Pressure Biosciences Inc. (NASDAQ:PBIO)
Q2 2014 Earnings Conference Call
August 14, 2014 4:30 PM ET
Richard Schumacher – CEO
Richard Thomley – CFO
Frank Hawkins – Hawk Associates
Alan Stone – WallStreet Research
Greetings and welcome to the Pressure BioSciences Second Quarter 2014 Financial and Business Update. At this all participants are in a listen-only mode. A question-and-answer session will follow the presentation. (Operator Instructions). As a reminder this conference is being recorded.
I would now like to turn the conference over to your host, Mr. Richard Schumacher, CEO of Pressure BioSciences. Please go ahead.
Thank you Diego and welcome everybody to the Pressure Bio’s second quarter and year-to-date 2014 financial review and business update. I’m here with, as usual, Richard Thomley, our Chief Financial Officer. I am going to read a cautionary statement to begin.
The following remarks may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include among others those detailed from time-to-time in the company’s filing with the Securities and Exchange Commission. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any statement is based.
The agenda today is that I’m going to turn it over to Dick and he is going to give a brief overview of what hopefully many of you’ve seen already in the second quarter press release and perhaps the Q which has been filed. And then after Dick has concluded I am going to follow with a general business update and then we’re going to be pleased to take questions. So Dick?
Thanks Rick. Products and services revenues for the second quarter of 2014 were $307,464 as compared with $196,522 for the comparable period of 2013, that’s a 56% increase. We did not have any grant revenues in the second quarter of 2014 compared to $161,214 in 2013. Our grants were completed in the third quarter of 2013 and we are actively pursuing additional grants.
Sales of consumables for the second quarter of 2014 increased by 86% to $48,417, as compared with $26,034 for the comparable period of 2013. Because of the loss of grant revenues total revenues for the three months ended June 30, 2014 decreased 14% to $307,464, compared to $357,736 in the same period in 2013. Operating loss for the three months ended June 30, 2014 was $846,757 as compared to $858,026 in the prior year.
Loss per common share for the second quarter of 2014 basic and diluted decreased to $0.05 a share as compared with a loss of $0.10 per share for the comparable period of 2013. The decrease in loss per share is primarily due to a $585,219 income we recorded to recognize a decrease in fair value of our derivative liabilities. Products and services revenues for the first six months of 2014 were $711,611 as compared with $418,092 for the comparable period of 2013, that’s a 70% increase.
Again we did not have grant revenues in the first six months of 2014 compared to $310,382 in 2013. Sales of consumables for the first half of 2014 increased 93% to $103,029 as compared to $530,258 in the previous year. Because of the loss of grant revenues total revenues for the six months ended June 30, 2014 decreased 2% to $711,611 compared to $728,474 for the same period in 2013. Operating loss for the six months ended June 30, 2014 was $1,629,123 compared with $1,583,049 in the prior year.
Loss per common share for the first half of 2014, basic and diluted increased to $0.30 a share compared with a loss of $0.22 per share for the comparable period of 2013. The increased loss per share is primarily due to $1,388,000 charge for deemed dividends on our convertible preferred stock and other derivative accounting. Thank you.
Thanks Dick. What I plan to do is briefly comment on the results that Dick just went over and also on operational progress that we’ve reported in our Form 10-K that was filed earlier today several hours ago, and somewhat mentioned in the press release that we sent out this morning.
I want to also plan to briefly address several important operational and strategic events that we’re currently working on some of which have occurred during the second quarter and some even in the few weeks past the end of the second quarter, but we believe these are important to the stability and growth of the company and would like to mention them briefly on the call. Then we’re going to open up the phone lines for Q&A.
First of all on the financial front, as we heard from Dick, product and services revenue for the quarter increased 56% over the same quarter in 2013 and this included an increase of 86% in consumable sales. This increase by itself is what we would consider significant, but we believe it’s all that more significant and compelling when you realize that we achieved these results while our focus in the second quarter was primarily on finishing all of the things that we had to finish in order to launch the new Barozyme HT48 high throughput instrument at the Mass Spectrometry Annual Meeting in mid-June.
