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PB

PRESSURE BIOSCIENCES INC (PBIO)·Q2 2014 Earnings Summary

Executive Summary

  • Mixed quarter: products/services revenue rose 56% YoY to $0.31M, but the absence of grant revenue drove total revenue down 14% YoY; operating loss was essentially flat YoY while EPS improved to $(0.05) largely on non-cash derivative gains .
  • Launch of the Barozyme HT48 high‑throughput instrument in mid‑June (on time) and strong consumables growth (+86% YoY) were operational positives; management reiterated a focus on increasing products/services revenue vs 2013 and pursuing strategic/financing alternatives (potential spin‑offs) .
  • Interest expense rose sharply on financing activity; cash was minimal at quarter‑end, and the company flagged going‑concern uncertainty, underscoring reliance on external capital despite improving product traction .
  • Near‑term stock catalysts likely center on Barozyme HT48 evaluations/orders (possibly late 2014), securing a strategic distribution partner by year‑end, and any spin‑off decisions emerging from the IssuWorks engagement .

What Went Well and What Went Wrong

What Went Well

  • Products/services revenue growth and consumables strength: products/services +56% YoY to $307k; consumables +86% YoY to $48k, reflecting improving installed‑base monetization .
  • On‑time launches: Barozyme HT48 (mid‑June) and earlier HUB880 launch; CEO: “we got our high throughput instrument out on time...and...achieved [sales] results” .
  • Strategic initiatives: engagement of IssuWorks to evaluate spin‑offs; collaboration with Parabase Genomics to position PCT in next‑gen sequencing sample prep .

Quotes:

  • “Product and services revenue for the quarter increased 56%... including an increase of 86% in consumable sales” .
  • “We… got our high throughput instrument out on time… fully functional” .
  • “We’ve engaged… IssuWorks for… strategic and financing alternatives including the possible spin-off of vertical market applications” .

What Went Wrong

  • Revenue decline and grant lapse: total revenue down 14% YoY to $307k due solely to $0 grant revenue vs $161k in Q2’13 .
  • Elevated financing costs: interest expense rose to $342k vs $63k in Q2’13, reflecting debt discounts and financing fees; minimal cash ($9k) and going‑concern uncertainty persist .
  • Limited near‑term sales impact from new products: management does not expect meaningful 2014 sales from HUB880/Barozyme (possible Q4 impact depends on build/evaluations) .

Data points:

  • Operating loss roughly flat YoY at $(0.85)M; gross margin on products/services ~56% (vs 57% LY) reflecting greater channel sales .
  • Balance sheet pressure: current liabilities $2.75M vs total assets $1.48M at 6/30; cash $9k .

Financial Results

MetricQ2 2013Q1 2014Q2 2014
Total Revenue ($)$357,736 $404,147 $307,464
Products & Services Revenue ($)$196,522 $404,147 $307,464
Grant Revenue ($)$161,214 $0 $0
Gross Margin % (Products/Services)57% 56% 56%
Operating Loss ($)$(858,026) $(782,366) $(846,757)
Interest Expense ($)$(63,110) $(244,612) $(341,649)
Net Loss per Share (basic/diluted)$(0.10) $(0.25) $(0.05)

Revenue mix and KPIs:

MetricQ2 2013Q1 2014Q2 2014
Consumables Revenue ($)$26,034 $54,612 $48,417
Total Operating Expenses ($)$1,215,762 $1,186,513 $1,154,221
Cash & Equivalents (period end, $)NA$428,537 $9,369

Notes:

  • EPS improvement in Q2’14 was driven in part by a $585k non‑cash gain from decreased fair value of derivative liabilities (warrants/convertible options) .

