PBIO: Recent Launch of Barozyme HT48 will Accelerate Revenue Growth

Zacks Small Cap Research

By Grant Zeng, CFA

OTC:PBIO

High Throughput Barocycler Launched At the ASMS Annual Meeting   


PBIO (PBIO) officially launched its much anticipated High Throughput PCT-based Barozyme HT48 for the enhanced preparation of proteins for mass spectrometry analysis at the American Society for Mass Spectrometry (ASMS) Annual Conference on Mass Spectrometry and Allied Topics held June 15-19, 2014 in Baltimore, Maryland.


The bench-top Barozyme HT48 is a first-in-class, high throughput PCT-based instrument. It is capable of processing up to 48 samples simultaneously using the Company's new and proprietary BaroFlex 8-well processing strips.


The high throughput system is a breakthrough technology for PBIO. PBIO announced in June 2013 that they have achieved and passed proof-of-principle objectives in their multi-year investment into the development of a high throughput (HT) system for their patented pressure cycling technology (PCT) platform. The High Throughput (HT) Barozyme HT48 uses the disposable microwell strips that are universally used by labs worldwide. PBIO’s ability to perform PCT with these strips will allow the Company to directly integrate its PCT instruments with the current automated robotically-driven microwell templates used by thousands of labs worldwide.

This breakthrough also has the potential to significantly accelerate its growth in existing and new PCT-based applications and products, and its ability to attract and form new strategic partnerships.

Many research laboratories working with biological samples worldwide use automated, HT sample preparation and analytical systems in their studies. HT systems generally use sample handling robotics and “multiwell” test plates in standardized formats (e.g., 24, 96, or 384 wells per plate) for processing and testing large numbers of samples simultaneously. The multiwell plate is often processed in an automated fashion, allowing scientists to perform other important tasks while samples are being processed unattended.

Although a number of studies have shown significant advantages of the PCT platform in preparing biomolecules (e.g., DNA, proteins, and lipids) for analysis, the PCT platform continues to be used primarily in small but important research studies. Unlike today’s popular HT multiwell plates that use an automated, unattended approach, the PCT Platform uses individual test tubes that require a lot of manual sample handling. These manual sample handling requirements have prevented the PCT platform from being better accepted by the research community. To that end, PBIO’s new HT multiwell format will substantially enhance and accelerate the acceptance of the PCT platform in the life sciences R&D marketplace. This technology breakthrough is a game-changer for PBIO in our view.

From a financial perspective, we believe the new Barozyme HT48 has the potential to significantly fuel growth and increase revenue for both existing and new PCT-based applications and products, as soon as in the second half of 2014.  We also believe that the new Barozyme HT48 high throughput system can greatly facilitate the commencement of new strategic partnerships.

With product sales increasing, two new instruments released in the first half of 2014 (PBIO released the Barocycler HUB880 in March 2014),

Based on the strong financial performance in 1Q14, as well as the two new products launch in 1H14 and continued marketing efforts by management, we estimate that revenue will continue to grow in the remainder of 2014.

We think revenue ramp in 2014 will be driven by sales from both existing and new products (instruments and consumables), and from the Company’s expanding distribution network. Specifically, we model product sales will reach $1.65 million in fiscal 2014, an increase of 58% over $1.05 million product sales for fiscal 2013.

PCT Platform Highlighted at ASMS Annual Conference Throughout Week


In addition to the successful launch of Barozyme HT48 at the 2014 ASMS meeting, PBIO’s PCT platform has also received a lot of publicity with eight presentations by six separate research groups on the uses and advantages of PCT. Study results indicated that utilizing the Company's patented PCT platform in the preparation of samples for analysis resulted in critically enabling quality and/or improved time or cost efficiency of test results.


ETH Zurich and the University of Zurich

Dr. Tiannan Guo from laboratory of Dr. Ruedi Aebersold, internationally acclaimed protein chemist and Professor of Molecular Systems Biology at ETH Zurich and the University of Zurich, presented on PCT SWATH, a method they developed that combines the many advantages of PCT with SWATH, a revolutionary mass spectrometry method from AB SCIEX. Dr. Guo's and Professor Aebersold's results indicate that PCT SWATH could significantly reduce overall processing times for protein analysis and biomarker discovery by mass spectrometry while concomitantly decreasing test cost and increasing test quality. AB SCIEX is a global leader in life science and analytical technologies, including mass spectrometry.


Lab Corp

Dr. Christopher Shuford and colleagues presented data on the development of a mass spectrometry-based thyroid cancer test. A major step in the potential test workflow is the rapid digestion of the thyroglobulin protein and its subsequent identification by mass spectrometry. PCT was shown to digest thyroglobulin significantly faster than all three comparative methods, including two microwave systems (current competitive alternatives to PCT for protein digestion) and the Lab Corp standard heat-based method.

FDA

Dr. Melinda McFarland and colleagues presented data on the development of a mass spectrometry-based method to improve the identification of bacteria involved in food-borne outbreaks by testing contaminated food samples. Thirty-six Salmonella isolates originating from food-borne outbreaks were studied. PCT was the method of choice for extracting the pathogen from the samples. Current methods to determine the causative agent of food-borne outbreaks primarily use DNA detection. The authors showed that bacterial protein expression profiles could potentially enhance pathogen identification in food-borne outbreaks.

University of Minnesota and Others 

Dr. Brian Sandi and colleagues reported in their presentation on the discovery of target pathways and promising biomarkers of COPD-associated lung cancer. PCT was the sample preparation method of choice, as the authors had previously shown that PCT could extract substantially more proteins from lung tissue than other extraction methods.

Northeastern University and Others

Peganum harmala (P. harmala) is a perennial plant.  The seed has been used for medicinal purposes and as a condiment. The seed contains the hallucinogenic and narcotic compounds harmine and harmaline.

Dr. Adam Hall and colleagues reported that PCT followed by the rapid separation and analysis by DMS mass spectrometry enhanced the detection of harmine and harmaline, as compared to standard GC mass spectrometry.

The purpose of the study was to evaluate DMS mass spectrometry as a potentially better analysis method for the characterization of suspected P. harmala seeds, as compared to GC mass spectrometry.  PCT was the method of choice for a faster and more efficient extraction method.

The Baltimore VA Medical Center

Formalin fixation followed by paraffin embedding (FFPE) is the most commonly used method worldwide for the preservation of tissues for pathology evaluation. Archival repositories that contain millions upon millions of FFPE tissue samples represent an invaluable resource for retrospective studies of disease progression and response to therapy.  Unfortunately, the analysis of FFPE samples is highly problematic because molecules (including proteins) of interest are chemically trapped in the tissue samples by formalin fixation.

In two different presentations, Dr. Carol Fowler, Dr. Jeffrey Mason, and colleagues reported substantial improvements in protein recovery from paraffin embedding (FFPE) tissue samples of four-fold (4x) when extraction was performed by PCT.

We believe the data presented at the 2014 ASMS meeting will encourage and accelerate new researchers to try PCT.

We think PBIO is more like a development stage biotech company. We have a price target of $2.00 per share, which values the company at $26 million in market cap based on 13 million outstanding shares. This valuation is still very conservative in our view. As long as the Company can execute its growth strategy correctly, we believe this goal is achievable. Patient investors will get rewarded.

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