We wanted to do it on time, we wanted to have the instrument and consumables complete. We did, we wanted to make sure that potential strategic partners and potential customers would be able to come over to the booth and see the exact instrument that they would be hopefully looking to purchase and that’s exactly what we did. So I’m very proud of the fact that we achieved such good results in our opinion, while at the same time we were certainly under the pressure, pardon the pun, to make sure that we got our high throughput instrument out on time.
Grants, Dick mentioned that we had no grant activity in the first and second quarter. We’ve had grant activity for most quarters prior to this and this is one of the reasons that our total revenue was slightly down. We had our greatest, our largest grant revenue in the history of our company in the second quarter of last year. We were able to make most of that up by increasing our product and services sales, again primarily through consumables and instruments and but it doesn’t downsize a need for grants.
I’ve said it before, I’ll say it again grants are important to us, grants are a great way of having non-dilutive funding. Grants in our opinion should never be the primary source of income for a company like us and will never be our primary source of income, but it does help pay the bill, it does help pay some overhead, it does reduce overhead cost and it does allow us to make progress in areas that we intend to work on, because unlike many companies that I listen to in investor meetings and other places and read about, we only submit grants in areas in which we have a genuine interest in developing a product. We just don’t do it because we want to get some overhead dollars in the door.
We have submitted grants, we have grants that have been submitted, we have grants that are being reviewed. We are hopeful that we will get positive results and that perhaps before the year is out, we will have grant money coming back in. That would be interesting because as we continue to increase our sales, if we start getting grants and that will maybe perhaps for the first time in four years tell us that we need to start growing our personnel. As I think all of you know we have nine full time employees and have pretty much had nine full time employees for the last several years.
So it’s very important I think to point out that we did get the Barozyme high throughput instrument in time, on time, fully functional and at the same time we were able to achieve the results that Dick went over on our product sales.
In addition to the Barozyme release, in addition to the significant increase in our product sales, there were several other announcements that have been made in the past three or four months. One was the announced collaboration with a company called Parabase Genomics. Under this collaboration, we plan to develop an enhanced front end sample preparation method for Parabase’s third generation sequencing test for a newborn screening.
Now this is a very exciting collaboration for us, not only because we think the scientists and folks at Parabase are on to something big and we want to support them, because they feel they can run many more tests that are being run now in a much shorter period of time through their third generation sequencing program. So this is really the first time that we’ve publicly come out and said that pressure cycling technology has a play in next generation sequencing. In my opinion it’s probably the hottest area in biotechnology today. A number of companies have jumped into the foray. The results are potentially staggering, the information that we’re going to be able to achieve through next generation sequencing.
But as I tell people you can’t sequence DNA, at least not today unless you get it out of the cell. And so getting out of the cell has been a problem. If you talk to our DNA scientists, I believe, most of them will tell you that the issues relating to next gen sequence continue to be how to be how do I get the DNA out of the cell and then how do you break the DNA into sizes that are effectively the ones I need to do the so-called sequencing or the reading of the DNA. And this is a first time that we’ve come out and said in anything of this magnitude that we believe that pressure cycling technology can have a role in this area.
So we’re very excited about it. We’ve had grant money in this. You may recall that we’ve touched on this slightly in the past it was publicly known that we received over $1 million or about $1 million in work that the army had for us in the area of proteins but we really haven’t talked much about the grants in the area of DNA with the exception of around the same time we talked about $150,000 grant that we relieved from the NIH to look at pressure cycling technology as a way to break open cells in a very controlled manner and get out the DNA that is needed for sequencing.
So we have had a phase I grant that we talked about briefly in our Form 10-K and 10-Q in the past. And now we’re talking about actively involved with a terrific partner in Parabase Genomics in helping them by developing what we think can be an enhanced front end simple preparation method.
We also announced during the quarter at the end of June that we’ve engaged a group called IssuWorks for what we call strategic and financing alternatives including the possible spin-off of vertical market applications into new standalone businesses. I am fond of saying that we are a technology, rich somewhat cash poor company. And what that really means is we have technology based upon pressure cycling that we believe can be exciting new products out in the field but with limited cash. We are very, very focused on the areas that we are focused in, in forensics and in biomarker discovery.
