SoftBank to Make $900 Million Investment in Pacific Biosciences
February 09 2021 - 9:07PM
Dow Jones News
By Maureen Farrell
SoftBank Group Corp. plans to put $900 million into red-hot
gene-sequencing company Pacific Biosciences of California Inc., as
the Japanese technology conglomerate ramps up a new public-equity
investing effort.
PacBio, as it is known, produces next-generation DNA-sequencing
systems used to research diseases and develop treatments. The
investment, in the form of convertible debt, is designed to help
accelerate the commercialization of the company's technology,
SoftBank and PacBio plan to announce Wednesday.
It comes on top of a roughly 6% stake in PacBio that SoftBank
had already accumulated and will give the Japanese investor
significant sway over the Menlo Park, Calif., company.
PacBio has a market value of $7.4 billion after a dramatic jump
in its shares in recent months that was sparked in part by a new
joint venture with Invitae Corp., a medical-genetics company.
PacBio, whose shares are up 11-fold since July, has also brought in
new management, including a chief executive.
SoftBank, best known lately for making big investments in
private technology companies out of a $100 billion fund, has been
retooling, selling off large holdings and buying back stock. It has
also increased its focus on publicly traded companies. The PacBio
investment will be made through SoftBank's recently established
asset-management arm, SB Northstar, which invests in listed tech
companies.
The unit has recently made bets on companies including Kahoot, a
Norwegian online-educational-game platform, and Sinch, a Swedish
firm that helps companies communicate with customers using
cloud-based tools. Both are up since SoftBank invested.
SoftBank just announced a record-breaking quarter for the $100
billion Vision Fund and a net profit overall equivalent to about
$11 billion.
SB Northstar posted an investment loss of almost $1.6 billion,
but SoftBank Chief Executive Masayoshi Son said on an investor call
that it was notching gains now. The unit, in which Mr. Son has a
one-third stake, made waves last year when it placed a big bet that
the stock prices of some large tech companies would go up.
The PacBio investment is part of SoftBank's plan to build up its
portfolio of biotech and life-sciences companies, people familiar
with the strategy said. SoftBank has recently invested in the
initial public offerings of six U.S. life-sciences companies, these
people said.
Roughly a year ago, PacBio's larger competitor Illumina Inc.
called off plans to acquire the company in a $1.2 billion deal that
was announced in November 2018. Illumina said it was backing away
following challenges from the Federal Trade Commission.
Illumina paid PacBio a $98 million breakup fee. But under their
arrangement, if PacBio raised more than $100 million subsequently,
it would owe Illumina $52 million. PacBio will now have to pay that
sum.
"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.
It will also enable PacBio to lower the price tag for its
systems, which is expected to lead to more rapid deployment,
PacBio's recently named CEO, Christian Henry, said in an interview.
He called the SoftBank investment a "transformational
transaction."
Write to Maureen Farrell at maureen.farrell@wsj.com
(END) Dow Jones Newswires
February 09, 2021 20:52 ET (01:52 GMT)
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