<SEC-DOCUMENT>0001299130-21-000147.txt : 20210701
<SEC-HEADER>0001299130-21-000147.hdr.sgml : 20210701
<ACCEPTANCE-DATETIME>20210519193925
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001299130-21-000147
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20210519

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PACIFIC BIOSCIENCES OF CALIFORNIA, INC.
		CENTRAL INDEX KEY:			0001299130
		STANDARD INDUSTRIAL CLASSIFICATION:	LABORATORY ANALYTICAL INSTRUMENTS [3826]
		IRS NUMBER:				161590339
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1305 O'BRIEN DRIVE
		CITY:			MENLO PARK
		STATE:			CA
		ZIP:			94025
		BUSINESS PHONE:		650-521-8000

	MAIL ADDRESS:	
		STREET 1:		1305 O'BRIEN DRIVE
		CITY:			MENLO PARK
		STATE:			CA
		ZIP:			94025

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PACIFIC BIOSCIENCES OF CALIFORNIA INC
		DATE OF NAME CHANGE:	20050829

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NANOFLUIDICS INC
		DATE OF NAME CHANGE:	20040729
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<!--HTML document created with Certent Disclosure Management 6.39.3.1-->
<!--Created on: 5/19/2021 6:35:43 PM-->
<html>
	<head>
		<title>
			SEC Response Letter
		</title>
	</head>
	<body><div style="margin-left:72pt;margin-right:72pt;"><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 3.554906in; height: 0.8319991in" alt="Picture 2"></font>

		</p>

</div>
		<p style="margin:0pt 0pt 0pt 18pt;line-height:100%;text-indent: -18pt;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt 0pt 8pt;font-family:Calibri;line-height:107.92%;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">May </font><font style="display: inline;font-family:Times New Roman;font-size:12pt;">19</font><font style="display: inline;font-family:Times New Roman;font-size:12pt;">, 2021</font>
		</p>
		<p style="margin:0pt 0pt 8pt;font-family:Calibri;line-height:107.92%;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;font-style:italic;font-size:12pt;text-decoration:underline;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt 0pt 8pt;font-family:Calibri;line-height:107.92%;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;font-style:italic;font-size:12pt;text-decoration:underline;">Via EDGAR and E-mail </font>
		</p>
		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Securities and Exchange Commission</font>
		</p>
		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Division of Corporation Finance </font>
		</p>
		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">100 F Street, N.E.</font>
		</p>
		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Washington, D.C. 20549-3720</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;text-indent: -36pt;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;text-indent: -36pt;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Attention:</font><font style="display: inline;font-family:Times New Roman;font-size:12pt;;font-size: 12pt;font-family:Calibri;text-indent:0pt;margin-left:0pt;padding:0pt 36pt 0pt 0pt;"></font><font style="display: inline;font-family:Times New Roman;font-size:12pt;"></font><font style="display: inline;font-family:Times New Roman;font-size:12pt;">Division of Corporation Finance </font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;text-indent:36pt;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Office of Life Sciences</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;text-indent:36pt;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Mary Mast</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;text-indent:36pt;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Angela Connell</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;text-indent: -36pt;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;vertical-align:baseline;font-family:Calibri;font-size: 12pt">
			<font style="text-indent:0pt;margin-left:0pt; padding-right:21pt;"><font style="display: inline;font-family:Times New Roman;font-weight:bold;font-size:12pt;">Re:</font></font><font style="text-indent:0pt;margin-left:0pt; padding-right:4pt;text-align:left"><font style="display: inline;font-family:Times New Roman;font-size:12pt;"></font><font style="display: inline;font-family:Times New Roman;font-weight:bold;color:#000000;font-size:12pt;">Pacific Biosciences of California, Inc.</font></font>
		</p>
		<p style="margin:0pt 0pt 0pt 72pt;line-height:100%;vertical-align:baseline;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;color:#000000;font-size:12pt;">Form 10-K for the Fiscal Year Ended December 31, 20</font><font style="display: inline;font-family:Times New Roman;font-weight:bold;color:#000000;font-size:12pt;">20</font>
		</p>
		<p style="margin:0pt 0pt 0pt 72pt;line-height:100%;vertical-align:baseline;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;color:#000000;font-size:12pt;">Filed </font><font style="display: inline;font-family:Times New Roman;font-weight:bold;color:#000000;font-size:12pt;">on February 26, 2021</font>
		</p>
		<p style="margin:0pt 0pt 0pt 72pt;line-height:100%;vertical-align:baseline;font-family:Calibri;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;color:#000000;font-size:12pt;">File No. 001-34899</font>
		</p>
		<p style="margin:12pt 0pt 8pt;font-family:Calibri;line-height:107.92%;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">&#xFEFF;</font>
		</p>
		<p style="margin:12pt 0pt 8pt;font-family:Calibri;line-height:107.92%;font-size: 12pt">
			<font style="display: inline;font-family:Times New Roman;font-size:12pt;">Ladies and Gentlemen:</font>
		</p>
		<p style="margin:12pt 0pt 0pt;border-bottom:1pt none #D9D9D9 ;line-height:100%;text-indent:36pt;font-family:Times New Roman;font-size: 12pt">
			<font style="display: inline;">Pacific Biosciences of California, Inc. (the &#x201C;</font><font style="display: inline;font-weight:bold;">Company</font><font style="display: inline;">&#x201D;) is submitting this letter in response to comments from the staff (the &#x201C;</font><font style="display: inline;font-weight:bold;">Staff</font><font style="display: inline;">&#x201D;) of the Securities and Exchange Commission set forth in a letter dated </font><font style="display: inline;">April 21, 2021</font><font style="display: inline;"> (the &#x201C;</font><font style="display: inline;font-weight:bold;">Comment Letter</font><font style="display: inline;">&#x201D;) with respect to the above-referenced Annual Report on Form 10-K for the Fiscal Year Ended December 31, 20</font><font style="display: inline;">20</font><font style="display: inline;"> (the &#x201C;</font><font style="display: inline;font-weight:bold;">20</font><font style="display: inline;font-weight:bold;">20</font><font style="display: inline;font-weight:bold;"> Annual Report</font><font style="display: inline;">&#x201D;) filed on </font><font style="display: inline;">February 26</font><font style="display: inline;">, 20</font><font style="display: inline;">2</font><font style="display: inline;">1</font><font style="display: inline;"> (File No. 001-34899).&nbsp; </font>
		</p>
		<p style="margin:12pt 0pt 0pt;border-top:1pt none #D9D9D9 ;line-height:100%;text-indent:36pt;font-family:Times New Roman;font-size: 12pt">
			<font style="display: inline;">For your convenience, the Staff&#x2019;s comments set forth in the Comment Letter have been reproduced in bold and italics herein with responses immediately following each comment.&nbsp;&nbsp;References to &#x201C;we,&#x201D; &#x201C;our&#x201D; or &#x201C;us&#x201D; mean the Company or its advisors, as the context may require.</font>
		</p>
		<p style="margin:0pt 0pt 0pt 18pt;line-height:100%;text-indent: -18pt;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt 0pt 0pt 18pt;line-height:100%;text-indent: -18pt;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;">&#xFEFF;</font>
		</p>
		<div style="width:100%"><table style="width:100%; table-layout: fixed;" cellpadding="0" cellspacing="0"><tr><td style="width:0pt;"><p style="width:0pt;font-size:0pt;"></p></td><td valign="top" align="left" style="width: 18.00pt;">
			<p style="line-height:100%;text-align:justify;text-justify:inter-ideograph;border-bottom:1pt none #D9D9D9 ;font-family:Calibri;font-size: 11pt;margin:0pt;">
				<font style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;border-bottom:1pt none #D9D9D9;font-family:Calibri;font-size:11pt;;"> 1.</font>
			</p>
		</td><td style="width:0pt;"><p style="width:0pt;width:0pt;font-size:0pt;"></p></td><td align="left" valign="top">
			<p style="line-height:100%;text-align:justify;text-justify:inter-ideograph;border-bottom:1pt none #D9D9D9 ;font-family:Calibri;font-size: 11pt;margin:0pt;">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;font-style:italic;color:#000000;">You disclose that the Continuation Advances constitute a financial liability and that you elected the fair value option to recognize this liability. Please address the following:</font></p></td></tr></table></div>
		<p style="margin:0pt 0pt 0pt 36pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;font-style:italic;color:#000000;">&#xFEFF;</font>
		</p>
		<div style="width:100%"><table style="width:100%; table-layout: fixed;" cellpadding="0" cellspacing="0"><tr><td style="width:22pt;"><p style="width:22pt;font-size:0pt;"></p></td><td valign="top" align="left" style="width: 18.00pt;">
			<p style="line-height:100%;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;font-family:Calibri;font-size: 11pt;margin:0pt;">
				<font style="margin:0pt;font-family:Times New Roman;line-height:100%;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9;font-size:11pt;;"> "</font>
			</p>
		</td><td style="width:0pt;"><p style="width:0pt;width:0pt;font-size:0pt;"></p></td><td align="left" valign="top">
			<p style="line-height:100%;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;font-family:Calibri;font-size: 11pt;margin:0pt;">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;font-style:italic;color:#000000;">Explain how you determined that the Continuation Advances met the definition of a financial liability. Also explain how you determined that these advances should be accounted for differently than the Reverse Termination Fee which you appear to have accounted for as a gain contingency based on your disclosure on page 54. Clarify why your Continuation Advances were not also considered a gain contingency under ASC 450.</font></p></td></tr></table></div>
		<p style="margin:0pt 0pt 0pt 18pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;color:#000000;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">