So the engagement of IssuWorks came about by David Weild listening to us at a call, actually it was at an in-person meeting. And David was there with his partner, Ed Kim. And they listen to Jeff Peterson, our Chairman and myself give a talk a meeting. They were interested, they came up afterwards and with their background we were very excited that they were interested in our company.
David is the ex-co-Vice Chairman of NASDAQ and he was President of PrudentialSecurities.com. And he is by all rights everything you read if you Google him, he is the guy who is generally referred to as a father of the JOBS Act. And his white papers, written by him and Ed Kim were used a lot in developing JOBS Act. So the fact that these guys at IssuWorks were interested Pressure Bio was certainly something that made us proud but at the same time to have access to people that have this background is tremendous. So we’ve been working with David and Ed for about a month now. And very, very exciting that they’re interested in helping us grow our business.
In addition to the successful launch of the Barozyme HT48 instrument we also at the same time listened to six or seven different research groups at the Mass Spectrometry Meeting in June. That presented data that used our patented PCT platform in the preparation of samples that resulted in significantly improved time or cost efficiencies in their work, and in several cases looked at unique new biomarker that might come out of some of the work that they were doing.
So that was exciting also that not only do we have those new instruments but we have a number of people using our existing instruments and are still having – continue to have good results in increasing their efficiency or decreasing their cost or perhaps even in some cases finding things in the samples that they haven’t found by using methods to break cells that were not based upon pressure cycling technology.
So those are some of the things that have happened. The last thing I’ll say before you open up to the Q&A is that we’ve gone out on the limb again; we went out on the limb about a year ago and gave the market some guidance, about what we expected our numbers to start – our revenue to start increasing in the area of products and services. And they have. We gave guidance that we expect to release our new HUB880 instrument in the first quarter and we did. We gave guidance that we expected to release the new Barozyme instrument in the second quarter and we did.
So we set ourselves some lofty goals for the next four to six months. And one of them is to continue to increase our products and services revenue over 2013 levels. We think that’s important. So among all the other things that we’re doing, with the same nine people, we set a goal to not rest on our laurels but to continue to increase product and service revenue over the rest of this year compared to last year. We’ve also set a goal; we’d like to be in a position to decide on the possible spin-off of certain selected PCT applications into new standalone businesses for our engagement with IssuWorks. That would be a standalone business that’s designed to generate a revenue stream to Pressure Bio and favorable visibility for Pressure Bio.
We would like to have – be in this position over the next four to six months. It doesn’t mean it’s going take four to six months. It could take less but we don’t want it to take more. We understand how important this can be to our shareholders and to have what we think and we believe is very exciting technology, kind of sitting on the backburner because as a small company we can’t – we need to stay focused and we can’t work on everything.
We’ve also set a goal about that in the four to six months we want to finally secure that strategic marketing distribution partner. I have mentioned before this was a goal three years ago. It never came to be. The word we got back from pretty much three major groups that we were very interested in working with was the same thing, all your instruments are based on manual work, all of our instruments are based on using the automated formats, the sample handlers and the robotics that are in the labs today, in thousands upon thousands of labs and we can’t ask our customers to use manual instruments.
So the big drive for us to get out the Barozyme, really two of them; one is, we believe it will open up doors, and I can say, already has opened up phone lines and several doors to allow us to talk to potential customers, because now our instrument can align with their instrument. They speak the same language. They use the same type of consumable which they never had before.
So we are now offering the ability to have the advantages of PCT in the format of what we call the micro plate, micro-titer plate. But we also know that we’ve had several customers intimate in the past that they have many more samples to run but they can only run so many with a manual system. So we’re hoping that the ability to run these eight at a time in an automated fashion will also manifest itself with in increased sales down the road. So we’re working hard at another goal, which is to complete the manufacture of the 25 Barozyme HT48s and HUB880 instruments that we started on earlier this year.
We have pretty much paid – purchased and put half down on all of the long lead item parts and they’ve all been made. And now it’s a question of just building these instruments and making sure that they’re available to our potential customers as soon as possible.
I said before, don’t expect that our sales will be impacted in this year from either of these instruments. However the caveat there is how quickly we can build these instruments and get them out for evaluation. There is still hope that this can be done in a time where it actually could impact our fourth quarter.
