with a third party (in which case the entire amount will be repayable) or raise at least $100.0 million in equity or debt financing in a single transaction (with the amount repayable dependent on the amount raised by us). The merger is subject to certain customary closing conditions, including the receipt of certain required antitrust approvals. No assurance can be given that the required regulatory approvals will be obtained or that the required conditions to closing will be satisfied, and, even if all such approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals. Under certain circumstances specified in the Merger Agreement, Illumina may be required to pay us a termination fee of $98.0 million (the “Reverse Termination Fee”). In certain other circumstances, including but not limited to, a termination of the Merger Agreement in connection with us accepting a superior transaction proposal or due to the withdrawal by our board of directors of its recommendation of the Merger and the transactions contemplated by the Merger Agreement, we would be required to pay Illumina a cash termination fee of $43.0 million. For more information about the effects of our agreement to be acquired by Illumina please see Risk Factors under the section “Risks Related to Our Business”.

NOTE 1. OVERVIEW

Product

We design, develop and manufacture sequencing systems to help scientists resolve genetically complex problems. Based on our novel Single Molecule, Real-Time (SMRT®) sequencing technology, our products enable: de novo genome assembly to finish genomes in order to more fully identify, annotate and decipher genomic structures; full-length transcript analysis to improve annotations in reference genomes, characterize alternatively spliced isoforms in important gene families, and find novel genes; targeted sequencing to more comprehensively characterize genetic variations; and real-time kinetic information for epigenome characterization. Our technology provides high accuracy, ultra-long reads, uniform coverage and the ability to simultaneously detect epigenetic changes. PacBio® sequencing systems, including consumables and software, provide a simple and fast end-to-end workflow for SMRT sequencing. The names “Pacific Biosciences,” “PacBio,” “SMRT,” “SMRTbell,” “Sequel” and our logo are our trademarks.

Merger with Illumina

On November 1, 2018, we entered into an Agreement and Plan of Merger with Illumina, Inc. (“Illumina”) and FC Ops Corp. (“Merger Subsidiary”), a wholly-owned subsidiary of Illumina (the “Merger Agreement”) pursuant to which Illumina will acquire us for $8.00 per share of our common stock in an all-cash transaction and Merger Subsidiary will be merged with and into us (the “Merger”), with us surviving the Merger and becoming a wholly-owned subsidiary of Illumina. Completion of the transaction is subject to terms and conditions set forth in the Merger Agreement, including expiration or termination of any waiting periods applicable to the consummation of the Merger under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and clearance under the antitrust laws of certain non-U.S. jurisdictions. At a Special Meeting of Stockholders held on January 24, 2019, our stockholders, among other things, approved the adoption of the Merger Agreement. The Merger has been notified to the United States Federal Trade Commission (“FTC”) and to the Competition and Markets Authority of the United Kingdom (“CMA”) and is under review by both the FTC and the CMA. On October 24, 2019, as part of its Phase 2 review, the CMA announced that it had reached the provisional view that the proposed acquisition could lead to a substantial lessening of competition. We are reviewing the CMA’s provisional findings and continue to work with Illumina to address the CMA’s concerns. We and Illumina also continue to work cooperatively with the FTC.

On September 25, 2019, we, Illumina and Merger Subsidiary entered into Amendment No. 1 (the “Amendment”) to the Merger Agreement. The Amendment, among other things, extends the End Time (as defined in the Merger Agreement) to December 31, 2019, subject to Illumina’s unilateral right to further extend the End Time to March 31, 2020. In addition, the Amendment provides that Illumina will make cash payments to us of $6.0 million on or before each of October 1, 2019, November 1, 2019 and December 2, 2019 and we have received the October 1, 2019 and November 1, 2019 cash payments. If Illumina elects to further extend the End Time to March 31, 2020, then Illumina will make cash payments to us of $6.0 million on or before each of January 2, 2020, and March 2, 2020, and a cash payment of $22.0 million on or before February 3, 2020. We will use these payments, which are collectively referred to as the “Continuation Advances,” to fund our continuing operations. Up to the full amount of the Continuation Advances actually paid to us are repayable without interest if (1) the Merger Agreement is terminated and (2) within two years of termination, we enter into certain change-of-control transactions with a third party (in which case the entire amount will be repayable) or raise at least $100.0 million in equity or debt financing in a single transaction (with the amount repayable dependent on the amount raised by us).

The merger is subject to certain customary closing conditions, including the receipt of certain required antitrust approvals. No assurance can be given that the required regulatory approvals will be obtained or that the required conditions to closing will be satisfied, and, even if all such approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals. Under certain circumstances specified in the Merger Agreement, Illumina may be required to pay us a termination fee of $98.0 million (the “Reverse Termination Fee”). In certain other circumstances, including but not limited to, a termination of the Merger Agreement in connection with us accepting a superior transaction proposal or due to the withdrawal by our board of directors of its recommendation of the Merger and the transactions contemplated by the Merger Agreement, we would be required to pay Illumina a cash termination fee of $43.0 million.

For more information about the effects of our agreement to be acquired by Illumina please see Risk Factors under the section “Risks Related to Our Business”.