The company's patented Pressure Cycling Technology (PCT) platform uses rapid and repeating cycles of hydrostatic pressure at controlled temperatures to extract cell components in the preparation of a biological sample, such as DNA, RNA, and proteins from humans, animals and plants, for further study.
The applications of the company's PCT-based products 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.
Early last week, Pressure BioSciences said that Ironridge BioPharma would buy $500,000 in shares of Series E convertible preferred stock of the company.
Each share of the 500 shares of preferred stock to be sold to Ironridge is convertible into roughly 980 shares of common stock, which is determined by dividing the stated value of the Series E preferred stock of $1,000 by a fixed conversion price of $1.02 per share.
The conversion price is not subject to any price anti-dilution protection, and Ironridge will receive no warrants. There are also few restrictive covenants and no amortization provisions in the transaction, the company said.
"The deal immediately boosts PBIO’s balance sheet. As of December 31, 2011, PBIO had cash of $223,000, and in February, 2012, PBIO closed on an $800,000 private placement. With current financing, the company should have cash of about $0.7 million at hand right now," said Zacks analyst Grant Zeng, CFA, in the note.
Further, the report said that the conversion price of $1.02 represents a premium of 64.5 percent over the then share price of $0.62, with no warrants and no restrictive provisions.
"This is unusual since most financing for small cap biotech companies are toxic and diluting to existing shareholders. This validates PBIO’s technology and its commercial potential," Zeng added.
The relationship could be “the beginning of a long and mutually beneficial partnership”, said Zacks, as Ironridge said in the statement on April 9.
"The Fund is not in the habit of doing bridge financings. There is a good chance that PBIO might be looking to go back to the Fund for additional funding," Zacks further stated.
The preferred stock sold will accrue dividends at 10.5 percent per year, subject to a credit risk and make-whole adjustment, and is payable in cash or shares of registered common stock at the discretion of Pressure BioSciences.
Under certain conditions and subject to certain limitations, the company said it may require Ironridge to convert their preferred stock into common stock. Ironridge said it has never shorted the company's stock, and does not hold any short position in the company.
Zacks concluded: "The Ironridge deal is absolutely good news for PBIO investors. With a favorable long term partnership, PBIO is well positioned to grow its business in 2012 and beyond.
"It should still be in investors’ fresh memory that PBIO has been making every effort to roll out its aggressive commercialization initiatives for its Pressure Cycling Technology (PCT)-based products.
"Within one year, the fompany has established 4 co-marketing or distribution agreements worldwide. This is a cost-effective way to significantly increase PBIO’s market penetration and increase sales. We expect to see incremental sales results during the first half of 2012 and major impact in 2H2012."
Since Pressure BioSciences began commercial operations in the middle of 2007, it has come a long way, releasing a number of PCT-based products geared towards the $6 billion sample preparation market, 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.
Already, the company has installed around 200 of its PCT Barocycler instruments plus required consumables in laboratories. The 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.
Indeed, Pressure BioSciences has been accelerating its commercialization efforts as of late.
In March, the life sciences company inked another distribution deal with Netherlands-based life sciences company LA Biosystems BV, and a month earlier it announced the signing of a co-marketing and selling agreement with Digilab. Late last year, the company inked a partnership with IUL to distribute its PCT product line in Germany and Switzerland.
"We think PBIO is undervalued at current price of $0.60 and represents a great investment opportunity now. Ironridge is doing the right thing by investing in the company right now," Zeng said.
Zacks has an "outperform" rating on Pressure BioSciences' shares.
Pressure BioSciences announced in March that the Henry C. Lee (HCL) Institute of Forensic Sciences will evaluate the use of the company's PCT platform for the extraction of DNA and other biomolecules in a number of forensic areas.
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