We have also released in a sort of second fiddle to the Barozyme, a very exciting patent pending, a little consumer what we called the micro-Pestle and we’re very excited about this. We’ve gotten some very strong data from two key market leaders, we believe our key opinion leaders, that this micro-Pestle, this is a consumable or one-time use. But we believe that it can break apart tiny little biopsy samples that are such a bear to break apart now without contaminating that or losing them. We feel that this – it fits inside our existing holders in our pressure cycling instruments and the way we designed it is that you don’t have to transfer it from one tube to another. You can do anything in one tube. So it should, we believe, minimize cross contamination and minimize loss. And some of the early data in the past four to six weeks that’s come in has us very excited.
So we’re excited about getting a marketing program going about on micro-Pestle and then of course as always we continue to work on and we believe make measurable progress in developing a sound financial roadmap, that’s what is key for this company. We have the technology, we believe that it’s been well accepted by a number of different areas of life sciences. We know we believe there’s a very strong market out there that needs this technology.
The nice thing we don’t have to invent a whole new reason to use it. It’s a better in our opinion mouse trap, for those that are already breaking open cells and what we call digesting proteins. But we need to have a better, a more sound financial roadmap than we had in the past and that’s what we had as a goal this year. And as you know from our filings we raised $3 million, we paid off a lot of debt. We’ve converted a lot of debt into equity and we expect that this will continue for the rest of the year.
So Diego at this time I’m going to turn it over to you and to anyone that might have any questions for Dick or me.
Thank you. At this time we will conduct our Q&A session. (Operator Instructions). Our first question comes from Frank Hawkins with Hawk Associates. Please state your question.
Frank Hawkins – Hawk Associates
Hey, Rick, how are you?
Frank Hawkins – Hawk Associates
You’ve been busy?
We’ve been very busy.
Frank Hawkins – Hawk Associates
Pretty good start, you know what, to start off things, if I recall correctly, I think you pulled off a stunt like this about 10 years ago at Boston Biomedica and ended up with some, a fairly large market cap, is that correct?
Yeah, I wouldn’t call it a stunt, and I am saying that tongue in cheek but yes, we did. We, about 10 or 12 years ago at Boston Biomedica, we had some drug discovery technology that really didn’t fit in the core business of Boston Biomedica. So the Board decided that we should either shut it down or spin it off.
I think history says we made the right decision. We spun it off into a private company called Panacos Pharmaceuticals. We brought in several terrific venture firms in Ampersand Ventures and A. M. Pappas. And with their help and knowledge and contacts and the ability to raise money this little fledgling company that was actually costing Boston Biomedica money and focus ended up in four, five year later being worth many hundreds and millions of dollars in market cap. And quite frankly in some of those filings in the past I’ve said it generated about $7.5 million in cash that flowed back in the Boston Biomedica.
So that was exciting and when David Weild said to me you are technology rich. Have you ever thought about spinning off some of this, I just kind of chuckled because it brought me back 10 or 12 years ago and it would be great to try to look at this and we are going through to see if perhaps we have got technology that could stand on its own two feet if we spin it out.
Frank Hawkins – Hawk Associates
So normally a spin-off like this involves bringing in someone who would contribute cash to the new venture presumably.
The idea that we mentioned in the press release when we sent out the press release on the hiring of IssuWorks is that we would expect that the spin would be funded by sources other than us, so that if we have technology now that would make sense to be spun off it only makes sense if it’s going to add value to our shareholders. And as you saw with Panacos Pharmaceuticals it added quite a lot of value to shareholders of BBII at the time, Boston Biomedica.
So yes I would – I think what works best would be a scenario very similar to what we did with Panacos, where you find technology that needs to be – have a focus that is not getting its focus, that is actually costing the company money, spin this off, get it funded by other sources but make sure there is a revenue stream and since all of our technologies pretty much depend on pressure our expectation is that we would – some of the potential revenue stream would come from licensing of our technology, let this new company use it.
So we are excited about the possibility. I can’t say that it’s going to be done; I can’t say when it’s going to be done. But you are absolutely right, we did it. It was highly successful 10 or 12 years ago and we are using that template to look at it again.