		</p>
		<p><font size="1"> </font></p><hr size="3" style="color:#999999" width="100%" align="center"></hr><p style="page-break-after:always">&nbsp;</p><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 1.648in; height: 0.3857021in" alt="Picture 1"></font>

		</p>

</div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;;font-size: 11pt"><font style="display: inline;font-family:Times New Roman;font-weight:bold;">Response.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">We respectfully submit </font><font style="display: inline;font-family:Times New Roman;">that </font><font style="display: inline;font-family:Times New Roman;">we believe </font><font style="display: inline;font-family:Times New Roman;">that while both </font><font style="display: inline;font-family:Times New Roman;">the Continuation Advances and the Reverse Termination Fee</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">originated from Illumina, Inc. (</font><font style="display: inline;font-family:Times New Roman;">&#x201C;</font><font style="display: inline;font-family:Times New Roman;">Illumina</font><font style="display: inline;font-family:Times New Roman;">&#x201D;</font><font style="display: inline;font-family:Times New Roman;">) &nbsp;</font><font style="display: inline;font-family:Times New Roman;">as part of the developments related to </font><font style="display: inline;font-family:Times New Roman;">the same </font><font style="display: inline;font-family:Times New Roman;">aborted </font><font style="display: inline;font-family:Times New Roman;">acquisition transaction</font><font style="display: inline;font-family:Times New Roman;"> (the &#x201C;Merger Agreement&#x201D; and the &#x201C;Merger&#x201D;)</font><font style="display: inline;font-family:Times New Roman;">, they </font><font style="display: inline;font-family:Times New Roman;">have </font><font style="display: inline;font-family:Times New Roman;">different </font><font style="display: inline;font-family:Times New Roman;">substance</font><font style="display: inline;font-family:Times New Roman;"> and intent</font><font style="display: inline;font-family:Times New Roman;">, and accordingly, were accounted for differently. </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;text-decoration:underline;">Continuation Advances</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">The Continuation Advances represented financing of </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">operations by Illumina, the need for which arose in the second half of 2019 due to the continued delays with the parties&#x2019; ability to consummate the Merger,</font><font style="display: inline;font-family:Times New Roman;"> primarily due to regulatory review and feedback. The original Merger Agreement was executed in November 2018; at that time</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;"> the parties contemplated a timeline that included approvals by </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">stock</font><font style="display: inline;font-family:Times New Roman;">holders and regulatory approvals in the US and certain other jurisdictions, with consummation expected in mid-2019. </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">While the Merger was approved by </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">stock</font><font style="display: inline;font-family:Times New Roman;">holders, the regulatory review </font><font style="display: inline;font-family:Times New Roman;">took longer</font><font style="display: inline;font-family:Times New Roman;"> than anticipated. In September 2019, the Merger was still pending decisions by the </font><font style="display: inline;font-family:Times New Roman;">U.S.</font><font style="display: inline;font-family:Times New Roman;"> Federal Trade Commission and the Competition and Markets Authority of the United Kingdom. Either party had a contractual right to cancel the Merger if it was not consummated by November 1, 2019 (the original End Time). It was clear </font><font style="display: inline;font-family:Times New Roman;">by September 2019 that </font><font style="display: inline;font-family:Times New Roman;">the regulatory decisions would not be made in time to allow consummation by the End Time.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">Additionally, while the Merger Agreement was pending</font><font style="display: inline;font-family:Times New Roman;"> &nbsp;(</font><font style="display: inline;font-family:Times New Roman;">i.e. from November 2018</font><font style="display: inline;font-family:Times New Roman;">)</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">we were</font><font style="display: inline;font-family:Times New Roman;"> significantly limited, both contractually and practically, in </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">ability to raise either equity or debt financing from other parties</font><font style="display: inline;font-family:Times New Roman;">, which was how we had historically financed our operations</font><font style="display: inline;font-family:Times New Roman;">. Throughout the same time, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> continued to incur losses and negative cash flows from operations. </font><font style="display: inline;font-family:Times New Roman;">We</font><font style="display: inline;font-family:Times New Roman;"> incurred a net loss of $84 million and $60 million of cash was used in operating activities during the nine months ended September 30, 2019. As a result, as of September 30, 2019, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> had $49 million remaining in cash, cash equivalents and investments, as compared to $102 million at December 31, 2018</font><font style="display: inline;font-family:Times New Roman;"> and </font><font style="display: inline;font-family:Times New Roman;">we had </font><font style="display: inline;font-family:Times New Roman;">working capital of $26 million as of September 30, 2019, as compared to $105 million at December 31, 2018.&nbsp; </font><font style="display: inline;font-family:Times New Roman;">As </font><font style="display: inline;font-family:Times New Roman;">we were</font><font style="display: inline;font-family:Times New Roman;"> expected to continue to incur losses and negative cash flows from operations, and with the </font><font style="display: inline;font-family:Times New Roman;">completion of the Merger still</font><font style="display: inline;font-family:Times New Roman;"> unresolved, the issue </font><font style="display: inline;font-family:Times New Roman;">of our </font><font style="display: inline;font-family:Times New Roman;">financing</font><font style="display: inline;font-family:Times New Roman;"> needs</font><font style="display: inline;font-family:Times New Roman;"> became urgent to address.&nbsp; </font><font style="display: inline;font-family:Times New Roman;">We</font><font style="display: inline;font-family:Times New Roman;"> disclosed </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">need to obtain additional capital and that such capital was necessary to alleviate substantial doubt about </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">ability to meet </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">then debt repayment obligations and to fund </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">projected operating requirements for at least twelve months from the date of filing of the Quarterly Report on Form 10-Q for the period ended September 30, 2019.</font>
		</p>
		<p style="margin:0pt 0pt 0pt 18pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">To address </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> financing needs, the parties executed A</font><font style="display: inline;font-family:Times New Roman;">mendment No. 1 </font><font style="display: inline;font-family:Times New Roman;">to the Merger Agreement </font><font style="display: inline;font-family:Times New Roman;">dated September 25, 2019.</font><font style="display: inline;font-family:Times New Roman;"> The </font><font style="display: inline;font-family:Times New Roman;">Amendment, among other things, extend</font><font style="display: inline;font-family:Times New Roman;">ed</font><font style="display: inline;font-family:Times New Roman;"> the </font><font style="display: inline;font-family:Times New Roman;">End Time from November 1, 2019 </font><font style="display: inline;font-family:Times New Roman;">to December 31, 2019, </font><font style="display: inline;font-family:Times New Roman;">and provided </font><font style="display: inline;font-family:Times New Roman;">Illumina</font><font style="display: inline;font-family:Times New Roman;"> with an option to further </font><font style="display: inline;font-family:Times New Roman;">extend </font><font style="display: inline;font-family:Times New Roman;">it </font><font style="display: inline;font-family:Times New Roman;">to March 31, 2020. </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">The Amendment also stipulated that Illumina would provide financing for </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> ongoing operations while the Merger was pending</font><font style="display: inline;font-family:Times New Roman;">, referred to therein as </font><font style="display: inline;font-family:Times New Roman;">the Continuation Advances. Specifically</font><font style="display: inline;font-family:Times New Roman;">, Illumina </font><font style="display: inline;font-family:Times New Roman;">agreed to </font><font style="display: inline;font-family:Times New Roman;">make cash payments to </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;"> of $6 million on or before each of October 1, 2019, November 1, 2019 and December 2, 2019. If Illumina elect</font><font style="display: inline;font-family:Times New Roman;">ed</font><font style="display: inline;font-family:Times New Roman;"> to extend the End Time, then Illumina </font><font style="display: inline;font-family:Times New Roman;">would</font><font style="display: inline;font-family:Times New Roman;"> make </font><font style="display: inline;font-family:Times New Roman;">additional </font><font style="display: inline;font-family:Times New Roman;">cash payments of $6 million on or before each of January 2, 2020, and March 2, 2020, and a cash payment of $22 million on or before February 3, 2020</font><font style="display: inline;font-family:Times New Roman;"> (note that in February 2020, a $16 million principal payment relating to a debt agreement entered into in February 2013 was to become due)</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;">These amounts approximated </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> projected cash outflows during the relevant periods. </font><font style="display: inline;font-family:Times New Roman;">The </font><font style="display: inline;font-family:Times New Roman;">Amendment provided that </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">would</font><font style="display: inline;font-family:Times New Roman;"> use these payments </font><font style="display: inline;font-family:Times New Roman;">for general working capital purposes</font><font style="display: inline;font-family:Times New Roman;"> &nbsp;(</font><font style="display: inline;font-family:Times New Roman;">i.e., </font><font style="display: inline;font-family:Times New Roman;">to fund continuing operations</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">including repayment of debt</font><font style="display: inline;font-family:Times New Roman;">)</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">

		</p>
		<p><font size="1"> </font></p><div style="width:100%">

		<p style="margin:0pt;text-align:right;line-height:100%;font-family:Calibri;font-size: 11pt">

			<font style="display: inline;"></font><font style="display: inline;">2</font><font style="display: inline;"></font>

		</p>

		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">

			&nbsp;

		</p>

</div><hr size="3" style="color:#999999" width="100%" align="center"></hr><p style="page-break-after:always">&nbsp;</p><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 1.648in; height: 0.3857021in" alt="Picture 1"></font>

