- Pacific Biosciences stock skyrocketed on Wednesday amid a reported $900 million investment from SoftBank.
- SoftBank's SB NorthStar unit will buy $900 million of notes with an initial conversion price of $43.50 per share.
- The SB NorthStar unit reported losses of $1.6 billion in SoftBank's most recent earnings release.
Pacific Biosciences spiked as much as 29% on Wednesday before paring gains after the company revealed that Softbank plans to invest $900 million into its business.
The $900 million investment, which will be in the form of convertible debt, will come from the recently established asset-management arm of SoftBank, SB NorthStar. The investment adds to the unit's roughly 6% current stake Pacific Biosciences.
The Menlo Park, California-based company is a genomics systems developer that focuses on providing state-of-the-art DNA-sequencing equipment to scientists.
"This strategic investment by SoftBank validates our leadership position in the long-read DNA sequencing market and enables us to further accelerate our growth strategies", said Christian Henry, President and Chief Executive Officer of Pacific Biosciences.
SB NorthStar came under scrutiny for producing $3.7 billion in trading losses using risky options strategies in late 2020. Though the unit recovered in SoftBank's most recent earnings release, it reported $1.6 billion in losses.
The group recently made some winning investments to help right the ship however, including a $215 million bet on a Norwegian online-educational game platform called Kahoot and a $690 million stake in the Swedish cloud communications company Sinch.
Pacific Biosciences has had a remarkable run since July, with shares up 1,167%. The company has benefitted from new management and a joint venture with Invitae Corp., a medical-genetics company, to develop epilepsy tests.
A 15-year, non-exclusive deal with Roche to help increase the availability of next-generation sequencing-based in vitro diagnostic (IVD) tests has also added to the growth story.
PacBio had planned a $1.2 billion merger with larger competitor Illumina about a year ago, but the deal fell through after anti-monopoly regulatory agencies in the United States and the UK began asking questions.
PacBio received a $98 million "reverse termination fee" when the deal failed to go through, but now the company will be forced to return $52 million of that sum because the SoftBank deal is considered a "change of control" transaction.
"We believe that PacBio's [technology] will be the de facto standard tool for population genomics, fundamentally altering the practice of health care," said Akshay Naheta, CEO of SB Management, which runs the Northstar portfolio.
Pacific Biosciences CEO, Christian Henry, said the investment will also enable the company to lower prices for its systems, per the Wall Street Journal.
Shares of Pacific Biosciences traded up nearly 17%, at $46.25 per share as of 10:49 AM EST on Wednesday.