August 7, 2012
Connecting the Dots in the Pressure BioSciences (PBIO) Story
We have written about Pressure BioSciences, Inc. (OTC:PBIO) from a variety of angles over the past few months, highlighting their distribution agreements and partnerships while talking about the impressive scientific validation of their Pressure Cycling Technology (PCT). This is an important time in the development of the company as they have moved from product development into full-blown commercialization and it seems as if there are plenty of investors sitting on the sidelines, perhaps waiting for more impressive revenue numbers. We think that the savvy investor might want to make a bit more of a leap and reap more benefits as the PBIO picture comes together.
The company has repeatedly offered guidance to the financial community, indicating that strong revenue growth should be the norm through 2012 and beyond. For Q1 2012 PBI reported revenue up 69% from Q1 2011 and there has been no indication that there will be a reversal of this trend in the upcoming quarters (Q2 numbers should be coming out soon). Distribution agreements and sales partnerships can take a while to bear fruit, so this year’s announcements of eleven new countries, four international distributors and four strategic US partners should provide fertile ground for the continued growth of the company’s revenues.
One aspect of the story that we have not highlighted to this point is the potential for a partnership or an OEM type of relationship with any number of heavy hitters in the sample preparation industry. Let’s take a look at one of many promising target markets, the mass spectrometry vertical, as an example.
Companies like Agilent Technologies, Inc. (NYSE:A), Life Technologies Corporation (NASDAQ:LIFE) and Thermo Fisher Scientific, Inc. (NYSE:TMO) are leaders in mass spectrometry equipment, which is widely used in the analysis of small molecules including proteins, DNA and RNA. This type of analysis is the cornerstone of much of today’s drug development, proteomics and biomarker research. Mass spectrometry also plays a crucial role in a wider range of industries like environmental testing, petroleum refining and even electronics. All told it’s a multi-billion dollar market opportunity.
Pressure Bio’s technology allows scientists to obtain the best possible samples by offering a highly controllable and repeatable way of separating the tissues and extracting the desired molecules. Studies have shown that PCT technology greatly enhances the effectiveness of existing mass spectrometry equipment and procedures. In fact, Thermo Fisher’s own scientists published a paper touting the benefits of PBI’s proprietary system.
Teaming up with companies like these is a logical next step for PBI, especially considering that these larger companies have much more robust sales organizations with established market penetration. A deal or two along these lines would dramatically impact the company’s revenue, conceivably far surpassing the aforementioned 69% growth.
Alternatively, a company like the ones mentioned above might see Pressure Bio as an acquisition target. With an impressive list of current customers including Amgen, Lilly, Biogen, the National Institute of Health and the Centers for Disease Control, the company has already demonstrated the viability of their technology. PBI’s market cap has been hovering in the $3-5 million range which is exceedingly low for a company at their stage of development, making a potential acquisition very attractive for all parties concerned.
Any way you slice it, Pressure BioSciences looks like an intriguing play. Plentiful scientific validation, a large and expanding market niche, patented and revolutionary technology, an experienced team of scientific and business professionals, growing revenues – each of these is like a piece of tile or glass contributing to the formation of a beautiful mosaic. We’ll call it the PBI Investment Opportunity and hang it on the wall. You should take a good look.
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