		</p>

</div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;;font-size: 11pt"><font style="display: inline;font-family:Times New Roman;">Ultimately, Illumina elected to extend the End Time to March 31, 2020. Subsequently, </font><font style="display: inline;font-family:Times New Roman;">in light of</font><font style="display: inline;font-family:Times New Roman;"> negative feedback from </font><font style="display: inline;font-family:Times New Roman;">applicable </font><font style="display: inline;font-family:Times New Roman;">regulators regarding the ability to consummate the Merger, the parties agreed to terminate the Merger Agreement in January 2020. As part of the termination, the parties agreed </font><font style="display: inline;font-family:Times New Roman;">that </font><font style="display: inline;font-family:Times New Roman;">Illumina would still be obligated to finance </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> operations for the remainder of the previously committed period by making the remaining Continuation Advance payments. In aggregate, the Continuation Advances amounted to $52 million.</font>
		</p>
		<p style="margin:0pt 0pt 0pt 18pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;line-height:107.92%;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">The Continuation Advances were subject to repayment</font><font style="display: inline;font-family:Times New Roman;">, without interest,</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">in the event </font><font style="display: inline;font-family:Times New Roman;">of termination</font><font style="display: inline;font-family:Times New Roman;"> of the Merger Agreement</font><font style="display: inline;font-family:Times New Roman;">, if within two years </font><font style="display: inline;font-family:Times New Roman;">thereafter </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> entered into certain change-of-control transactions with a third party or raised at least $100 million in equity or debt financing in a single transaction (with the amount repayable dependent on the amount raised by </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;">).</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">We </font><font style="display: inline;font-family:Times New Roman;">initially accounted</font><font style="display: inline;font-family:Times New Roman;"> for the Continuation Advances in the quarter ended December 31, 2019 (as part of our financial statements for the year ended December 31, 2019). </font><font style="display: inline;font-family:Times New Roman;">W</font><font style="display: inline;font-family:Times New Roman;">e concluded the Continuation Advances represented a financing arrangement with Illumina and met the definition of a financial instrument per ASC 825-10-20</font><font style="display: inline;font-family:Times New Roman;">, as</font><font style="display: inline;font-family:Times New Roman;"> no shares were issued in exchange for the Continuation Advances, the repayment provisions</font><font style="display: inline;font-family:Times New Roman;"> result</font><font style="display: inline;font-family:Times New Roman;">ed</font><font style="display: inline;font-family:Times New Roman;"> in a contractual obligation (</font><font style="display: inline;font-family:Times New Roman;">based on the terms of the </font><font style="display: inline;font-family:Times New Roman;">Merger Agreement as amended) and the Continuation Advances represent payments received from Illumina which </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> would have to repay under certain contingencies&#x2014;resulting in a </font><font style="display: inline;font-family:Times New Roman;">f</font><font style="display: inline;font-family:Times New Roman;">inancial </font><font style="display: inline;font-family:Times New Roman;">i</font><font style="display: inline;font-family:Times New Roman;">nstrument</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">In reaching this conclusion, we also observed that the Continuation Advances were a freestanding instrument</font><font style="display: inline;font-family:Times New Roman;"> as the</font><font style="display: inline;font-family:Times New Roman;"> obligation extended past the termination of the Merger Agreement and was contingent on unrelated events.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">We concluded the Continuation Advances were a financial instrument and a financial liability. Financial instruments as defined in ASC 825 Glossary include, among other</font><font style="display: inline;font-family:Times New Roman;">s</font><font style="display: inline;font-family:Times New Roman;">, contracts that both impose on one party a contractual obligation that is a financial liability, and conveys to the other party a contractual right that is a financial asset.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">Contractual rights and obligations in this definition may or may not be conditional. </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">As defined by ASC 825-10-20, a</font><font style="display: inline;font-family:Times New Roman;"> financial liability is a contract that imposes on one entity an obligation to either deliver cash or another financial instrument to a second entity, or to exchange other financial instruments on potentially unfavorable terms. </font><font style="display: inline;font-family:Times New Roman;">A financial asset is a contract that conveys to one entity a right to receive cash or another financial instrument from a second entity, or to exchange other financial instruments on potentially favorable terms. Continuation Advances each represented a financial asset for Illumina and a financial liability for </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;">.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">Under ASC 825-10-25-1, entities are permitted to elect the fair value option for eligible items</font><font style="display: inline;font-family:Times New Roman;"> &nbsp;(</font><font style="display: inline;font-family:Times New Roman;">i.e. to carry them at fair value, with remeasurement through income</font><font style="display: inline;font-family:Times New Roman;">)</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;color:#000000;">As disclosed in </font><font style="display: inline;font-family:Times New Roman;color:#000000;">our</font><font style="display: inline;font-family:Times New Roman;color:#000000;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;color:#000000;">December 31, 2019 financial statements, </font><font style="display: inline;font-family:Times New Roman;color:#000000;">we</font><font style="display: inline;font-family:Times New Roman;color:#000000;"> elected the fair value option for the Continuation Advances liability because management believed that among all measurement methods allowed by ASC 825, the fair value option would most fairly represent the value of such a financial liability, and</font><font style="display: inline;font-family:Times New Roman;color:#000000;">,</font><font style="display: inline;font-family:Times New Roman;color:#000000;"> specifically, </font><font style="display: inline;font-family:Times New Roman;color:#000000;">would reflect the likelihood </font><font style="display: inline;font-family:Times New Roman;color:#000000;">that the repayment </font><font style="display: inline;font-family:Times New Roman;color:#000000;">was </font><font style="display: inline;font-family:Times New Roman;color:#000000;">low and the fair value of the financial liability was not material</font><font style="display: inline;font-family:Times New Roman;color:#000000;">.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">We</font><font style="display: inline;font-family:Times New Roman;"> properly disclosed Continuation Advances in the relevant financial statements as (1) financial liabilities for which the fair value option was elected; and (2) the cash received as cash inflows from financing activities. </font><font style="display: inline;font-family:Times New Roman;">We</font><font style="display: inline;font-family:Times New Roman;"> also remeasured these financial liabilities to current fair value at each subsequent reporting date in accordance with ASC 825-10-45-5. Finally, as the Continuation Advances were deemed to be a financing arrangement, the guidance on gain contingencies was not </font><font style="display: inline;font-family:Times New Roman;">deemed </font><font style="display: inline;font-family:Times New Roman;">applicable.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">

		</p>
		<p><font size="1"> </font></p><div style="width:100%">

		<p style="margin:0pt;text-align:right;line-height:100%;font-family:Calibri;font-size: 11pt">

			<font style="display: inline;"></font><font style="display: inline;">3</font><font style="display: inline;"></font>

		</p>

		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">

			&nbsp;

		</p>

</div><hr size="3" style="color:#999999" width="100%" align="center"></hr><p style="page-break-after:always">&nbsp;</p><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 1.648in; height: 0.3857021in" alt="Picture 1"></font>

