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This is a very interesting and opportune time to talk about Pressure BioSciences (OTCQB:PBIO), a healthcare company focused on solving major challenges in biological sample preparation, which is a necessary and crucial part of life sciences research. The company develops, markets, and sells proprietary laboratory instrumentation and associated consumables to the estimated $6 billion life sciences sample preparation market.
Pressure BioSciences’ products are based on the unique properties of both constant (static) and alternating (pressure cycling technology, or PCT) hydrostatic pressure. PCT is a patented enabling technology that uses alternating cycles of hydrostatic pressure between ambient and ultra-high levels to safely and repeatedly control bio-molecular interactions. To date, Pressure BioSciences has installed more than 250 PCT systems in approximately 160 sites worldwide. There are over 100 publications citing the advantages of the PCT platform over competitive methods, many from key opinion leaders.
Sample preparation is often complex, time consuming, and, as Pressure BioSciences believes, one of the most error-prone steps of scientific research. It is a widely-used laboratory undertaking, the requirements of which drive a large and growing market. It has been a long time coming, but Pressure BioSciences is showing considerable market validation and has impressively grown here with minimal capital and a lean staff base.
PCT is an enabling platform technology based on a natural, physical process that had not previously been widely-used to control biomolecular interactions. PCT uses internally developed instrumentation and consumables capable of cycling pressure between ambient and ultra-high levels (45,000 psi or greater) at controlled temperatures and specific time intervals, to rapidly and repeatedly control the interactions of bio-molecules, such as proteins, DNA, RNA, lipids, and small molecules.
Beyond the Next-Generation Barocycler 2320EXTREME
The company’s lead instrument product is currently the Barocycler 2320EXTREME, which was released for sale in June 2016 and quickly achieved CE Marking (permitting its sales in all 31 countries of the European Economic Area) in February 2017. This next-generation PCT-based sample preparation instrument was also named “Best New Instrument for Sample Preparation 2017” by Corporate America News in March 2017. With CE Marking, Pressure BioSciences is now permitted to sell the Barocycler 2320EXT in the European Economic Area. This is a great development for the company for future and current revenue flows. PBIO has also recently invested in significantly expanding its sales and marketing capacity to take advantage of its new and enhanced distribution capabilities, including its co-marketing agreement with worldwide life sciences analytical instrument leader SCIEX (a Danaher Company).
“I’m very pleased to report that our new, next-generation instrument is selling and it’s selling well,” said Richard T. Schumacher, President and CEO of Pressure BioSciences. “We have a new ISO-certified manufacturer, and they are very good at building quality instrumentation. We are in the midst of a build of 25 instruments: 10 have already been built and sold, and the remaining 15 will be available for sale between now and the end of September. Our goal is to sell more than half of these in the third quarter, which would result in record revenue for the quarter. With aggressive marketing combined with our new five-person sales force hitting the field hard after Labor Day, this is very possible. It has been a long, hard road, but we believe it’s all finally coming together.”
Beyond the 2320EXT, Pressure BioSciences’ Barocycler® product line features a number of other laboratory instruments that subject samples to cycles of pressure from ambient to ultra-high levels (45,000 psi or greater), and then back to lower pressures/ambient, in a precisely controlled manner.
Here is a list of products that are key for Pressure BioSciences’ revenue growth:
Barocycler® NEP3229 – The Barocycler® NEP3229 is capable of processing up to three samples simultaneously using PBIO’s specially designed, single-use PULSE® Tubes and up to 48 samples simultaneously using the company’s specially-designed MicroTubes.
Barozyme HT48 – The Barozyme HT48 is a high throughput, bench-top instrument designed for accelerated enzymatic digestion of proteins at high pressure. Typically, protein digestion using the enzyme trypsin (a common yet important laboratory procedure) requires overnight incubation to reach completion. However, this can be reduced to under one hour when the digestion procedure is carried out under PCT.
Barocycler® HUB440 – PBIO believes the Barocycler® HUB440 is the first portable, ready-to-use, “plug-and-play,” high-pressure generator for the laboratory bench. The Barocycler® HUB440 is capable of creating and controlling hydrostatic pressure from 500 psi to 58,000 psi. It is computer controlled and runs on software that was specially-written by PBIO in LabVIEW (software from National Instruments Corporation). PBIO owns the rights and has a license to use the specialty LabVIEW software.
