Grant Zeng, CFA
New Products Launches are on the Horizon
On February 7, 2011, Pressure BioSciences, Inc. (PBIO) announced that it has unveiled four key instruments in its 2011-2013 product pipeline at the annual meeting of the Association for Mass Spectrometry Applications to the Clinical Lab (MSACL) held from Feb 5 to Feb 9 at San Diego, CA. The MSACL meeting is important to mass spectrometry manufacturers since MSACL is an active and influential supporter of the development of new mass spectrometry applications for clinical medicine, including tests for the diagnosis, treatment, and prognosis of clinical disorders. The MSACL meeting is attended by physicians, scientists, and other healthcare professionals, and therefore is an important stage and opportunity for major mass spectrometry manufacturer in the U.S. to show their new products.
The four new instruments unveiled by PBIO include:
Barocycler HUB440: a manual or computer controlled, compact, portable, and versatile high pressure generator for multiple bioscience applications. Estimated release: Q3 2011.
Barocycler FFPE Protein Extraction Service: a service offering the enhanced extraction of proteins from formalin-fixed, paraffin-embedded (FFPE) samples using a modified Barocycler instrument that combines the advantages of pressure cycling, high temperature, and certain reagents. Estimated release: 2012.
XstreamPCT(TM) HPLC Digestion Module: for automated, in-line, on-demand PCT-enhanced protein digestion; the first module in PBIO’s PCT-based HPLC platform. Estimated release: 2013.
Barocycler HT Multiwell (48-384): for high throughput, PCT-enhanced biomolecule extraction/accelerated enzymatic digestion; process 48 – 384 samples. Estimated release: 2013.
The Company has demonstrated proof-of-concept. Data has also been generated and patents have been filed on these new products. In addition, ten presentations related to the Company’s current PCT-based Barocycler product line are scheduled to be presented at the meeting. These presentations are expected to highlight the advantages of PBIO’s current products when used in research related to mitochondria, cancer, and Klotho, a potential biomarker for a number of significant human disorders, including chronic renal disease, osteoporosis, and Alzheimer’s disease.
The four new instruments will offer key advantages to current products in the mass spectrometry area. The Company will focus significant resources to help ensure the remaining development and subsequent release of these products will proceed as efficiently and rapidly as possible. PBIO also plans to grow its in-house sales and marketing capabilities and staff, and to find strategic partners to help it rapidly take advantage of this opportunity.
We believe the four key instruments unveiled at MSACL by PBIO represent an important addition to the Company’s existing pressure cycling technology (PCT) platform. These new products will make a significant impact in the way that research scientists prepare their samples for analysis, particularly scientists working in the mass spectrometry market which is a multi-billion dollar market.
PBIO’s plan is to becoming a major supplier of sample preparation instruments and consumables to the large and growing mass spectrometry market. In this regard, we are very pleased to see that the Company has put a lot of efforts to come up with new products and services and has generated results. The successful launch of these new products will boost the Company’s revenue in the coming years.
Strong Financial Results are Expected for 4Q and Full Fiscal Year 2010
We expect PBIO will report a strong financial performance for the 4Q and full fiscal year of 2010 soon.
Total revenue for 4Q may increase by 23% to $0.43 million, while revenue for the fiscal year of 2010 will reach $1.5 million, an increase of 20% year over year. Although quarterly revenue for product sales may fluctuate, we are more optimistic for 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 the 3Q of 2010, PBIO recorded a 22% year over year growth in consumables sales. 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 6.3% of total PCT related revenue, this number will become larger going forward.
We maintain our Outperform rating on the Company’s shares and reiterate our six to twelve month price target of $5 (see Valuation and Recommendation below).
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