		</p>

</div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;;font-size: 11pt"><font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">We have included additional </font><font style="display: inline;font-family:Times New Roman;">disclosure regarding</font><font style="display: inline;font-family:Times New Roman;"> the Continuation Advances in </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">Quarterly Report on Form 10-Q for the period ended March 31, 2021, in particular</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;"> to note that the purpose and intent of the Continuation Advances was to provide financing to support </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> working capital needs in light of the continued negative cash flows incurred during the extended regulatory approval period for the </font><font style="display: inline;font-family:Times New Roman;">Merger</font><font style="display: inline;font-family:Times New Roman;">.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;text-decoration:underline;">Reverse Termination Fee</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">Termination fees are typically included in acquisition agreements to ensure </font><font style="display: inline;font-family:Times New Roman;">the acquiror has serious intentions, and </font><font style="display: inline;font-family:Times New Roman;">in </font><font style="display: inline;font-family:Times New Roman;">recognition of the distraction </font><font style="display: inline;font-family:Times New Roman;">and potential competitive harm </font><font style="display: inline;font-family:Times New Roman;">the acquisition process </font><font style="display: inline;font-family:Times New Roman;">may have</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">on the </font><font style="display: inline;font-family:Times New Roman;">acquired entity&#x2019;s business.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">As the Reverse Termination Fee was included in the original Merger Agreement, it </font><font style="display: inline;font-family:Times New Roman;">repre</font><font style="display: inline;font-family:Times New Roman;">sented a </font><font style="display: inline;font-family:Times New Roman;">contingency and a potential </font><font style="display: inline;font-family:Times New Roman;">gain for </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">subject to </font><font style="display: inline;font-family:Times New Roman;">a number of conditions</font><font style="display: inline;font-family:Times New Roman;">, from the date the Merger Agreement was executed</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">The first of these conditions was </font><font style="display: inline;font-family:Times New Roman;">the termination of the Merger Agreement</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">by either party if the parties were unable to consummate </font><font style="display: inline;font-family:Times New Roman;">the Merger </font><font style="display: inline;font-family:Times New Roman;">by November 1, 2019 (the original End Time)</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;">However, </font><font style="display: inline;font-family:Times New Roman;">as the </font><font style="display: inline;font-family:Times New Roman;">consummation of the Merger was</font><font style="display: inline;font-family:Times New Roman;"> substantially</font><font style="display: inline;font-family:Times New Roman;"> delayed, primarily due to </font><font style="display: inline;font-family:Times New Roman;">the extended regulatory approval process</font><font style="display: inline;font-family:Times New Roman;">, and </font><font style="display: inline;font-family:Times New Roman;">after it </font><font style="display: inline;font-family:Times New Roman;">eventually became unlikely</font><font style="display: inline;font-family:Times New Roman;"> that the Merger would be approved</font><font style="display: inline;font-family:Times New Roman;">, the </font><font style="display: inline;font-family:Times New Roman;">parties </font><font style="display: inline;font-family:Times New Roman;">agreed to </font><font style="display: inline;font-family:Times New Roman;">terminate the Merger Agreement in January 2020</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">The termination agreement added an additional contingency that if</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;"> on or prior to September 30, 2020, we enter</font><font style="display: inline;font-family:Times New Roman;">ed</font><font style="display: inline;font-family:Times New Roman;"> into a definitive agreement providing for, or consummate, a Change of Control Transaction (as defined in the Termination Agreement) (&#x201C;Change of Control Transaction&#x201D;), then we may </font><font style="display: inline;font-family:Times New Roman;">have </font><font style="display: inline;font-family:Times New Roman;">be</font><font style="display: inline;font-family:Times New Roman;">en</font><font style="display: inline;font-family:Times New Roman;"> required to repay the Reverse Termination Fee (without interest) to Illumina in connection with the consummation of such Change of Control Transaction. </font><font style="display: inline;font-family:Times New Roman;">As a result, the </font><font style="display: inline;font-family:Times New Roman;">Reverse Termination Fee </font><font style="display: inline;font-family:Times New Roman;">became due </font><font style="display: inline;font-family:Times New Roman;">in January 2020</font><font style="display: inline;font-family:Times New Roman;">, but </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> ability to retain it was still subject to additional contingencies</font><font style="display: inline;font-family:Times New Roman;">/clawback</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">In view of the above circumstances, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> accounted for the Reverse Termination Fee as a contingent gain</font><font style="display: inline;font-family:Times New Roman;"> from the date the Merger Agreement with Illumina was executed in November 2018.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">P</font><font style="display: inline;font-family:Times New Roman;">ursuant to ASC 450-30-</font><font style="display: inline;font-family:Times New Roman;">25-1 </font><font style="display: inline;font-family:Times New Roman;">gains are not recognized </font><font style="display: inline;font-family:Times New Roman;">until the contingenc</font><font style="display: inline;font-family:Times New Roman;">ies </font><font style="display: inline;font-family:Times New Roman;">are resolved</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">T</font><font style="display: inline;font-family:Times New Roman;">he final contingencies were resolved on </font><font style="display: inline;font-family:Times New Roman;">October 1</font><font style="display: inline;font-family:Times New Roman;">, 2020, when </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> did not enter into a </font><font style="display: inline;font-family:Times New Roman;">definitive agreement for</font><font style="display: inline;font-family:Times New Roman;">, or consummate,</font><font style="display: inline;font-family:Times New Roman;"> a </font><font style="display: inline;font-family:Times New Roman;">C</font><font style="display: inline;font-family:Times New Roman;">hange of </font><font style="display: inline;font-family:Times New Roman;">C</font><font style="display: inline;font-family:Times New Roman;">ontrol</font><font style="display: inline;font-family:Times New Roman;"> Transaction</font><font style="display: inline;font-family:Times New Roman;">. Accordingly, the gain from the Reverse Termination Fee was recognized at that time. </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">The distinction between these two arrangements</font><font style="display: inline;font-family:Times New Roman;"> with Illumina</font><font style="display: inline;font-family:Times New Roman;"> is further evidenced via the different provisions.&nbsp;&nbsp;Specifically, the Reverse Termination Fee </font><font style="display: inline;font-family:Times New Roman;">did</font><font style="display: inline;font-family:Times New Roman;"> not preclude </font><font style="display: inline;font-family:Times New Roman;">or penalize us</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">for</font><font style="display: inline;font-family:Times New Roman;"> obtaining </font><font style="display: inline;font-family:Times New Roman;">debt or equity </font><font style="display: inline;font-family:Times New Roman;">financing</font><font style="display: inline;font-family:Times New Roman;">.&nbsp;&nbsp;However, </font><font style="display: inline;font-family:Times New Roman;">if </font><font style="display: inline;font-family:Times New Roman;">we </font><font style="display: inline;font-family:Times New Roman;">obtain</font><font style="display: inline;font-family:Times New Roman;">ed</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">debt or equity </font><font style="display: inline;font-family:Times New Roman;">financing in excess of $100 million in a single transaction, then a certain amount of the Continuation Advances </font><font style="display: inline;font-family:Times New Roman;">would </font><font style="display: inline;font-family:Times New Roman;">be</font><font style="display: inline;font-family:Times New Roman;"> repayable to Illumina, since the purpose of the Continuation Advances was to provide needed financing to </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;"> during and subsequent to the extended merger regulatory review period.&nbsp;&nbsp;Unlike the Continuation Advances, the Reverse Termination Fee was deemed a penalty and not a financial instrument.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;"> &nbsp; &nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<div style="width:100%"><table style="width:100%; table-layout: fixed;" cellpadding="0" cellspacing="0"><tr><td style="width:22pt;"><p style="width:22pt;font-size:0pt;"></p></td><td valign="top" align="left" style="width: 18.00pt;">
			<p style="line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt;margin:0pt;">
				<font style="margin:0pt;font-family:Times New Roman;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-size:11pt;;"> "</font>
			</p>
		</td><td style="width:0pt;"><p style="width:0pt;width:0pt;font-size:0pt;"></p></td><td align="left" valign="top">
			<p style="line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt;margin:0pt;">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;font-style:italic;color:#000000;">You state that the estimated fair value of the Continuation Advances at both December 31, 2020 and 2019 was determined to be zero as management estimated that there would be no future cash outflows associated with this financial instrument because the probabilities of either of the specified triggering events occurring and requiring repayment to Illumina were evaluated as being remote at both of those dates. However, in February 2021 you were required to repay $52 million of these advances as a result of your issuance of $900 million in convertible notes. Explain the factors you considered in determining the probability of repayment was remote given the nature of the specified events that would trigger repayment (particularly an equity or debt financing) and the fact that the time period that repayment of such advances could be triggered extends out to March 2022.</font></p></td></tr></table></div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 10pt">

		</p>
		<p><font size="1"> </font></p><div style="width:100%">

		<p style="margin:0pt;text-align:right;line-height:100%;font-family:Calibri;font-size: 11pt">

			<font style="display: inline;"></font><font style="display: inline;">4</font><font style="display: inline;"></font>

		</p>

		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">

			&nbsp;

		</p>

</div><hr size="3" style="color:#999999" width="100%" align="center"></hr><p style="page-break-after:always">&nbsp;</p><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 1.648in; height: 0.3857021in" alt="Picture 1"></font>

