Pressure BioSciences (PBIO) recently released financial results from the third quarter ended September 30, 2017, which included record revenue with gains notched in all segments, along with a business update that showed the company’s business model is gaining traction and building on the momentum established in the first half of this year. With new products coming to market and a much larger sales team, Pressure BioSciences is better positioned now than ever before to address a wide spectrum of markets with its Pressure Cycling Technology (PCT) and Ultra Sheer Technology (UST) platforms.
Pressure BioSciences By The Numbers
For the quarter, Pressure BioSciences reported its highest revenue ever for any quarter at $646,061, up 21% from the prior year quarter. The gain was most notable in a 158% year-over-year increase to $84,594 in sales of consumables related to its PCT-based Sample Preparation Systems. These Systems are used throughout the worldwide life sciences industry by academic, government, biotech, and biopharmaceutical research laboratories. Instrument sales improved to $410,906 in the latest quarter from $383,527 in Q3 2016.
The company’s quarterly net loss widened to $2.34 million, or $2.07 per share, versus $945,207, or 96 cents per share, in the year earlier period. The bigger net loss was due in part to a $400,000 credit taken in the third quarter of 2016 related to a former professional service provider, as well as to increase staff (primarily sales and marketing) and expenses related to a withdrawn registration statement.
For the first nine months of 2017, revenue climbed to $1.74 million, up 12% from $1.56 million during the first nine months of 2016. Instrument sales were up a similar amount at $1.15 million, while revenue from consumables increased 34% to $200,223.
Net loss rang in at $7.89 million for the first three quarters of 2017, up from $5.93 million during the same period a year earlier. Interest expense was a significant part of the net loss.
Strong Undertones for a Successful Future
A net loss by a growing company certainly isn’t a surprise, especially considering the quantifiable corporate advancements made by Pressure BioSciences so far in 2017, particularly as of late.
For starters, the company recently spent significant capital to expand and enhance their one-person field sales team to a bona fide field sales team with five full-time sales managers plus a Director of Sales for North America. To that point, PBIO CEO Ric Schumacher said during the November 14th conference call discussing Q3 that he expects revenue growth to continue to remain strong and “accelerate as we move into the fourth quarter and into next year” on a year-over-year basis.
Schumacher also said that he was excited about the new sales team, the new products in development, and the next generation Barocycler2320EXT instrument, for which Schumacher is rightfully beaming with pride over the fact that the instrument has been named a finalist for the vaunted 2017 R&D 100 Awards. In the world of innovation, the R&D 100 Awards sit at the top of the mountain in acknowledging revolutionary technology, earning the nickname the “Oscars of Innovation.” Whether PBIO’s Dr. Lazarus stands at the podium or not when the final results are announced, Schumacher says his team already considers themselves a winner just for being elected a finalist alongside far bigger companies like General Electric (GE) and venerable institutions like MIT.
For investors, the finalist designation embodies the tantalizing and potentially explosive opportunity for PBIO with the Barocycler 2320EXT.
Talking about the new product, which is replacing the original Barocycler 2320 that’s been around for eight years, Schumacher remarked We believe this this instrument is absolutely going to take us to the next level.” He further commented that the new 2320EXT instrument can go to higher pressures, has exquisite pressure control, and has far superior data input, data output, and data reduction capabilities than the previous Barocycler model.
“The new bells and whistles offered by the Barocycler 2320EXT were not added to make the instrument look fancier. Rather they were added to help the research scientist have more control over their critical sample preparation process, and to allow them to extract better quality biomolecules for their studies. After all, better quality starting material means better opportunities make discoveries and improve our understanding of diseases like cancer, stroke, and diabetes,” said Schumacher during the call.
These qualities are expected to make the Barocycler 2320EXT very attractive to biopharma manufacturers and research scientists worldwide. In fact, it has already caught the attention of an unnamed biopharma, that Schumacher is only at liberty to refer to at this point as “one of the largest biopharmas in the world,” with hopes that one day he won’t be bound for confidentiality reasons, and will be able to reveal their name. This multi-national, multi-billion-dollar company has grown from a tiny customer of PBI to a much bigger customer while providing invaluable guidance on software development to meet GMP/GLP standards, a key to broad market adoption. Their new, updated software allows the Barocycler 2320EXT to be used throughout the complete and extensive drug development, manufacturing, and quality control process – potential uses that weren’t previously possible with the legacy Barocycler.