Barocycler® HUB880 – The Barocycler® HUB880 is one of PBIO’s newer instruments; it is expected to be routinely available for sale during the first six months of 2018. It is a compact, portable, bench-top, ultra-high-pressure generator that uses an air pressure-to-liquid pressure intensifier, allowing the user to generate fluid pressure as high as 90,000 psi with input air pressure of just 126 psi.
The Shredder SG3 – The Shredder SG3 is a low shear mechanical homogenization system for use with tough, fibrous, and other difficult-to-disrupt tissues and organisms. The Shredder SG3 System uses a variety of Shredder PULSE® Tubes to directly and rapidly grind a biological sample, which, when combined with selected buffers, can provide effective extraction of proteins, DNA, RNA, lipids, and small molecules from tissues and organisms.
A New Chapter at Pressure BioSciences
As mentioned earlier, Pressure BioSciences has impressively overcome some financial and operational challenges over a critical period. Now the company stands strong and looks great in the scientific community. This is a key inflection point for Pressure BioSciences, as it took many years to get here. The proof is in the company’s numbers, as evidenced by its latest numbers. The company just announced record second quarter and first half 2017 results.
For the first half of 2017, revenues grew 7% to $1,091,729 versus the prior year. The revenue increase was primarily due to higher revenue from instrument sales, and the company believes the trend will continue in the second half of 2017. Instrument sales increased 16% year-over-year to $742,977, while products and services revenue increased 8% to $1,006,398 for the first half of 2017. Meanwhile, operating loss increased 5% to $2,203,394, primarily due to the expansion of sales and marketing, which has already begun to produce sales results for the company.
“With about half of the third quarter completed, we are already over $400,000 in expected sales for the third quarter. And to think that we have not even reached September yet, which has historically been a very good revenue month for PBIO,” Schumacher said. “We have never had a $600,000 quarter before, so we are very pleased with the progress we are making, especially with respect to our new, five-person sales team. To that point, two instrument orders have been secured from two of our new salespeople. We did not expect the new salespeople to play any significant role in our third quarter, since it usually takes about six months of intense training to get a new salesperson to the level we want before they are allowed out in the field. So, we are obviously very pleased that we have received purchase orders from two customers amounting close to $100,000 total that were generated from two of our new salespeople.”
Expanding Marketing and Sales Capabilities
As covered previously, Pressure BioSciences contracted with EKG Sales Associates, a well-known life sciences lead generation firm with a contact database of 50,000 scientists from academia, government, pharma, and biotech. That’s in addition to the four (soon-to-be five) new full-time field sales directors it has hired. Compare this to having only one full-time and one part-time field sales directors in the US, and several international distribution partners for the past half dozen or so years.
The company has also recently signed agreements with several strong distribution partners in Europe, and the 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).
Wall Street Validation for Pressure BioSciences
Most recently, Zacks Small-Cap Research issued a new report on Pressure BioSciences and was very high on the company’s growth prospects:
“With the significantly expanded sales and marketing capabilities, as well as the newly established multi-national co-marketing partner SCIEX, we continue to believe revenue will grow significantly in 2017 and beyond,” Zacks analyst Grant Zang, CFA wrote. “In terms of valuation, we think PBIO shares are undervalued based on the Company’s fundamentals. When we look at the Company and the industry in which it operates in detail, we realize that PBIO is a company with huge opportunity and one that can grow its revenue and earnings at a tremendous rate in the next few years. With a rapidly growing market worldwide, combined with its unique technology and broad range of product offerings, the Company is well positioned to boost its top line and bottom line in the coming years. According to our long-term financial model, the company’s products and services revenue will grow at a compound annual growth rate (CAGR) of 83% in the next four fiscal years from 2017 to 2020.”
Pressure BioSciences is hitting an inflection point based on having a broad base of products in the market currently, and validating those products with great sales figures. Pressure BioSciences is also aggressively growing the sales team in key areas and in a great new product development phase. It is great to note that, despite all the growing pains and lean staffing problems, management has brought the company this far. Risk has now been significantly reduced, and I expect interesting developments and catalysts in the upcoming year.
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