		</p>

</div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;;font-size: 10pt"><font style="display: inline;font-size:10.5pt;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-weight:bold;">Response.</font><font style="display: inline;font-family:Times New Roman;"> We respectfully submit that </font><font style="display: inline;font-family:Times New Roman;">as part of our financial statement close</font><font style="display: inline;font-family:Times New Roman;"> process</font><font style="display: inline;font-family:Times New Roman;"> as of December 31, 2020 and 2019 </font><font style="display: inline;font-family:Times New Roman;">(as well as any intervening interim dates), </font><font style="display: inline;font-family:Times New Roman;">we carefully </font><font style="display: inline;font-family:Times New Roman;">assessed </font><font style="display: inline;font-family:Times New Roman;">the likelihood of repayment of the </font><font style="display: inline;font-family:Times New Roman;">Continuation Advances</font><font style="display: inline;font-family:Times New Roman;"> and the fair value of the </font><font style="display: inline;font-family:Times New Roman;">C</font><font style="display: inline;font-family:Times New Roman;">ontinuation </font><font style="display: inline;font-family:Times New Roman;">A</font><font style="display: inline;font-family:Times New Roman;">dvances liability</font><font style="display: inline;font-family:Times New Roman;">. In particular, </font><font style="display: inline;font-family:Times New Roman;">we </font><font style="display: inline;font-family:Times New Roman;">completed </font><font style="display: inline;font-family:Times New Roman;">this assessment </font><font style="display: inline;font-family:Times New Roman;">for the December 31, 2020 </font><font style="display: inline;font-family:Times New Roman;">financial statements in </font><font style="display: inline;font-family:Times New Roman;">February 2021 </font><font style="display: inline;font-family:Times New Roman;">with full understanding of </font><font style="display: inline;font-family:Times New Roman;">the</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">fact </font><font style="display: inline;font-family:Times New Roman;">that </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">obligation to repay </font><font style="display: inline;font-family:Times New Roman;">the Contin</font><font style="display: inline;font-family:Times New Roman;">u</font><font style="display: inline;font-family:Times New Roman;">ation Advances </font><font style="display: inline;font-family:Times New Roman;">in full </font><font style="display: inline;font-family:Times New Roman;">was triggered </font><font style="display: inline;font-family:Times New Roman;">by the financing </font><font style="display: inline;font-family:Times New Roman;">arrangements entered into with </font><font style="display: inline;font-family:Times New Roman;">SoftBank Group Corp</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">(&#x201C;SoftBank&#x201D;)</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">in February 2021</font><font style="display: inline;font-family:Times New Roman;">, which was disclosed in our financial statements included in our Annual Report on Form</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">10</font><font style="display: inline;font-family:Times New Roman;">-</font><font style="display: inline;font-family:Times New Roman;">K for the year ended December 31, 2020</font><font style="display: inline;font-family:Times New Roman;">. This</font><font style="display: inline;font-family:Times New Roman;"> indicated </font><font style="display: inline;font-family:Times New Roman;">that </font><font style="display: inline;font-family:Times New Roman;">a substantial </font><font style="display: inline;font-family:Times New Roman;">increase </font><font style="display: inline;font-family:Times New Roman;">in the fair value of the Continuation Advances </font><font style="display: inline;font-family:Times New Roman;">financial </font><font style="display: inline;font-family:Times New Roman;">liability occurred </font><font style="display: inline;font-family:Times New Roman;">prior to the repayment</font><font style="display: inline;font-family:Times New Roman;">. However, we concluded </font><font style="display: inline;font-family:Times New Roman;">this </font><font style="display: inline;font-family:Times New Roman;">change in fair value </font><font style="display: inline;font-family:Times New Roman;">was </font><font style="display: inline;font-family:Times New Roman;">a result of events that occurred after December 31, 2020, and </font><font style="display: inline;font-family:Times New Roman;">which were not known, knowable, contemplated or </font><font style="display: inline;font-family:Times New Roman;">anticipated </font><font style="display: inline;font-family:Times New Roman;">by us </font><font style="display: inline;font-family:Times New Roman;">as of December 31, 2020</font><font style="display: inline;font-family:Times New Roman;">.&nbsp; </font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">Fair value is defined in ASC 820-10-35-2 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or in this case, December 31, 2020.&nbsp;&nbsp;We concluded that the ultimate debt financing with Softbank was not the result of the culmination of a financing process, strategy or other events which had commenced or been expected or contemplated prior to December 31, 2020, but rather, was a discrete event which both commenced and concluded in early 2021.&nbsp;&nbsp;Accordingly, we concluded that the estimated fair value of the Continuation Advances, in accordance with ASC 820-10-35-2, as of December 31, 2020, should be reflective of management&#x2019;s estimates and judgments at that date.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">As of December 31, 2020, our internal financial model projected </font><font style="display: inline;font-family:Times New Roman;">that our then current cash balance was </font><font style="display: inline;font-family:Times New Roman;">sufficient</font><font style="display: inline;font-family:Times New Roman;">, without obtaining any additional financing,</font><font style="display: inline;font-family:Times New Roman;"> to sustain operations well beyond March 2022</font><font style="display: inline;font-family:Times New Roman;">, which is when the Continuation Advances repayment provisions lapse</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;"> &nbsp;Accordingly, at December 31, 2020, the probability of </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;"> completing a </font><font style="display: inline;font-family:Times New Roman;">single </font><font style="display: inline;font-family:Times New Roman;">financing</font><font style="display: inline;font-family:Times New Roman;"> in excess of $100 million</font><font style="display: inline;font-family:Times New Roman;">, which was the threshold to trigger an obligation to</font><font style="display: inline;font-family:Times New Roman;"> partially</font><font style="display: inline;font-family:Times New Roman;"> or fully</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">repay the Continuation Advances, </font><font style="display: inline;font-family:Times New Roman;">was deemed to be </font><font style="display: inline;font-family:Times New Roman;">very low</font><font style="display: inline;font-family:Times New Roman;">, which resulted in the fair value of the Continuation Advances </font><font style="display: inline;font-family:Times New Roman;">liability </font><font style="display: inline;font-family:Times New Roman;">being immaterial as of that date.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">SoftBank expressed interest in us in January 2021.&nbsp;&nbsp;As the accelerated investment scenario occurred subsequent to the financial statement date, w</font><font style="display: inline;font-family:Times New Roman;">e concluded </font><font style="display: inline;font-family:Times New Roman;">this</font><font style="display: inline;font-family:Times New Roman;"> was </font><font style="display: inline;font-family:Times New Roman;">a &nbsp;</font><font style="display: inline;font-family:Times New Roman;">non</font><font style="display: inline;font-family:Times New Roman;">-</font><font style="display: inline;font-family:Times New Roman;">recognized </font><font style="display: inline;font-family:Times New Roman;">subsequent event </font><font style="display: inline;font-family:Times New Roman;">in accordance with ASC 855-10-</font><font style="display: inline;font-family:Times New Roman;">5</font><font style="display: inline;font-family:Times New Roman;">5-</font><font style="display: inline;font-family:Times New Roman;">2</font><font style="display: inline;font-family:Times New Roman;">(f). </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;text-decoration:underline;">Fair value assessment</font><font style="display: inline;font-family:Times New Roman;text-decoration:underline;">s</font><font style="display: inline;font-family:Times New Roman;text-decoration:underline;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;text-decoration:underline;">through December 31, 2020</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;border-bottom:1pt none #D9D9D9 ;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-size:11pt;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-size:11pt;">We concluded that the factor most significantly impacting the fair value of the Continuation Advances </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">financial liability </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">was the </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">expectations about potential variations in the future cash flows, and specifically, </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">the likelihood of whether </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">repayment of the Continuation Advances would be </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">required. </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">Partial or full </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">repayment would be triggered </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">only </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">by one of the following </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">events occurring within two years after the termination of the Merger</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">:</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-size:11pt;">&#xFEFF;</font>
		</p>
		<div style="width:100%"><table style="width:100%; table-layout: fixed;" cellpadding="0" cellspacing="0"><tr><td style="width:18pt;"><p style="width:18pt;font-size:0pt;"></p></td><td valign="top" align="left" style="width: 18.00pt;">
			<p style="text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt;margin:0pt;">
				<font style="margin:0pt;font-family:Symbol;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9;border-bottom:1pt none #D9D9D9;line-height:100%;color:#000000;font-size:11pt;;"> &#xB7;</font>
			</p>
		</td><td style="width:0pt;"><p style="width:0pt;width:0pt;font-size:0pt;"></p></td><td align="left" valign="top">
			<p style="text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt;margin:0pt;">
			<font style="display: inline;font-family:Times New Roman;font-size:11pt;color:#000000;">Acquisition by a third party </font></p></td></tr></table></div>
		<div style="width:100%"><table style="width:100%; table-layout: fixed;" cellpadding="0" cellspacing="0"><tr><td style="width:18pt;"><p style="width:18pt;font-size:0pt;"></p></td><td valign="top" align="left" style="width: 18.00pt;">
			<p style="text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt;margin:0pt;">
				<font style="margin:0pt;font-family:Symbol;text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9;line-height:100%;color:#000000;font-size:11pt;;"> &#xB7;</font>
			</p>
		</td><td style="width:0pt;"><p style="width:0pt;width:0pt;font-size:0pt;"></p></td><td align="left" valign="top">
			<p style="text-align:justify;text-justify:inter-ideograph;border-top:1pt none #D9D9D9 ;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt;margin:0pt;">
			<font style="display: inline;font-family:Times New Roman;font-size:11pt;color:#000000;">The Company raising at least $100 million in equity or debt financing in a single transaction (in one or multiple closes)</font></p></td></tr></table></div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;color:#000000;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;color:#000000;">Our assessment of the likelihood of these factors</font><font style="display: inline;font-family:Times New Roman;color:#000000;">, as first documented as part of our December 31, 2019 close,</font><font style="display: inline;font-family:Times New Roman;color:#000000;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;color:#000000;">and reassessed each subsequent reporting period, </font><font style="display: inline;font-family:Times New Roman;color:#000000;">is below.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;color:#000000;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-style:italic;color:#000000;">Acquisition by a third party</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 14pt">
			<font style="display: inline;font-family:Times New Roman;font-size:14pt;color:#000000;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;line-height:107.92%;font-size: 11pt">

		</p>
		<p><font size="1"> </font></p><div style="width:100%">

		<p style="margin:0pt;text-align:right;line-height:100%;font-family:Calibri;font-size: 11pt">

			<font style="display: inline;"></font><font style="display: inline;">5</font><font style="display: inline;"></font>

		</p>

		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">

			&nbsp;

		</p>

</div><hr size="3" style="color:#999999" width="100%" align="center"></hr><p style="page-break-after:always">&nbsp;</p><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 1.648in; height: 0.3857021in" alt="Picture 1"></font>

