Shares in Pressure BioSciences, Inc. (PBIO), a leader in the development and sale of broadly enabling, pressure cycling technology (PCT)-based instruments, have been under pressure since CEO Ric Schumacher filed an S1 announcing that PBIO was planning a registered financing in conjunction with an up-list to the Nasdaq. This created a bevy of short opportunists, who are the scourge of our industry, and really since Dodd-Frank have been the punishing factor in holding small companies down, not so much the legislation; yet, it has been these unscrupulous lenders disguised as bankers applying selling pressure (often in cahoots with the commission house where they clear the trades) on these small companies.
Opportunistic, small-company-destroyers do this often by shorting shares and not having to get a (legal short) borrow – and they are not agnostic in terms of what the company does. The opportunist does not care if these small companies are helping patients with cures, getting operational traction for clients or shareholders or rolling out a new beneficial technology. They do not discriminate, they do it just for the money.
Unfortunately, Dodd Frank has been a failure. This is evidenced when a small filing public company under $100m market cap has to bow to predatory shorts, but are required to sign on the dotted line for the 8K and the 10K and if they report incorrectly it becomes a criminal act, a felony. The only ones who benefited from Dodd Frank were the lawyers.
The problematic part of this equation is that regulations will ease and banking could become a Wild West quagmire of volatility before getting any better. We will be in uncharted territory regarding regulation for the next few years. I think in spite of this the rising tide of demand from a returning investor base, the re-entry of the public shareholder will occur. I see evidence that the public doesn’t care so much about expanding regulations – this never really helps – capital markets seek higher volume, and the day of the market maker have been replaced by aggressive algo traders who seek volume and create more, and they are easy to spot.
I think the public wants to be invested in the markets. This is why you see an expanded crowdfunding marketplace, with no real “investor qualifying” going on until the trigger is pulled to invest – then they are forced off the accreditation cliff. I see the crowdfunding area also expanding. There is room for everyone. I see investors flocking back into the market aggressively for the remainder of the decade.
Let’s look at our case study here on PBIO and evaluate how the
volume expanded since the company filed the S1. This is as clear as day. The
chart below tells the story, volume increased from 30,000 shares per day to
300,000 shares per day, representing a 10x increase. The question that should
be asked is, where is this volume coming from? The answer is – illegal shorts – knowing they will be able to cover before they feel any regulatory pressure
from the house. The house is part of the scam, too, or, what traders call collecting a nice “gate fee.” I’m not sure how they think this will play
out. At some point they halt the game or you drive all the companies out of
business. A lack of monitoring these short-sellers and Dodd Frank itself nearly accomplished this.
There is an old saying, “the best revenge is living well ” in business, the best revenge is to make money.
When I talk to smaller companies, I always say the same thing: companies are a reflection of what they earn and the industry multiple (example FaceBook is trading at 54x trailing revenue). This has never really changed. So, lets look at our case study and see what they have on tap because if PBIO is going to hold, a few things need to happen: the company needs to be in a position to make money and time needs to pass. Time is the enemy of these unscrupulous shorts. The company released news today that might lean toward
this revenue recognition.
Pressure BioSciences, Inc. (PBIO),recently announced that they have achieved CE Marking for the Barocycler 2320EXTREME, the Company’s recently released, next-generation PCT-based sample preparation instrument. PBI is now permitted to begin sales of the Barocycler 2320EXT in the European Economic Area.
Since 1985, achievement of CE Marking has been required for products in 24 different categories sold within the European Economic Area (“EEA”). Each product falls under one or more Directives, which determine the specific requirements the product must meet. When the CE Mark is affixed to a product, it signifies the manufacturer’s declaration that the product meets all applicable EU safety, health, or environmental requirements. Achieving CE Marking requires substantial cost, time, and effort from the manufacturer, but allows the product to be marketed and move freely throughout all 31 countries in the EEA that require the CE Mark.
The Barocycler 2320EXT is the most recent addition to, and the next generation of, PBI’s Barocycler family. It is a compact, bench top instrument offering many features and benefits not found in PBI’s earlier Barocycler models, such as data logging options, user-level security, computer-operated control with touch screen programming, and the ability to customize multiple pressure cycling parameters. These and other features have already positioned the Barocycler 2320EXT as an instrument of choice for life science key opinion leaders (“KOLs”) worldwide, when preparing protein samples for analysis.
Among these KOLs is Professor Ruedi Aebersold, a world-renowned protein chemist and Director of the Institute of Molecular Systems Biology in Zurich, Switzerland. Professor Aebersold has been a leading proponent of PBI’s PCT-based sample preparation methods prior to proteomic analyses for some time.
When asked to comment on the importance of sample preparation in research studies, and why his laboratory upgraded their sample preparation method to the Barocycler 2320EXT, Professor Aebersold said: “Not only do we need to consider the method of analyzing the proteome, but we must also recognize that the method of sample preparation used for protein extraction & digestion is equally important.”
Dr. Nate Lawrence, Vice President of Marketing and Sales for PBI, said: “Achievement of CE Marking for the Barocycler 2320EXT is an important next step in our commercialization plans for this powerful and enabling sample preparation instrument, especially since CE Marking is required prior to selling the Barocycler 2320EXT to the large and potentially lucrative biopharmaceutical market in Europe. We recently signed agreements with several strong distribution partners in Europe, our SCIEX co-marketing agreement is entering its second year (SCIEX is a global provider of laboratory instrumentation to the life sciences area, with a large presence in Europe), and Professor Ruedi Aebersold – one of the most recognized world leaders in proteomics – recently purchased two Barocycler 2320EXTs. We believe we are well prepared for our upcoming, planned launch of the CE Marked Barocycler 2320EXT in Europe. These are very exciting times for PBI.”
So, time is a key for PBIO, but the events that began when CEO Schumacher filed his S1 are all part of the plan for the company. The news has been brewing for shareholders for a long time and many know the story, but the addition of the volume oriented banker/short seller has brought the opportunist to the picnic and the decision to move up-exchange to Nasdaq will bring a new breed of investor – and thus prompt the current shorts to cover. This will cause the same effect as too many people trying to fit through a single door – and anyone who has watched a short covering rally knows what happens next.
I am impressed that through all the selling pressure shares have held strong to the .15 cent level, it must be frustrating for the short sellers to keep selling shares into a potential bottom all the while lowering their average price to this magic .22 cent level where everyone will be trying to fit through the same door. My suggestion is to watch this level very carefully.
Know that markets spend 85% of the time preparing to move and 15% of the time moving – lulling you to sleep – and then gaping in a direction. This is the dangerous part of this game for the short side – I know, I’ve been there.
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