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PBI Hoping Revenue Rebound, Exercise of Warrants Will Lead to Additional Staffing

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By Tony Fong

Buoyed by a 46 percent rebound in revenue for 2009 and a hoped-for influx of cash from the exercise of warrants, Pressure BioSciences' CEO this week said that the firm is in hiring mode.

The company this week reported that revenue climbed to $350,340 in the fourth quarter, which ended Dec. 31, 2009, up 5 percent from the year ago period when it posted $334,041 in receipts.

Full-year 2009 revenue rose 46 percent to $1.24 million from $852,263 in full-year 2008. That, along with proceeds of up to $1.5 million from the exercise of warrants that are set to expire soon, prompted company CEO Richard Schumacher to say during a conference call that for the first time in "several years" PBI will look to hire people.

The plan right now, he said, is to add at least two sales people to its current sales staff of three, and at least one hire in applications research.

"There are a number of laboratories that are interested in [PBI's] technology but they need help in specific applications they are working on, and if we can bring in an extra pair of hands we can give them that help," Schumacher said.

To be sure, there is no guarantee the company will meet its proceeds target from the warrant exercise. Also, the firm is emerging from a rough year during which it laid off eight staffers — 40 percent of its total staff at the time — closed one R&D facility, and suspended several R&D projects.

The warrants in question were issued in February 2009 and are set to expire on April 28. In a document filed with the US Securities and Exchange Commission this week, PBI said it had sent a notice to holders of the outstanding warrants extending the exercise period until the end of the business day April 27. Each warrant is exercisable for preferred stock at $12.50 per share until then.

Certain investors, PBI added, had exercised their warrants between November 2009 and last month and purchased 19,330 shares of preferred stock for an aggregate purchase price of $241,625.

During his conference call Schumacher said that he is "very hopeful" that all remaining holders of the outstanding warrants will exercise their warrants, which would raise another $1.3 million for the company.

"As everybody knows, we have been living from hand to mouth," he said. "If indeed all of these warrants are exercised … this will be the first time in several years that we will have enough cash to hire some people back."

The firm has one open sales position and has interviewed several people for it, he added.

Though the South Easton, Mass.-based firm remains in survival mode, in the 16 months since restructuring its business in the face of a reluctant credit and equities market, PBI has slowly regained its footing (PM 12/04/08).

At the time the company said it was having trouble attracting investors, and as a result had enough cash to last only until the middle of 2009. In the past year, though, it has been able to tap into a pool of about 35 new investors.

Last week PBI said it had raised $500,000 in the second tranche of its $2.5 million Series B placement, bringing the total amount raised to about $1.66 million. The firm closed on the first tranche in November, raising $1.16 million.

A year ago, the company raised $1.8 million in a private placement.

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As of Dec. 31, 2009, PBI had $1.6 million in cash and cash equivalents, up 85 percent from $868,208 reported the year before.

PBI's lead technology is its pressure cycling technology for sample preparation that uses ultra-high pressure to induce lysis so that cell components can be extracted from biological samples.

The company's lead product is the Barocyler instrument. During the fourth quarter 2009, PBI installed 12 of the systems, compared to 10 in the year-ago period, bringing the total number of such systems installed for all of 2009 to 54, compared to 41 in 2008.

The firm defines an installation as any transaction that generates revenue, including sales and leases.

Revenue in Q4 2009 from PCT products and services was $245,674, up from $233,256. For full-year 2009, revenue from PCT products and services was $831,602, compared to $655,252 in 2008.

A goal of PBI in 2009 was to find a strategic partner to help it market, sell, and distribute its products, in particular, its PCT products. That was not achieved, and in 2010 PBI will continue to seek such a collaboration.

Schumacher said the company is especially interested in a partner that can help PBI sell "in areas where we feel that we have clear advantages over the competitive landscape that's out there now."

PBI is continuing to talk to several companies, he said, without elaborating.

In addition to a rebound in revenue, PBI has lowered it cash-burn rate. The company had stated a goal of lowering its average quarterly cash-burn rate to $600,000 for 2009 from more than $1 million in 2008. In the fall, it raised the mark to $650,000.

This week, PBI said that for 2009, its cash-burn rate was $644,000 per quarter.

That contributed to a 36 percent reduction in the firm's operating loss of $3.2 million for 2009, from $4.9 million in 2008.

Net loss for 2009 shrank 48 percent to $2.6 million from $4.9 million in 2008.

In the fourth quarter, operating loss was $777,144, compared to $900,100 in Q4 2008. PBI did not disclose a net loss or profit for the fourth quarter of 2009.

During 2009, PBI posted $413,308 in grant revenue for two grants, up from $197,011 the year before. One grant from the National Institute of Allergy and Infectious Diseases was for research into the microbiome, and to show that the PCT technology offers advantages over other technologies.

The company also posted grant revenue in 2009 from the second year of a two-year $850,000 grant from the National Institute of General Medical Sciences targeted at cellular organelles and their functions with an emphasis on mitochondria.

Based on the microbiome study, PBI plans to release a product in the first quarter of 2011 "in the area of automated intact mitochondrial extraction," Schumacher said this week.

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