Guidance Changes

Metric/TopicPeriodPrevious GuidanceCurrent GuidanceChange
Products & services revenue trajectoryFY 2014Grow vs 2013 (prior commentary) Reaffirmed: “continue to increase... over 2013 levels” Maintained
Barozyme HT48/HUB880 launch timing1H14/2Q14Launch by mid‑June (Barozyme); HUB880 released in March Achieved; launched on time Achieved
2014 sales impact from new instruments2H14Not specifiedDo not expect 2014 sales impact; possible Q4 if builds/evals progress quickly New detail (conservative)
Strategic partner for distributionBy year‑end 2014Goal implied by launch plansTargeting securing partner within 4–6 months New target
Spin‑off decision (verticals) via IssuWorksNext 4–6 monthsNot previously specificAim to be in position to decide within 4–6 months New target
Manufacturing plan (Barozyme/HUB880)2H14Not specifiedComplete build of 25 units in 2H14; long‑lead parts in hand New target
GrantsFY 2014Actively pursuing Hopeful of resumption before year‑end Maintained (timing color)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2013)Previous Mentions (Q1 2014)Current Period (Q2 2014)Trend
High‑throughput automation (Barozyme HT48)Planned launch; record FY’13 product/total revenue backdrop On target for mid‑June release Launched mid‑June; expected to open partner/customer doors; auto microplate format Execution to commercialization
New products (HUB880)—Released and initial sale (Mar 19) Limited 1H sales; building inventory; possible Q4 impact Early commercialization
Strategic alternatives (spin‑offs)——Engaged IssuWorks; evaluating spin‑offs within 4–6 months Newly introduced
NGS sample prep positioning——Parabase Genomics collaboration; PCT role in sequencing sample prep New adjacency
Grants/government programsCompleted prior grants in 2013 No grants; pursuing more No grants; hopeful resumption before year‑end Stable pursuit
Financing/capital—Series K tranches raised; derivatives impacted results Additional financings; higher interest expense; going concern language Persistent need

Management Commentary

  • Strategic focus on revenue mix and launches: “We set... goals... to continue to increase product and service revenue over the rest of this year compared to last year” .
  • Product strategy and market fit: “Now our instrument can align with their instrument... We are now offering the ability to have the advantages of PCT in the... micro‑titer plate” .
  • Resource constraints and strategic options: “We are a technology‑rich, somewhat cash‑poor company… [engaged] IssuWorks for… strategic and financing alternatives including the possible spin‑off…” .
  • Consumables traction: “Sales of consumables… increased by 86%…” .
  • Conservative near‑term outlook for new platforms: “Don’t expect that our sales will be impacted in this year... however... could impact our fourth quarter” .

Q&A Highlights

  • Spin‑off playbook: CEO referenced prior success spinning out Panacos at Boston Biomedica; a spin would be externally funded with licensing revenue back to PBIO if pursued .
  • Micro‑Pestle potential: Management sees significant opportunity in small biopsy sample prep with single‑tube workflow and reduced contamination/loss .
  • 2H sales cadence: Increases would be driven by existing product lines; HUB880/Barozyme sales would be additive if any ship in time .
  • NGS partnerships: Discussions extend beyond Parabase; collaboration expected to spur broader interest post‑launch .
  • Pathogen inactivation angle: Historical PCT efficacy vs anthrax; pressure shown to inactivate viruses like HIV; team will evaluate relevance to Ebola .

Estimates Context

  • Wall Street consensus: Not available in S&P Global for PBIO (missing CIQ mapping). As a result, no consensus EPS or revenue estimate comparison for Q2 2014 can be provided at this time. We attempted to retrieve S&P Global consensus, but no mapping exists for PBIO in the database (tool error).
  • Implication: Given limited coverage and small-cap profile, buyside models should emphasize internal trajectory (products/services growth, consumables attach), financing cadence, and timing of Barozyme evaluations to potential orders .

Key Takeaways for Investors

  • Execution on product roadmap is evident (on‑time HT48 launch), and consumables growth supports improving installed‑base monetization; sustained products/services growth vs 2013 remains the core operating KPI .
  • Near‑term P&L leverage is constrained by loss of grant revenue and higher financing costs; derivative revaluation noise aided EPS this quarter but is non‑operational .
  • Balance sheet risk is material (low cash, going‑concern), keeping equity/debt market access central to the story until product revenue scale increases .
  • Strategic catalysts (distribution partner, potential spin‑off decisions, NGS collaborations) could unlock channel access and non‑dilutive economics; monitor IssuWorks process over next 4–6 months .
  • Barozyme HT48 is the key medium‑term thesis element; management does not expect a 2014 revenue step‑function, but late‑year evaluation wins could improve 2015 visibility .
  • Watch consumables trend and gross margin stability given increased channel mix; confirm that margin holds near mid‑50s as volumes scale .
  • For trading, headline‑sensitive items include any announced partner agreement, instrument evaluation conversions, and financing/spin‑off updates .

Appendix: Additional Press Releases and Prior Periods

  • We located no standalone Q2 2014 earnings press release in the filing set; the company filed its Q2 2014 10‑Q (Aug 14) and hosted a Q2 call (Aug 15). Two subsequent 8‑Ks furnished investor presentations (Aug 25 and Sep 16) – – – –.
  • Prior quarter (Q1 2014) reference points: revenue $404k; operating loss $(0.78)M; gross margin 56%; initial HUB880 release and reiterated Barozyme mid‑June release .

All claims and figures are sourced from the company’s 10‑Q for Q2 2014, Q1 2014 10‑Q, and the Q2 2014 earnings call transcript as cited above.