Frank Hawkins – Hawk Associates
Well, so nice you have seen this movie before, so to speak, so that’s sort of reassuring I would think. You used – and talking about the marketing for the micro-Pestle, you used the world significantly. Can you give us a little color on what you mean by the word significantly?
Tell me in what context, what did I say?
Frank Hawkins – Hawk Associates
You said the development implemented successful marketing campaign to the recently release pattern pending micro-Pestle that has the potential to significantly add the product revenue.
Well, here is the situation. The micro-Pestle needs our instrument to work. There is, in our opinion, a very real need all over the world for a better way to break apart by a small biopsy samples in order to get the biomolecules out of those samples. And if anyone on the phone call knows anybody that works with these samples I am sure they will tell that it is a bear, because yeah, the sample is so small that you tend to lose it or contaminate it as you try to break it up and then transfer.
Our patent pending is based upon the use of pressure and that literally what we have done is we are using the pressure and the chamber to squeeze the tube, in which this small piece of tissues rests. It breaks apart, it breaks apart the sample right there in the tube and then we add reagents. We are not having exchange it into another tube or transfer it to another tube. So where there is a need that we believe many, many labs are using these small biopsy samples when they have a need because they can’t get it done and we have an answer that’s why I use the world significant.
Frank Hawkins – Hawk Associates
Yeah, well that’s pretty interesting. I guess by the way I mean the growth in the products and consumable revenue is actually quite impressive and obviously if you had some grant revenue in this quarter, it would have looked even better than it did in some respects. But apparently you don’t have any sales yet from the new Barozyme instruments or the small sales from the HUB880. So presumably if you get some of that in the second half it will even be better.
Well you hit a key point, which I have tried to make and that key point is our increase in sales is coming from our existing product line of constant pressure and cycle pressure instruments and consumables. And it is not coming from – we did sell one HUB880 to our very dear friend, Professor Hubbell at the UCLA who in his genius help does design and make this instrument as good as it is. But that’s the only sale that we’ve had on the HUB880 and we haven’t had a sale and it’s not because we’ve tried and failed but because all hands on deck were to try to increase sales of our existing products in the first half of the year and to get these two products out so that we could at least show them to the world.
We were successful in all of that and now our goal is to try to do everything we can to have some of these instruments available before the end of the year. And they would be additive if we sell any to what we’re already doing.
Frank Hawkins – Hawk Associates
Okay, one more question and I’ll jump back in the queue, and that is your discussions with Parabase Genomics about the new third generation or new generation sequencing test. Are you in discussion with any other companies about this or is this just the only one so far?
We have spoken to several third generation sequencing companies about the potential of pressure. So I’ll just leave it at that. It’s exciting new area for us. And we’ve kind of held back because we wanted to stay focused and we wanted to get our two instruments out and now that we have we went back to Parabase and said we’re ready now and that we knew that once we release that it would probably generate interest from some other groups.
Frank Hawkins – Hawk Associates
Okay. May be I can talk about that offline at some point. I’ll jump back in the queue. Thanks Rick congratulations on the lovely progress you are making.
Thank you, Frank.
Our next question comes from Alan Stone with WallStreet Research. Please state your question.
Alan Stone – WallStreet Research
Hi, Rick congratulations on the very good quarter, first of all. I guess I just would like to elaborate a little bit on what you just discussed on the new products and how they kind of translate into the existing products, and correct me, because it’s been a while since I’ve really studied the company carefully. But are the new products intended to replace some of the existing product lines, are they just going to be additional, supplemental products that will be in addition to what you heard you got going, that’s successfully operated?
Alan, it’s very good question. I’m not sure that we’ve really focused directly on that question before. Maybe we have, but the newest instrument, the one that we’ve been working on for probably three years, is the instrument that we call the Barozyme. This is totally different. It’s based upon the same fact, the fact is that pressure and turning pressure on and off can often times help a scientist do things to their sample, to their cell, they can break it up, they can speed up a reaction and slow it down.
It can get things out of cells that you might have trouble getting out or may never get out using non-pressure means. So but the difference is that the way of the world is many, many, many, most in fact I would say scientists around have these robots and these automated instruments that they use and they use these strips of the eight and they can do multiple samples and let the robot do a lot of the additions and washings and things and you can’t do that with our existing instruments.
