Pressure BioSciences’ core pressure cycling technology to become scientific "investigators choice"

Pressure BioSciences (PBI) (NASDAQ:PBIO) is a company operating in the life sciences market, whose pressure cycling technology (PCT) used to extract cell components has a myriad of potential target industries, and according to CEO Richard T. Schumacher, is among the most under-appreciated businesses listed on the Nasdaq today, with enormous growth potential.

Indeed, Schumacher, who previously founded two Nasdaq-listed biotech companies, is not the only one convinced of Pressure BioSciences' potential, as Zacks Equity Research also sees the company as undervalued, assigning it an "outperform" rating last month and a 12-month price target of $5.00, way up from its current trading price of 85 cents.

Since the company began commercial operations in the middle of 2007, it has come a long way though still in the early stages of commercialization, releasing a number of PCT-based products geared towards the $6 billion sample preparation market and covered by 24 US and foreign patents, including three pressure-generating instruments named Barocyclers, a patent-pending sample homogenization device (The Shredder SG3), five types of single-use processing containers and six different, application-specific reagent kits.

Pressure BioSciences' key product, the Barocycler, is an instrument that uses rapid and repeating cycles of hydrostatic pressure at controlled temperatures, in order to extract cell components in preparing a biological sample, such as DNA, RNA, proteins, and lipids from humans, animals, and plants, for further study.

The PBI sample preparation system has been proven to be safer, more accurate, reproducible, and much faster than current cell extraction methods - with up to 48 samples able to be processed from a wide variety of cells and tissues within minutes. The closed system, which reduces sample handling and therefore minimizes exposure to toxins for scientists, also works with computer-controlled protocols that ensure consistent sample extraction every time, said Pressure BioSciences.

The technology, which has been dubbed as "novel and enabling" by Zacks, is entering the sample preparation market, an industry that covers virtually everything preceding scientific analysis that, admits Schumacher, has not changed much for several years, but is known as the one of the most error-prone steps of scientific research. The PCT sample preparation system though does not just break apart samples, but can also "exquisitely control" them, allowing for, in some cells, two to three times more recovery of unique proteins, Schumacher said, which can be crucial to understanding why a person did or did not recover from a certain disease.

According to recent market reports, the company believes there are roughly 80,000 laboratories around the world that require the extraction of DNA, RNA, proteins, lipids and small molecules from biological samples for their research studies. While Schumacher concedes that the accurate control of the PCT system is not necessary in all sample preparation applications, the company aims to capture between 5 to 10 percent of this existing market in the next three to five years, amounting to roughly between 4,000 to 8,000 labs. This should mean big business considering Barocycler instruments cost between $25,000 to $48,000 per unit, and with every Barocycler sale, there is an expected stream of consumable sales for years afterwards.

Already, Pressure Biosciences has installed around 200 of its PCT Barocycler instruments plus required consumables in laboratories, with clients including the FDA, the FBI, Harvard, UCLA, ThermoFisher Scientific, Merck, and Novartis, among a host of others. The applications are endless - from the key $2 billion target market of mass spectrometry, an analytical technique used to determine the characteristics of molecules, to biomarker discovery, forensics and counter-bioterrorism, among other uses.

Earlier this month, the company was awarded a near $0.7 million phase two grant from the US Department of Defense to help fund the development of a new, fully-automated high pressure system based on the PCT platform for the processing of viruses and bacteria. To detect dangerous pathogens and to protect soldiers, safe and rapid inactivation of infectious samples and the extraction of biomolecules from a pathogen such is anthrax is required. Pressure BioSciences has the only technology in the world that can kill anthrax but also leave it in a form in which it can still be studied.

In a statement, Schumacher said: "This grant award is very important and timely for PBI, as it provides $649,000 in non-dilutive funding for the company, payable over two years.  Inclusive of our previously announced NIH SBIR I award, this brings the total of non-dilutive funding awarded PBI over the past two months to $809,000."

Indeed, in September, the company was also awarded a phase one grant from the National Institute of General Medical Sciences of the NIH to fund the development of a system for the automated processing and preservation of tissue samples - which could be used by scientists to track a marker of a disease years later in a previous biopsy sample of a patient.

Aside from counter-bioterrorism and biomarker discovery, the PCT-based systems have also been receiving recognition for their potential use in the forensics field.

In Zacks' research report, the firm noted: "PCT sample preparation platform technology is a superior method to apply to the forensic field. One major bottle neck in forensic sample preparation is the tiny amount of DNA at the crime scene. Therefore, methods used for sample preparation must have a high yield. Pressure BioSciences PCT technology seems to be the choice."

In August, Dr. Bruce McCord from Florida International University presented updated results of the PCT platform for forensic applications at an international conference in Vermont, specifically with regards to differential extraction of DNA from male versus female cells - an important issue with sexual assault cases.
Currently, methods used to separate a woman's DNA from a man’s DNA is done manually, often time-consuming and yielding unsatisfactory results in cases like rape.

But Dr. McCord's data, based on the hypothesis that male and female cells should respond differently to pressure cycling based on their unique composition, shows that PCT treatment can in fact produce selective extraction of DNA from a man’s sperm head and a woman’s cell, allowing for improved identification of criminals involved in sexual assault.

Another study conducted by the University of North Texas Health Science Center (UNTHSC) also showed an increase in DNA yield from forensic swab samples prepared with PCT treatment, compared to samples prepared without the technology.

"The data presented by these studies are additional confirmation that PCT can improve the detection of DNA in challenging forensic samples. These methods can be used by forensic laboratories and criminal justice agencies worldwide to better identify missing persons or perpetrators of violent crimes," Zacks said in the report.

The company's Barocycler instrument even appeared in the season opener of the highly-watched CBS crime show CSI:NY in September, in a scene alongside lead actor Gary Sinise.

The buzz on Pressure BioSciences’ technology is booming, and the company is now focused on expanding its sales and marketing efforts. Management is optimistic that it will raise sufficient amount of capital to support its continued operations and growth plans during the second half of the year and beyond. In fact, the company has plans to bolster its current sales team of just three after raising the necessary funds

In August, the company said it expects revenue for the second half of this year to be "significantly greater" than total revenue for the first half of 2011, which came in at approximately $370,000.

Pressure BioSciences, which already has three international distribution agreements in place, also said during a conference call that it is making significant progress towards signing at least one major, worldwide PCT product distribution agreement this year, and is currently in active discussions with potential partners.

Schumacher said he believes that the PCT platform behind the company’s products is among the best in terms of market potential he has seen. His assertion comes from experience, having been a part of the founding group of Trinity Biotech (NASDAQ:TRIB), a company with a current market cap of nearly $207 million, and a founder of Panacos Pharmaceuticals, a former Nasdaq-listed company that had a market cap of over $600 million whose lead anti-viral product was bought by Myrexis in 2009.

Operationally, the company is in fast gear, unveiling four future products in February, with the first launching this past August, and the remainder due to be introduced late next year or in 2013. Of significance, Pressure BioSciences insists it is on track to release its pressure-enhanced formalin-fixed, paraffin-embedded (FFPE) protein extraction service in late 2012. The system will combine the advantages of pressure cycling, high temperature, and certain reagents, to achieve up to six times greater recovery of unique proteins.

Zacks noted that at the 2011 American Society for Mass Spectrometry (ASMS) annual meeting, six presentations highlighted Pressure BioSciences' PCT technology as a "superior method for sample preparation".

"We believe PCT technology will become investigators choice eventually when more and more data come out to support its superiority to existing technologies," the equity research firm concluded.