Grant Zeng, CFA
PBIO and KeraFAST Sign Worldwide E-Commerce Distribution Deal
On May 3, 2011, Pressure BioSciences, Inc. (PBIO) and KeraFAST LLC announced that they have entered into a non-exclusive, worldwide distribution agreement covering several of PBIO’s new sample preparation products. These products include the recently released The SHREDDER SG3 Extraction System; the novel MicroTube, MicroCap, and PCT Shredder sample processing tubes; and proprietary kits for the preparation of samples for DNA, RNA, protein, and lipid analysis.
KeraFAST is a leading vendor of life sciences tools in the rapidly growing area of research products distribution through e-commerce channels. KeraFAST is committed to providing the next generation of research tools to life science laboratories worldwide. KeraFAST is an emerging leader in the application of FASTCell™ keratin protein technologies for cell culture systems and in FAST® Slide protein microarrays, additionally providing a broad assortment of unique bioreagents, buffers, solutions and labware in its MaineSpring™, KeraFAST™ and The Investigator’s Annexe™ offerings.
Headquartered in Winston- Salem, North Carolina, with an additional location in Sanford, Maine, KeraFAST offers through e-commerce portal an extensive portfolio of innovative research products and services that are not available elsewhere.
What are the implications for PBIO?
PBIO is a life sciences company engaged in the research, development and commercialization of a novel, enabling platform technology called pressure cycling technology (PCT). The Company’s current product portfolio includes Barocyclers, PCT based instruments, and consumables, which include PULSE (Pressure Used to Lyse Samples for Extraction) Tubes as well as application specific kits (which include consumable products and reagents). The instruments and the consumables together make up the PCT Sample Preparation System (PCT SPS). The system follows the highly successful and profitable “razor and blade” business model.
The Company’s targeted market is research products and services for the life science industry. This market is comprised of academic research institutions (both private and government-sponsored), biotechnology and pharmaceutical companies, and other public and private laboratories. Currently, the Company provides PCT-based sample preparation products for genomic, proteomic, and small molecule studies.
Researchers at biological research laboratories must routinely prepare their samples prior to analysis. Sample preparation can be very challenging due to its complexity, time-consuming, and difficulties. The sample preparation market is a rather large and underserved market with tens of thousands of research laboratories worldwide needing high quality, affordable and easy-to-use sample preparation tools.
PBIO is an emerging leader in the sample preparation market with its unique and powerful PCT platform technology. The Company’s PCT technology has competitive advantages over existing technologies in the sample preparation market. As we pointed out in our previous research reports, PBIO is still in its early stage of commercialization and PCT is increasingly gaining recognition by research labs worldwide.
Collaboration such as the one established with keraFast is important for PBIO, which provides new channels for sales and distribution of its products in addition to the conventional sales channels. With KeraFast’s broad, rapidly growing, global e-commerce distribution channels, PBIO can increase their sample preparation market share significantly in a quick and cost-effect manner. We believe user adoption will accelerate in the coming years due to the focused marketing efforts by the Company.
We are impressed by the growth of consumables
As we mentioned before, PBI is still in the early stage of commercialization of its PCT technology. It takes time for research labs to recognize PCT’s superiority and advantage. Therefore, initial slow sales are understandable and acceptable. We believe sales of the equipment will continue to vary in the short term. But in the long run, we expect to see a relatively stable growth of PCT equipments year over year.
On the other hand, we have been very impressed by the growth of consumables. In fiscal year 2010, PBIO generated consumable sales of $104,924 compared to $70,343 during the prior year, an increase of $34,581 or 50%. We expect the trend will continue for consumables in the coming quarters. This growth is very important to the Company’s long term sustainable growth in our view. We remind investors consumables are recurring revenue source to the Company which are associated with the installation of PCT equipments. When more and more equipments are installed, more consumables will be used. The numbers of installed equipments will eventually go down, but the use of consumables will increase each quarter as the equipment base becomes larger. Although currently, revenue from consumables accounts for only 12% of total PCT related revenue, this number will become larger going forward.
KeraFAST has developed a successful marketing approach using the power and tremendous reach of e-commerce, which combines well with PBIO’s traditional marketing approach. Together, the combined marketing activities should bring greater visibility to PBIO and to its sample preparation products, which we believe will result in increased revenue for PBIO in the coming quarters.
For a free copy of the full research report, please email scr@zacks.com with PBIO as the subject.
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