So the new instrument, it took such a long time to develop, – it was not trivial, I said before, I’m very proud of our team to be able to have done this. And thankful to the U.S. army for the almost $1 million that they gave us that helped fund some of this work. But Alan, the new instrument is for a different market. It’s for the high throughput markets, for the markets where someone is running 10, 20, 50, a 100 samples at a time.
They will still be in our opinion a market for our existing instruments, that are doing the one and two at a time and five and ten at a time. So it will not – we don’t believe it will cannibalize. We think it is going to open up new markets and bigger markets to Pressure BioSciences.
Alan Stone – WallStreet Research
I see. Thank you for the clarification there. And in terms of any comments on any potential financing opportunities in the next couple of quarters that you see to further enhance your growth opportunities? I know a lot of it’s difficult to talk about on these calls.
No, we don’t have anything public that we can talk about. I think most people on the phone understand that we have lived hand to mouth for three years and it’s – I can tell you from experience, it’s not a great way to live and it makes it even more frustrating when you have what you believe to be hitting an inflection point or two and you think you are ready to roll-out the new products and you cash is tight.
So I don’t have anything, I can say about financing other than we have been very successful over three years in raising money when we needed it, and we understand that we are at a point now where growth requires money. The good thing about this, I told someone the other day, there is two big reasons people need money. One is they don’t have sales, they don’t have growth and they needed to survive. And the other is that they have growth, they have sales, potential new sales and they need it to grow. We believe we are in the latter. We believe our numbers show that. So the nice thing about this, I always get asked about dilution is, you know, if and when we raise money down the road as long as we put that to good news and we make this company more valuable then everybody is going to win.
Alan Stone – WallStreet Research
Yeah, thank you, Rick.
Our next question comes from [Bennett Hurtsell with Carter Cherry and Company]. Please state your question.
Hi, Rick, haven’t talk to you in a while. I have two questions. The first one is with the spin-off, will some of your long-term shareholders participate in getting some of those shares as a dividend to them or will all be held by the company, question one.
Question two, results, with the grants that you used to get, both you and the University of South Florida seem to have had a great program with grants for a pap-test it looked like it was practically commercial, what’s happened with that?
Let me take the first one, Bennett and hello it’s been, my gosh, it’s been over a year, a year and half I think since we have had you, welcome back.
I never left.
I know you never went away but it’s good to hear your voice. On the spin-off, I don’t want to get ahead of ourselves here. It was important for us to announce the engagement of Dave and Ed and their group at IssuWorks. It was important to talk about what they are going to be, what the first responsibility is and I appreciate – I think I was trying to mention that we have a template. We have done it before, successfully.
I can’t answer your question but I can – the one thing I would say is that the goal, my goal and the goal of everybody here is how do we increase shareholder value. And you know whether it’s – we have got about 1,800 shareholders in Pressure Bio. So it’d very difficult to spend something out into a private company, you couldn’t have 1,800 shareholders.
So I’m not sure if we are going to spin anything off and what it’s going to look like. But what I am sure of is that if we can do it and if it makes sense and it looks like it’s going to increase shareholder value in Pressure Bio, we are going to take a very, very hard look at it because it definitely did with Boston Biomedica when $7.5 million in about a year and half flowed back into the company with that spin off.
And by the way the technology we spun out was costing us hundreds of thousands of dollars a year and a lot of lost focus. And so it had a double win. It reduced our cost at Boston Biomedica and then four years later we had nice revenue. I think you said, you said the second question is pap. We haven’t been working on paps yet, but I get a feeling, since you talked about Florida State you are talking about the rape kit testing, is that right?
Yes, that’s all I meant, sorry.
That’s all right, that’s all right. You know it is a good question. Dr. McCord has made very good progress. Dr. McCord won, I believe it was around $350,000 from the Department of Justice, the most recent data that they have presented, the most recent data I have seen that’s public is – was the date they presented in February, which is very enticing, very comforting, that they are making progress. This is the type of technology that were we a bigger company, had we – if we had more money we might put more effort into it. But as a small company we’re unable to do that. So we’re able to support Dr. McCord to a certain extent but not more than that.
