PBIO Achieves CE Marking For its Next Generation Sample Preparation Instrument.
PBIO announced that it has achieved CE marking for its sample preparation instrument, the 2320Extreme. This is a major step for the Company to sell the 2320Extreme in Europe. Similar to FDA approval in the United States, products sold in Europe need CE marking within the European Economic Area (EEA). CE marking on a product is a manufacturer’s declaration that the product complies with all the essential requirements of the relevant European health, safety and environment regulations. The CE marking will allow PBIO to market its products freely in the 31 countries in the EEA that require CE marking.
Combined with the co-marketing deal with SCIEX (a leading provider of mass spectrometry instruments), we believe that CE marking for the 2320Extreme adds an additional level of credibility and strengthens marketing efforts which should lead to increasing sales. Also, Dr. Ruedi Aebersold, a world-renowned protein chemist is one of the key opinion leaders that uses the 2320Extreme in his laboratory for research studies and has been a leading proponent in PBIO's PCT-based sample preparation methods prior to proteomic (study of proteins) analyses for some time.
We are currently projecting modest QoQ growth through FY17 and believe that these key strategic decisions by the Company will increase revenue in FY18/FY19. Also, the Company is well positioned to generate consistent long-term revenue through its consumables. As PBIO’s instrument sales increase, consumables should accelerate at an increasing rate; at some point, we see consumable sales exceeding instrument sales.
PBIO’s technology uses hydrostatic pressure to break open cells; allows for brand new discoveries that were not previously possible. PBIO’s 2320Extreme uses the Company’s patented Pressure Cycling Technology (PCT) platform which uses alternative cycles of hydrostatic pressure between ambient and ultra-high levels (up to 90,000 psi) to safely and conveniently control the rupture of cells from human, animal, plant and microbial tissue samples.
Current cell lysis (breaking down of the membranes of cells) to extract proteins, lipids, DNA and RNA from tissues has been generally limited by the poor solubility of biomolecules in traditional buffers. These methods include mechanical distortion, sonication and manual grinding techniques.
PBIO’s 2320Extreme system is computer operated with a touch screen interface. It allows scientists to more accurately and quickly dial in pressure ranges to break open cells to detect virus, bacteria or proteins for further analysis. This unique technology uses three components: Barocycler instrument, MicroTube adapter processing tubes and cartridges, and PBIO’s detergent free extraction reagent ProteoSolve SB-kit. For more information on the product, please read the full research report:
Figure 1: PCT MicroTube(left) and Barocycler 2320EXTREME microprocessor instrument(right)
We are valuing PBIO using a 4.0x EV/S multiple applied to our 2019 sales estimate of $20.9M to derive a target price of $1.43. We believe that PBIO has a strong potential for revenue growth in the near to mid-term given its recent CE marking on its product and also the co-marketing deal with SCIEX (a subsidiary of a $50 billion company). Near-term, we believe that PBIO will continue to increase its sales in the scientific research industry. Currently, the company is in the process of adding a dedicated internal sales and marketing team, and that should positively impact the revenues.
Figure 2: Income Statement model