		</p>

</div>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;line-height:107.92%;;font-size: 11pt"><font style="display: inline;font-family:Times New Roman;">After the Merger was terminated, we </font><font style="display: inline;font-family:Times New Roman;">concluded that </font><font style="display: inline;font-family:Times New Roman;">the possibility of a merger with another </font><font style="display: inline;font-family:Times New Roman;">third</font><font style="display: inline;font-family:Times New Roman;"> party during </font><font style="display: inline;font-family:Times New Roman;">the two-year period </font><font style="display: inline;font-family:Times New Roman;">was </font><font style="display: inline;font-family:Times New Roman;">remote. As discussed in </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> proxy statement (</font><font style="display: inline;font-family:Times New Roman;">S</font><font style="display: inline;font-family:Times New Roman;">chedule 14A) dated </font><font style="display: inline;font-family:Times New Roman;">December </font><font style="display: inline;font-family:Times New Roman;">17</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">2018, beginning in August 2017 and continuing into 2018, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">, with the assistance of an internationally recognized investment banking firm, contacted 23 parties (including Illumina) concerning their interest in a strategic partnership with </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;">. The principal motivations for these discussions were to (1)&nbsp;expand the distribution of </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> DNA sequencing products; and (2)&nbsp;ensure that </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> had access to sufficient cash resources to continue </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">research and development and commercialization efforts. Although </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> Board </font><font style="display: inline;font-family:Times New Roman;">of Directors </font><font style="display: inline;font-family:Times New Roman;">was most focused on identifying a strategic partner to assist </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;"> in pursuing </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">standalone strategy, the Board approached these discussions with an open mind as to potential outcomes, including the potential </font><font style="display: inline;font-family:Times New Roman;">of a </font><font style="display: inline;font-family:Times New Roman;">sale</font><font style="display: inline;font-family:Times New Roman;"> of the Company</font><font style="display: inline;font-family:Times New Roman;">. For various reasons, most of these companies declined to pursue discussions with </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;">. In connection with these strategic partnership discussions, members of </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> management</font><font style="display: inline;font-family:Times New Roman;"> team</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">met in September 2017 and November 2017 with members of Illumina management. During these conversations, the members of each of </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> management and Illumina management discussed ways that the two companies could work together. After various meetings and discussions with Illumina, </font><font style="display: inline;font-family:Times New Roman;">the </font><font style="display: inline;font-family:Times New Roman;">signing of the </font><font style="display: inline;font-family:Times New Roman;">Merger Agreement </font><font style="display: inline;font-family:Times New Roman;">was publicly announced </font><font style="display: inline;font-family:Times New Roman;">on November&nbsp;1, 2018. As </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> had </font><font style="display: inline;font-family:Times New Roman;">already contacted many potential business partners in the DNA sequencing market and went through a protracted business combination process with Illumina for over a year</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;"> and no competitive offers </font><font style="display: inline;font-family:Times New Roman;">were</font><font style="display: inline;font-family:Times New Roman;"> received, we </font><font style="display: inline;font-family:Times New Roman;">concluded </font><font style="display: inline;font-family:Times New Roman;">it </font><font style="display: inline;font-family:Times New Roman;">wa</font><font style="display: inline;font-family:Times New Roman;">s highly unlikely that </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">would </font><font style="display: inline;font-family:Times New Roman;">be able to find a replacement for Illumina and complete a business combination</font><font style="display: inline;font-family:Times New Roman;"> such that </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">would be acquired by a third party</font><font style="display: inline;font-family:Times New Roman;"> in </font><font style="display: inline;font-family:Times New Roman;">the</font><font style="display: inline;font-family:Times New Roman;"> two</font><font style="display: inline;font-family:Times New Roman;">-</font><font style="display: inline;font-family:Times New Roman;">year period after the termination of the </font><font style="display: inline;font-family:Times New Roman;">M</font><font style="display: inline;font-family:Times New Roman;">erger.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-style:italic;">Single </font><font style="display: inline;font-family:Times New Roman;font-style:italic;">Financing of at least $100 million</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">While </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> continued to incur losses following the termination of the Merger Agreement, and thus had a need for external financing, </font><font style="display: inline;font-family:Times New Roman;">we </font><font style="display: inline;font-family:Times New Roman;">did not need</font><font style="display: inline;font-family:Times New Roman;"> nor intend</font><font style="display: inline;font-family:Times New Roman;"> to raise </font><font style="display: inline;font-family:Times New Roman;">in excess of</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">$100 million in a single equity or debt financing</font><font style="display: inline;font-family:Times New Roman;">. The size of the financing</font><font style="display: inline;font-family:Times New Roman;"> is </font><font style="display: inline;font-family:Times New Roman;">within </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> control</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">so</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">m</font><font style="display: inline;font-family:Times New Roman;">anagement </font><font style="display: inline;font-family:Times New Roman;">could </font><font style="display: inline;font-family:Times New Roman;">structure debt or equity offerings such that no single financing </font><font style="display: inline;font-family:Times New Roman;">would be </font><font style="display: inline;font-family:Times New Roman;">greater than $100 million</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;">We note that under the terms of the </font><font style="display: inline;font-family:Times New Roman;">termination agreement with Illumina</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">multiple financings in the same year of </font><font style="display: inline;font-family:Times New Roman;">less than $100</font><font style="display: inline;font-family:Times New Roman;"> million </font><font style="display: inline;font-family:Times New Roman;">would </font><font style="display: inline;font-family:Times New Roman;">not trigger repayment. Accordingly, management ha</font><font style="display: inline;font-family:Times New Roman;">d</font><font style="display: inline;font-family:Times New Roman;"> no intention </font><font style="display: inline;font-family:Times New Roman;">of</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">rais</font><font style="display: inline;font-family:Times New Roman;">ing</font><font style="display: inline;font-family:Times New Roman;"> $100 million or more in a single equity or debt financing in </font><font style="display: inline;font-family:Times New Roman;">the two-year </font><font style="display: inline;font-family:Times New Roman;">timeframe. </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">Furthermore</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> ha</font><font style="display: inline;font-family:Times New Roman;">d</font><font style="display: inline;font-family:Times New Roman;"> not</font><font style="display: inline;font-family:Times New Roman;"> previously</font><font style="display: inline;font-family:Times New Roman;"> executed </font><font style="display: inline;font-family:Times New Roman;">single </font><font style="display: inline;font-family:Times New Roman;">equity or debt </font><font style="display: inline;font-family:Times New Roman;">financing transactions for more than $100 million</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;"> other than </font><font style="display: inline;font-family:Times New Roman;">in connection with</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">our initial public offering </font><font style="display: inline;font-family:Times New Roman;">in 2010</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;">We</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">had historically</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">utilized &#x201C;at-the-market&#x201D; </font><font style="display: inline;font-family:Times New Roman;">(&#x201C;ATM&#x201D;) </font><font style="display: inline;font-family:Times New Roman;">offerings of around $30-60 million or follow-on offerings of around $3</font><font style="display: inline;font-family:Times New Roman;">5</font><font style="display: inline;font-family:Times New Roman;">-</font><font style="display: inline;font-family:Times New Roman;">7</font><font style="display: inline;font-family:Times New Roman;">0 million</font><font style="display: inline;font-family:Times New Roman;">, and intended to continue to structure </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">financings in </font><font style="display: inline;font-family:Times New Roman;">a &nbsp;</font><font style="display: inline;font-family:Times New Roman;">similar manner</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;">B</font><font style="display: inline;font-family:Times New Roman;">etween </font><font style="display: inline;font-family:Times New Roman;">2013 and September 2018, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">completed </font><font style="display: inline;font-family:Times New Roman;">eight A</font><font style="display: inline;font-family:Times New Roman;">TM or follow-on offering</font><font style="display: inline;font-family:Times New Roman;"> financings,</font><font style="display: inline;font-family:Times New Roman;"> ranging in size from </font><font style="display: inline;font-family:Times New Roman;">$24 to $69 million</font><font style="display: inline;font-family:Times New Roman;">, with the average of </font><font style="display: inline;font-family:Times New Roman;">approximately </font><font style="display: inline;font-family:Times New Roman;">$40 million</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">The above assessment </font><font style="display: inline;font-family:Times New Roman;">was performed at each subsequent reporting date after December 31, 2019 </font><font style="display: inline;font-family:Times New Roman;">and through December 31, 2020, </font><font style="display: inline;font-family:Times New Roman;">without significant changes. As part of the subsequent assessments, we noted that during 2020</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">had two follow-on offerings, in </font><font style="display: inline;font-family:Times New Roman;">August and November</font><font style="display: inline;font-family:Times New Roman;"> 2020</font><font style="display: inline;font-family:Times New Roman;">. These financings were </font><font style="display: inline;font-family:Times New Roman;">deliberately </font><font style="display: inline;font-family:Times New Roman;">limited by management </font><font style="display: inline;font-family:Times New Roman;">to less than $100</font><font style="display: inline;font-family:Times New Roman;"> million</font><font style="display: inline;font-family:Times New Roman;"> and</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">thus </font><font style="display: inline;font-family:Times New Roman;">did not trigger </font><font style="display: inline;font-family:Times New Roman;">a &nbsp;</font><font style="display: inline;font-family:Times New Roman;">repayment</font><font style="display: inline;font-family:Times New Roman;"> of the Continuation Advances to Illumina</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;"> &nbsp;This demonstrated </font><font style="display: inline;font-family:Times New Roman;">m</font><font style="display: inline;font-family:Times New Roman;">anagement&#x2019;s intent and ability to structure </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">financings to avoid triggering repayment of the Continuation Advances</font><font style="display: inline;font-family:Times New Roman;">, while also raising sufficient capital to support our ongoing operations</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;"> As </font><font style="display: inline;font-family:Times New Roman;">a result</font><font style="display: inline;font-family:Times New Roman;"> of these financings</font><font style="display: inline;font-family:Times New Roman;"> as well as the </font><font style="display: inline;font-family:Times New Roman;">payments</font><font style="display: inline;font-family:Times New Roman;"> received from Illumina</font><font style="display: inline;font-family:Times New Roman;">, as of December 31, 2020, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">had cash, cash equivalents and investments </font><font style="display: inline;font-family:Times New Roman;">totaling</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">$319 million and working capital of $317 million, both </font><font style="display: inline;font-family:Times New Roman;">our </font><font style="display: inline;font-family:Times New Roman;">highest </font><font style="display: inline;font-family:Times New Roman;">year-end balance</font><font style="display: inline;font-family:Times New Roman;">s</font><font style="display: inline;font-family:Times New Roman;"> since inception</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">

		</p>
		<p><font size="1"> </font></p><div style="width:100%">

		<p style="margin:0pt;text-align:right;line-height:100%;font-family:Calibri;font-size: 11pt">