So I can tell you that it has not died, that the progress has been made, that we still believe that with optimization and some additional work, that using pressure might in fact be a way to increase the number of samples that you can do. These are rape – swap samples that you can do in a given amount of time. And as I said it on a previous phone call, may be six or eight, nine months ago the problem we have out there is that we have a backlog in the United States of hundreds of thousands of rape kits. And the backlog is not going down and there is only – in my opinion, two ways to start getting at that backlog and one of them is to find more money and more people and put a lot more people at work and have them do the testing. And we all know that is highly unlikely.
The other way is to try to do more with what we’ve got. So if someone, if a company or companies can develop methods that can run more tests in the same amount of time, we have a better chance – we obviously have a good chance of reducing the backlog and that’s the goal of what Dr. McCord and his team are doing. And that’s the goal that we’re supporting. And we continue to be in that area. And that’s all I can say is that the data actually, there has been measurable progress and it’s been good. It’s not fast enough for us unfortunately but it is – they are making progress and the progress is good.
Would you be looking for anymore grants for that or that’s out of the question?
It’s not out of the question at all. I think as I said before grants, we have never in my recollection applied for a grant that didn’t make sense. And I’ve seen it happen multiple times, people want to just get the overhead or they want to – they have extra people they don’t want to lay off or whatever. So they maybe try to give some grants that aren’t in their core business.
We feel that developing a better, faster more efficient, less expensive or any or all of the above test to help reduce this travesty of these hundreds of thousands of untested rape kits sitting on shelves is a core business of ours. And so the answer is yes, if a grant were to come out or if a request for a proposal were to be asked where this type of development makes sense, we would definitely look at the possibility of responding.
(Operator Instructions). Our next question comes from Charlie [Boyd]. Please go ahead.
Hey, Rick. Charlie Boyd here.
Charlie, how are things in Florida. I assume that’s where you are.
I am in Florida, right now as we speak.
Listen this might be a little bit off the wall question but I have been thinking about this and I wanted to ask you. A while back there was a lot of data presented on the effectiveness of the PCT in killing anthrax and with all the issues going right now with this new Ebola problem, I am just wondering if that’s an area that PBI might be able to get involved in?
Tough question. Just to summarize we did several years ago, we did in fact have data that was generated mostly from researchers at [inaudible] looking at using pressure cycling and it was very effective in killing anthrax and in fact that was one of the basis of the army grant that we got was to look at killing anthrax.
So it’s a good question, Charlie I have to admit that it has come up recently. Obviously it is a major health concern right now. There are differences between the bacterium in the spore of anthrax and the virus of Ebola, but that said we know that pressure is very effective at breaking apart and killing HIV. We know that other viruses can be killed and inactivated with pressure. So the easy answer is, I don’t want to be misunderstood here but the easy answer is it makes sense for us to at least look at this because you are talking about a Class IV pathogen that can only be studied in some very difficult situations like anthrax. And so I think your point is that we may, Charlie and we’re going to talk about it internally.
All right appreciate that. And hey, thanks for great quarter.
You’re welcome, good to hear from you.
There are no further questions at this time. I’ll turn it over back to you, Mr. Schumacher.
All right. I want to thank everybody. It’s other than apparently our friends in Florida, it’s a sunny day at most places, it’s a summer day. So to take some time at the end of the day to listen to this, I really appreciate. We had probably more people on this call at 4.30 than we have – than I can recall ever having. So we really, really appreciate you guys joining us. I am always available, Dick’s always available, the main number, call us. And we’ll happy to clarify anything or answer anything that didn’t get asked. I would close this out by saying that we are excited about all the things that are being done.
We – I can’t tell you how excited. We’re like a kid in a candy shop in getting out our Barozyme because it has the BaroFlex strip of eight consumables. So we are very, very excited. That to us was one of the biggest inflection points this company has ever had, was to develop this instrument with its consumables and to be able to do that and get it on time. And at the same time have consumables at almost double in instrument sales and other product sales that went up 50%, 60% we’re very excited about that.
So we’re looking forward to the second half of the year and as always I am looking forward to November and having this call to talk about our third quarter numbers at that time. Thank you all very much.
Thank you. This concludes today’s conference. All parties may disconnect. Have a great day.
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