Submitted by David Gould through our Trefis contributor tool
In the last year alone, Pressure BioSciences (PBIO) was awarded $910K in grants from the National Institute of Health and Department of Defense. Over the last half decade, management has focused its R&D and operations on proteomic, genomic, and small molecule studies. This research has culminated in the development of pressure cycling technology (PCT), which offers an innovative lab sample preparation solution that control molecular behavior. At a market cap of only $4.6B, Pressure BioSciences is significantly undervalued. It is the only company in its peer group that trades below book value. Gould Partners recommends that investors aggressively buy shares to capitalize off of the company’s beginning commercialization efforts.
With 24 issued patents – 10 of which have secured an international emerging market presence – and more than 100 independent publications confirming the strength of PCT, Pressure BioSciences has laid the solid scientific foundation necessary for accelerating sales. Impatient investors have discounted the company during its development stages; but, now, there are more signs than ever that operations are on the verge of taking off.
The healthcare firm already has over 150 customers like Thermo Fisher Scientific (TMO) and Amgen (AMGN). If Pressure BioSciences can attain the endorsements of leading federal agencies and multi-billion dollar firms, then, surely, it has the capability of meaningfully penetrating its market. The company has 17 leading brands that address unmet needs in mass spectrometry, forensics, and histology. Compared to competing solutions, their platform technologies allow for better accuracy and safety in extracting nucleic acids, proteins, and small molecules. We have reviewed the product portfolio and view the 2H11 beat as an inflection point indicating that shares of PBIO are ready to surge on the emerging sales effort.
In the second half of 2011, revenue spiked 66% off of the first half. Fourth quarter consumable sales were up 77% sequentially. Perhaps most important to new investors is that 20 presentations were made worldwide to scientists on the advantageous of PCT. Scientists at the University of North Texas and Florida International University have echoed these presentations by confirming that PCT has improved DNA yields.
Since the company trades 10% below book value, it is also a prime takeover target. Pressure BioSciences already has demonstrated the efficacy of its solutions, it now needs to work on distribution. Towards that end, management has started to shift the attention towards increasing its marketing staff, international distributors, and partnerships. But a buyout would immediately thrust the company’s product to an existing client base, so it is most likely being considered by Thermo Fisher and even Abbott Labs (ABT). The latter is splitting into two companies – one of which will be focused on medical devices, forensics, and diagnostics. A Pressure BioSciences takeover would unlock significant revenue synergies by complementing existing offerings. Proper sample preparation – the beginning process of physical lab test – is critical for trustworthy readouts. PCT provides the answer.
From its innovative platform technology to its leading agency capital backing, Pressure BioSciences has excellent risk/reward. It is, in our view, one of the top healthcare plays of 2012. Our last micro-cap pick in the medical device industry, InVivo Therapeutics (NVIV.OB) has gained 95% since we first alerted investors. Pressure BioSciences is likely to at least do the same.
DISCLOSURE: The distributor of this research report, Gould Partners, is not a licensed investment adviser or broker dealer. Investors are cautioned to perform their own due diligence as information contained within this report has been derived from public sources and cannot be guaranteed by us to be fully accurate. We are a consultant to a third-party EAG, representing Pressure BioSciences and have received one thousand dollars for independent research. Always discuss investments with a licensed professional before making any financial decision. Statements made herein are often “forward-looking statements” as stipulated under Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934, and the Private Securities Litigation Reform Act of 1995. Since these statements are uncertain, actual results may be materially different from those expected.