			<font style="display: inline;"></font><font style="display: inline;">6</font><font style="display: inline;"></font>

		</p>

		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">

			&nbsp;

		</p>

</div><hr size="3" style="color:#999999" width="100%" align="center"></hr><p style="page-break-after:always">&nbsp;</p><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 1.648in; height: 0.3857021in" alt="Picture 1"></font>

		</p>

</div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;;font-size: 11pt"><font style="display: inline;font-family:Times New Roman;">Additionally, as of December 31, 2020 </font><font style="display: inline;font-family:Times New Roman;">we were</font><font style="display: inline;font-family:Times New Roman;"> in the process of finalizing a collaboration agreement with Invitae</font><font style="display: inline;font-family:Times New Roman;"> Corporation (&#x201C;Invitae)</font><font style="display: inline;font-family:Times New Roman;">, whereby Invitae would initially cover certain development costs (with $20-$25 million anticipated in 2021).&nbsp;&nbsp;The&nbsp; </font><font style="display: inline;font-family:Times New Roman;">Development and Commercialization Agreement with Invitae </font><font style="display: inline;font-family:Times New Roman;">was finalized on </font><font style="display: inline;font-family:Times New Roman;">January 12, 2021. This agreement</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">also did</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">not </font><font style="display: inline;font-family:Times New Roman;">trigger repayment to Illumina</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">nor </font><font style="display: inline;font-family:Times New Roman;">would </font><font style="display: inline;font-family:Times New Roman;">other types of</font><font style="display: inline;font-family:Times New Roman;"> similar</font><font style="display: inline;font-family:Times New Roman;"> collaboration, distribution or licensing agreements</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">further demonstrating </font><font style="display: inline;font-family:Times New Roman;">our</font><font style="display: inline;font-family:Times New Roman;"> intent and </font><font style="display: inline;font-family:Times New Roman;">ability to obtain financing in ways that would </font><font style="display: inline;font-family:Times New Roman;">not </font><font style="display: inline;font-family:Times New Roman;">result in the repayment of the Continuation Advances.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">During 2020, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">used net cash in operating activities </font><font style="display: inline;font-family:Times New Roman;">(before the one-time gains from the terminated Merger) of $78 million. </font><font style="display: inline;font-family:Times New Roman;">Considering the historically high balance of cash and investments and the funding arrangement anticipated with Invitae</font><font style="display: inline;font-family:Times New Roman;"> as of December 31, 2020</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">and the flexibility with which </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> could structure future arrangements, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">did not have a </font><font style="display: inline;font-family:Times New Roman;">need</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">and did not anticipate a need</font><font style="display: inline;font-family:Times New Roman;">,</font><font style="display: inline;font-family:Times New Roman;"> to </font><font style="display: inline;font-family:Times New Roman;">raise additional funding</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">in such a way </font><font style="display: inline;font-family:Times New Roman;">that would trigger repayment of the Continuation Advances</font><font style="display: inline;font-family:Times New Roman;"> through the date </font><font style="display: inline;font-family:Times New Roman;">when the Continuation Advances would no longer be subject to repayment. </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">No other events have occurred or were anticipated as of December 31, 2020 to change </font><font style="display: inline;font-family:Times New Roman;">this expectation. </font><font style="display: inline;font-family:Times New Roman;">Accordingly</font><font style="display: inline;font-family:Times New Roman;">, we concluded that </font><font style="display: inline;font-family:Times New Roman;">the likelihood of </font><font style="display: inline;font-family:Times New Roman;">repayment </font><font style="display: inline;font-family:Times New Roman;">as of December 31, 2020 was </font><font style="display: inline;font-family:Times New Roman;">low</font><font style="display: inline;font-family:Times New Roman;">, and the fair value of the </font><font style="display: inline;font-family:Times New Roman;">Continuation Advances financial </font><font style="display: inline;font-family:Times New Roman;">liability remained </font><font style="display: inline;font-family:Times New Roman;">immaterial</font><font style="display: inline;font-family:Times New Roman;">.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;text-decoration:underline;">Consideration of subsequent events as of December 31, 2020</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">The </font><font style="display: inline;font-family:Times New Roman;">discussion </font><font style="display: inline;font-family:Times New Roman;">about a </font><font style="display: inline;font-family:Times New Roman;">potential </font><font style="display: inline;font-family:Times New Roman;">convertible debt </font><font style="display: inline;font-family:Times New Roman;">transaction </font><font style="display: inline;font-family:Times New Roman;">between </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;"> and SoftBank </font><font style="display: inline;font-family:Times New Roman;">was </font><font style="display: inline;font-family:Times New Roman;">initiated by SoftBank and first </font><font style="display: inline;font-family:Times New Roman;">discussed </font><font style="display: inline;font-family:Times New Roman;">on </font><font style="display: inline;font-family:Times New Roman;">January</font><font style="display: inline;font-family:Times New Roman;"> 27</font><font style="display: inline;font-family:Times New Roman;">, 2021</font><font style="display: inline;font-family:Times New Roman;">.</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;"> Prior to </font><font style="display: inline;font-family:Times New Roman;">this discussion of a potential debt financing, </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> had intended to </font><font style="display: inline;font-family:Times New Roman;">only </font><font style="display: inline;font-family:Times New Roman;">pursue </font><font style="display: inline;font-family:Times New Roman;">financing in ways that would not result in the repayment of the Continuation Advances</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">as noted above</font><font style="display: inline;font-family:Times New Roman;">.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">Both the </font><font style="display: inline;font-family:Times New Roman;">potential </font><font style="display: inline;font-family:Times New Roman;">size </font><font style="display: inline;font-family:Times New Roman;">and the timing </font><font style="display: inline;font-family:Times New Roman;">of the </font><font style="display: inline;font-family:Times New Roman;">financing </font><font style="display: inline;font-family:Times New Roman;">by SoftBank </font><font style="display: inline;font-family:Times New Roman;">were</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">attractive</font><font style="display: inline;font-family:Times New Roman;"> to </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;">, since t</font><font style="display: inline;font-family:Times New Roman;">he amount of the funding would</font><font style="display: inline;font-family:Times New Roman;"> also</font><font style="display: inline;font-family:Times New Roman;"> open strategic </font><font style="display: inline;font-family:Times New Roman;">growth</font><font style="display: inline;font-family:Times New Roman;"> opportunities for </font><font style="display: inline;font-family:Times New Roman;">us</font><font style="display: inline;font-family:Times New Roman;">, and the relationship with Softbank would provide connections to its vast network of partners in the biotechnology </font><font style="display: inline;font-family:Times New Roman;">and pharmaceutical industr</font><font style="display: inline;font-family:Times New Roman;">ies</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;">The size of the transaction also justified incurring the incremental cost </font><font style="display: inline;font-family:Times New Roman;">of $52 million </font><font style="display: inline;font-family:Times New Roman;">to repay the Continuation Advances to Illumina.</font><font style="display: inline;font-family:Times New Roman;"> &nbsp;However, prior to this discussion with SoftBank, we had not considered a financing in excess of $100 million, and as</font><font style="display: inline;font-family:Times New Roman;"> stated previously, have historically not closed a financing in excess of $100 million (other than our IPO). </font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">In summary</font><font style="display: inline;font-family:Times New Roman;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;">the transaction </font><font style="display: inline;font-family:Times New Roman;">with SoftBank was a unique </font><font style="display: inline;font-family:Times New Roman;">and potentially transformative development which could </font><font style="display: inline;font-family:Times New Roman;">not </font><font style="display: inline;font-family:Times New Roman;">have </font><font style="display: inline;font-family:Times New Roman;">be</font><font style="display: inline;font-family:Times New Roman;">en</font><font style="display: inline;font-family:Times New Roman;"> anticipated as of December 31, 2020. </font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">I</font><font style="display: inline;font-family:Times New Roman;">n February 2021 </font><font style="display: inline;font-family:Times New Roman;">we</font><font style="display: inline;font-family:Times New Roman;"> decided to </font><font style="display: inline;font-family:Times New Roman;">take advantage of </font><font style="display: inline;font-family:Times New Roman;">this</font><font style="display: inline;font-family:Times New Roman;"> strategic opportunity</font><font style="display: inline;font-family:Times New Roman;">, understanding that this unique deal to us would trigger repayment of the Continuation Advances</font><font style="display: inline;font-family:Times New Roman;">. The </font><font style="display: inline;font-family:Times New Roman;">convertible debt investment by SoftBank of $900 million was announced on February 10, 2021</font><font style="display: inline;font-family:Times New Roman;"> and was closed on February 16, 2021, triggering repayment of the Continuation Advances</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;text-align:justify;text-justify:inter-ideograph;line-height:100%;font-family:EYInterstate;color:#000000;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;font-size:11pt;">We</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;"> filed </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">our</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">December 31, 2020 annual report on February 26, 202</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">1</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">When completing our December 31, 2020 </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">close</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;"> in preparation for the report filing</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">, &nbsp;</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">we carefully considered whether </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">the </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">discrete event of the </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">SoftBank investment </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">could have been anticipated </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">as of December 31, 2020</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;"> and should be taken into account when determining the fair value of the </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">Continuation Advances financial liability as of that date</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;"> &nbsp; &nbsp;</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">However, we concluded </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">that </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">the unique factors </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">that would eventually lead to the transaction</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;"> with SoftBank</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;"> were either not present or could not have been known or anticipated by management</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;"> as of December 31, 2020</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">. &nbsp;</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">Accordingly, we concluded </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">that </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">the developments with SoftBank should not impact our assessment of the fair value of the Continuation Advances financial liability as of December 31, 2020. </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">ASC 855-</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">10-55-2(f) indicates that </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">&#x201C;[c]hanges in the fair value of assets or liabilities (financial or nonfinancial) or foreign exchange rates after the balance sheet date but before financial statements are issued or are available to be issued&#x201D; are </font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">examples of nonrecognized subsequent events.</font><font style="display: inline;font-family:Times New Roman;font-size:11pt;">&nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">

