Pacific Biosciences of California, Inc., provider of the PacBio(R) RS II Sequencing System, announced that it has achieved a second development milestone under its development, commercialization and license agreement with F. Hoffman-La Roche Ltd (Roche), earning an additional $10 million.

The development, commercialization and license agreement with Roche covers diagnostic products for clinical use, including sequencing systems and consumables based on Pacific Biosciences' Single Molecule, Real-Time (SMRT(R)) technology. Under the agreement, Roche has the exclusive right to commercialize and sell the developed diagnostic products for clinical use, subject to certain terms and conditions.

Pacific Biosciences received from Roche a non-refundable up-front payment of $35 million in September 2013, and was eligible to receive up to an additional $40 million based upon the achievement of development milestones. Pacific Biosciences has now earned $20 million of the $40 million potential milestone payments pursuant to the agreement.

"We are on track to deliver a system to Roche by the second half of next year, consistent with our original target," said Michael Hunkapiller, President and CEO of Pacific Biosciences. "I have been very pleased to see the productive spirit of collaboration under which our companies have been working for the last 18 months, and I'm confident that we will continue our record of milestone achievement for the duration of the development project."

Dan Zabrowski, Head of Sequencing and Tissue Diagnostics at Roche commented: "We are very pleased with the progress on this collaboration, and look forward to transitioning from product development to product sales in the future. Our goal has been to accelerate the integration of DNA sequencing into routine diagnostics, and we believe we are well on our way to achieving this with PacBio."

The proceeds from the development milestone will be recognized as contractual revenue in the Pacific Biosciences financial statements for the quarter ending June 30, 2015.