This as yet unnamed biopharma has recently bought three PCT Systems from PBIO for one of its facilities, and a fourth system for another facility, a microcosm of what they are capable of to outfit all their locations, much less what could happen if the Barocycler 2320EXT receives full sector exposure.
The market expansion efforts aren’t isolated to North America either. At the start of November, PBIO dubbed Professor Tiannan Guo’s laboratory at Westlake Institute for Advanced Study as its first Center of Excellence (CoE) in China. As head of the CoE in China, Dr. Guo, a world-renown proteomics expert who has worked with PBIO on PCT for years, will demonstrate and educate others in Asia of the value of PCT and PCT-SWATH, the latter being a sample preparation platform that combines the Barocycler of Pressure BioSciences and the mass spectrometry instrument and associated software of PBI’s co-marketing partner SCIEX. PCT-SWATH was co-developed by Dr. Guo.
PCT on Steroids Equals UST
Elsewhere, the first days of October featured two patents being issued in China for Pressure BioSciences Ultra Sheer Technology. UST is a new way to use high pressure to efficiently break down molecules into nanoparticles in a reproducible and stable manner. Schumacher spoke at some length and fielded questions during the Q&A portion of the Q3 financial call about the tremendous implications in being able to break particles down to such a small level that two substances – such as oil and water – can be durably combined into a long-term, stable mixture, often requiring minimal or chemical additives. In addition to the life sciences sector, particularly the sample preparation market where PBIO specializes currently, applications for UST abound, including paints (no more stirring), lubricants, cosmetics and food/dairy (preserving, stabilizing and mixing), to name just a few.
In October, Pressure BioSciences partnered with the supercritical fluid (SCF) extraction experts at Phasex Corporation to collaborate on the development of methods combining UST with SCF methods to enable the development of stable, water-soluble nanoemulsions, e.g., pharmaceuticals, cosmetics, and nutraceuticals, including CBD-enriched plant oil.
Investors with questions didn’t miss a beat with the potential to use PCT/UST in the burgeoning cannabis industry. While careful to emphasize that more research needs to be done, Schumacher noted that some companies have already expressed great interest in the potential of UST to increase the quality, bioavailability, and stability of nutraceuticals (especially CBD), as well as other consumer products.
With patents and collaboration in tow, Schumacher says working on possibilities “is not something that is two or three years out; this is something that is maybe two or three weeks or two or three months out.”
It’s Growth Acceleration Time
Against the backdrop of many pieces of the puzzle that have already been put in place, Pressure BioSciences seems very ready for vertical and horizontal growth. The improved Q3 2017 results were still ahead of some of the key drivers. The new, GMP/GLP software that is part of the Barocycler 2320EXT hasn’t begun to be showcased to even a small part of the entire market. While hired, the sales team is only now being trained, and it will be weeks before they can successfully attack the thousands of potential users throughout the U.S. One can only imagine the results of future quarters, when the sales team, the new Barocycler 2320EXT, and UST all begin clicking simultaneously.
Armed with the new technology and under the directive to increase revenue at an expedited clip, the sales team should deliver a measurable top line increase in short order, even with the ramp-up time common to the industry.
Essentially through word of mouth, trade shows and existing customers, PBIO management is already staring at the good problem of having trouble keeping inventory and, as Schumacher says, they haven’t even begun pushing the fact the new software is GMP/GLP compliant. Marketing push on the compliance factor “is going to happen before the year is out,” according to Schumacher.
Schumacher further added that even though the fourth quarter can be lumpy with sales because of the holidays, they already have sales, purchase orders, or high probability purchase indications that they that exceed total sales for Q4 2016. He’s not saying that sales will double from the prior year quarter, but he is confident in his guidance that revenue for the fourth quarter of 2017 will soundly beat the prior year quarter.
While the clear focus is on the Barocycler 2320EXT for immediate impact, Schumacher says the company has many projects in motion, four in particular (inclusive of the UST project), that are going on in the background as well. Schumacher referred to his company as now having two legs on what will be a multi-leg stool. From the outside looking in, it looks like it’s not far from those other legs being bolted on to make said stool stronger and more stable.
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