Zacks Equity Research issued a positive note on Pressure BioSciences (PBIO) (OTCQB: PBIO) after the life sciences company announced last week that a financing deal with Ironridge BioPharma.
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.
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.
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
"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.
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
"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
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.
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.
"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.
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
Indeed, Pressure BioSciences has been accelerating its commercialization efforts as of late.
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.
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.
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.