		</p>
		<p><font size="1"> </font></p><div style="width:100%">

		<p style="margin:0pt;text-align:right;line-height:100%;font-family:Calibri;font-size: 11pt">

			<font style="display: inline;"></font><font style="display: inline;">7</font><font style="display: inline;"></font>

		</p>

		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">

			&nbsp;

		</p>

</div><hr size="3" style="color:#999999" width="100%" align="center"></hr><p style="page-break-after:always">&nbsp;</p><div style="width:100%">

		<p style="margin:0pt;text-align:center;line-height:100%;font-family:Calibri;font-size: 16pt">

			<font style="display: inline;font-family:Copperplate Gothic Light;font-size:16pt;"><img src="pacb-20210519correspg001.jpg" style="width: 1.648in; height: 0.3857021in" alt="Picture 1"></font>

		</p>

</div>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;;font-size: 11pt"><font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">We additionally considered that u</font><font style="display: inline;font-family:Times New Roman;">ltimately, the decision to enter into the transaction with SoftBank was at management</font><font style="display: inline;font-family:Times New Roman;">&#x2019;s</font><font style="display: inline;font-family:Times New Roman;"> discretion</font><font style="display: inline;font-family:Times New Roman;">, and reflected the opportunistic evolution of our strategy in response to the </font><font style="display: inline;font-family:Times New Roman;">interest by SoftBank</font><font style="display: inline;font-family:Times New Roman;"> which occurred in 2021</font><font style="display: inline;font-family:Times New Roman;">. &nbsp;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">We appropriately disclosed the subsequent investment by SoftBank and the resulting </font><font style="display: inline;font-family:Times New Roman;">repayment of</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font><font style="display: inline;font-family:Times New Roman;">the Continuation Advances </font><font style="display: inline;font-family:Times New Roman;">liability</font><font style="display: inline;font-family:Times New Roman;"> to Illumina in our December 31, 2020 financial statements.</font><font style="display: inline;font-family:Times New Roman;"> We note that the timing of the charge </font><font style="display: inline;font-family:Times New Roman;">for the $52 million increase in the fair value of the Continuation Advances financial liability did not have an impact on management bonuses or compensation. We also do not believe it had a significant impact </font><font style="display: inline;font-family:Times New Roman;">on investors or other parties who reviewed our</font><font style="display: inline;font-family:Times New Roman;"> financial statements</font><font style="display: inline;font-family:Times New Roman;">, as we believe the users of our financial statements are focused on the strategic growth, product innovation and ultimate revenue potential for the Company, and not on the components of other income/expense</font><font style="display: inline;font-family:Times New Roman;">.</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:center;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;">*****</font>
		</p>
		<p style="margin:0pt;line-height:100%;text-align:center;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;">&#xFEFF;</font>
		</p>
		<p style="margin:12pt 0pt 0pt;text-indent:36pt;text-align:justify;text-justify:inter-ideograph;line-height:100%;font-family:Times New Roman;font-size: 11pt">
			<font style="display: inline;font-size:11pt;">Please direct any questions regarding </font><font style="display: inline;font-size:11pt;">this letter</font><font style="display: inline;font-size:11pt;"> to me at</font><font style="display: inline;font-size:11pt;">&nbsp;</font><font style="display: inline;font-size:11pt;">sgkim@pacificbiosciences.com</font><font style="display: inline;font-size:11pt;">&nbsp;</font><font style="display: inline;font-size:11pt;">or by telephone at (650) 924-8221</font><font style="display: inline;font-size:11pt;">. &nbsp;</font>
		</p>
		<p style="margin:12pt 0pt 0pt 216pt;line-height:100%;text-indent:36pt;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">S</font><font style="display: inline;font-family:Times New Roman;">incerely, </font>
		</p>
		<p style="margin:6pt 0pt 0pt 252pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Tahoma;text-decoration:underline;">&#xFEFF;</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font>
		</p>
		<p style="margin:6pt 0pt 0pt 252pt;line-height:100%;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;text-decoration:underline;">/s/ </font><font style="display: inline;font-family:Times New Roman;text-decoration:underline;">Susan Kim</font><font style="display: inline;font-family:Times New Roman;text-decoration:underline;">________</font><br /><font style="display: inline;font-family:Times New Roman;"></font><font style="display: inline;font-family:Times New Roman;">Susan Kim</font>
		</p>
		<p style="margin:0pt 0pt 0pt 252pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">Chief Financial Officer</font>
		</p>
		<p style="margin:6pt 0pt 0pt 252pt;line-height:100%;text-align:justify;text-justify:inter-ideograph;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Tahoma;">&#xFEFF;</font><font style="display: inline;font-family:Times New Roman;">&nbsp;</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent: -36pt;text-align:left;border-bottom:1pt none #D9D9D9 ;line-height:100%;text-justify:inter-ideograph;font-family:Times New Roman;font-size: 11pt">
			<font style="display: inline;color:#000000;">cc:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font style="display: inline;color:#000000;">Christian Henry</font><font style="display: inline;color:#000000;">, Pacific Biosciences of California, Inc.</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent: -36pt;text-align:left;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;line-height:100%;text-justify:inter-ideograph;font-family:Times New Roman;font-size: 11pt">
			<font style="display: inline;color:#000000;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font style="display: inline;color:#000000;">Brett Atkins, Pacific Biosciences of California, Inc.</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent:0pt;text-align:left;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;line-height:100%;text-justify:inter-ideograph;font-family:Times New Roman;font-size: 11pt">
			<font style="display: inline;color:#000000;">Michele Farmer, </font><font style="display: inline;color:#000000;">Pacific Biosciences of California, Inc.</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent:0pt;text-align:left;border-top:1pt none #D9D9D9 ;border-bottom:1pt none #D9D9D9 ;line-height:100%;text-justify:inter-ideograph;font-family:Times New Roman;font-size: 11pt">
			<font style="display: inline;color:#000000;">Andrew D. Hoffman</font><font style="display: inline;color:#000000;">, &nbsp;</font><font style="display: inline;color:#000000;">Wilson Sonsini Goodrich &amp; Rosati, P.C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>
		</p>
		<p style="margin:0pt 0pt 0pt 36pt;text-indent:0pt;text-align:left;border-top:1pt none #D9D9D9 ;line-height:100%;text-justify:inter-ideograph;font-family:Times New Roman;font-size: 11pt">
			<font style="display: inline;color:#000000;">Donna Petkanics, Wilson Sonsini Goodrich &amp; Rosati, P.C.</font>
		</p><hr style="border-bottom-style:solid;width:100%;height:2.25pt; ;color:#999" align="center"></hr>
		<p style="margin:12pt 0pt 0pt;text-indent:36pt;text-align:justify;text-justify:inter-ideograph;line-height:100%;font-family:Times New Roman;font-size: 11pt">
			<font style="display: inline;font-size:11pt;">&#xFEFF;</font>
		</p>
		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">
			<font style="display: inline;font-family:Times New Roman;">&#xFEFF;</font>
		</p>
		<p><font size="1"> </font></p><div style="width:100%">

		<p style="margin:0pt;text-align:right;line-height:100%;font-family:Calibri;font-size: 11pt">

			<font style="display: inline;"></font><font style="display: inline;">8</font><font style="display: inline;"></font>

		</p>

		<p style="margin:0pt;line-height:100%;font-family:Calibri;font-size: 11pt">

			&nbsp;

		</p>

</div><hr size="3" style="color:#999999" width="100%" align="center"></hr>
	</div></body>
</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>2
<FILENAME>pacb-20210519correspg001.jpg
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 pacb-20210519correspg001.jpg
M_]C_X  02D9)1@ ! 0$ 8 !@  #_X0 B17AI9@  34T *@    @  8*8  (
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MU]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0 'P$  P$! 0$! 0$! 0
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MAQQN>21&)&.]>4^)?^"C6A^%=#ETGX3_  ZM- B?)CGOHXH(H^V?L\'RD_\
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M;R$X\ZV:2*;RU_VI(FVK_M+7RUX-_P""PVBQZH?#WQ?^%NK>#IR!'<26[?:
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M>TQ/$GQP\5:[XE\::B%N+RUL[X"*)V&2LDSJ\DT@[N&4=?O=:X_XFP1^/O\
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MYZU[#_PY-^%G_0]>,/\ OJT_^,UX[^R#^V;\9OA+^SKX1\*>$OV<O$?C[0+
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M;16JLL4:PJ27*HH&2>IXHH'<L5\@^.OV2WT']J3P9\3O"-L3I4^JB;7+%/\
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MDJ %1<_*BC'U/- 'PU^R)_REO^-7_<:_]*X*Q=#\0)_P3]_X*5>)V\2EM/\
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M'Q)=V+2&173/4QEVC91T"H>]?>E]?6VE65Q=W=Q':VD"-++/,X2.-%&69F/
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6BBB@ HHHH **** "BBB@ HHHH __V0$!

end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
