Pacific Biosciences is bringing in an industry pioneer, Michael Hunkapiller, as its new CEO after a disappointing first year on the market with its new breed of DNA sequencing instrument.
The Menlo Park, CA-based company (NASDAQ: PACB) said today that CEO Hugh Martin has resigned effectively immediately, and is being replaced by Mike Hunkapiller, who helped build Applied Biosystems (now part of Life Technologies) into one of the DNA sequencing industry leaders over the past two decades.
Martin will get a severance package that includes a one-year lump sum equal to his base salary, a six-month consulting contract at $20,000 a month, and accelerated vesting of his PacBio stock options, according to a regulatory filing. Hunkapiller will start with a base salary of $400,000, and will get an option grant to buy as many as 1 million shares of PacBio stock, according to the filing.
The writing could have been interpreted as being on the wall back in October, when Hunkapiller, 63, a member of the board since 2005, stepped up his involvement to become full-time executive chairman of the PacBio board. The company introduced its new $700,000 sequencing machine to the market in April, and hit its first quarter sales goal. But then PacBio, and other rival sequencing companies, ran into challenges as scientists worried about federal research budget cuts that are curbing their ability to buy expensive new scientific tools. PacBio cut 130 jobs in September—28 percent of its workforce—and said it generated $10.6 million of sales in its second quarter on the market. That was a slight drop from its debut quarter.
Investors have punished the company for its performance, driving the stock down from a high of $16.85 a share all the way to $2.96 at the opening of today’s trading. The company, which has raised more than $580 million from investors, now has a market valuation of about $160 million. The company went public at about an $800 million valuation in October 2010.
“We are thankful for Hugh’s dedication and efforts in transforming PacBio from an early stage R&D company to a leader in single molecule technology,” said Bill Ericson, a general partner at Mohr Davidow Ventures and PacBio’s lead independent director, in a statement. “Mike brings unmatched expertise, experience and relationships with customers in the life science tools market and is uniquely qualified to lead the company through its next stage of growth.”
Martin added in the statement that, “I am in support of this decision and am looking forward to identifying my next exciting career venture.”
The PacBio instrument uses a different technology than other sequencers made by San Diego-based Illumina (NASDAQ: ILMN) and Carlsbad, CA-based Life Technologies (NASDAQ: LIFE). PacBio’s instrument has been used by scientists in high-profile investigations, providing fast answers to help scientists understand the Haitian cholera outbreak and the German E.coli scare of the past couple years. The instrument in its current form isn’t ideal for sequencing human genomes, and its larger competitors, as well as Mountain View, CA-based Complete Genomics (NASDAQ: GNOM) have made that more of a focus.
Hunkapiller also has another gig with Alloy Ventures, and he said he will continue to represent Alloy on the boards of a trio of small companies—NuGen, Verinata Health Systems, and RainDance Technologies.
Martin, who was listed as 57 in the company’s last proxy statement, has been public about his diagnosis with multiple myeloma, a serious cancer of the bone marrow, although he said back in October he was feeling fine physically, and he appeared to be fine when he appeared at an Xconomy genomics event that month in San Francisco. The disease was considered a death sentence a decade ago, but 5-year survival rates have dramatically increased with the introduction of new therapies from Millennium: The Takeda Oncology Company and Celgene.
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