TWST: May we start with a short history and overview of your company?
Mr. Schumacher: Pressure BioSciences is a little over three years old. The company was formed from the sale of a previous company that I started called Boston Biomedica, Inc., or BBI. Boston Biomedica was founded in 1986, went public in 1996 and was sold (asset sale) in 2004.
I started BBI in my garage with $3,200. With the help of a lot of good people, the company grew to over 300 employees, developed and offered for sale over 400 different products, and sold these products to thousands of laboratories worldwide. Many people considered BBI the leading company in the world in the area of infectious disease quality control products. One of the main reasons that BBI was sold in 2004 was that it was a very complicated story, as there were five different businesses under the umbrella of Boston Biomedica. Although the different businesses were quite complementary in product lines and customer base, the market never really understood and embraced what we had; consequently, the stock price never really manifested what we believed to be the true value of BBI.
Eventually, we came to the conclusion that the parts were worth more than the whole, so we decided to sell off the various pieces of BBI. We sold our infectious diseases laboratory to Specialty Laboratories of Santa Monica, California, our instrument division (Source Scientific) to two entrepreneurs in California, we spun out and sold the majority interest in our anti-HIV drug discovery company (Panacos Pharmaceuticals) to two VC firms, and we sold the core infectious diseases quality control business to SeraCare Life Sciences. The final paperwork was processed on September 14, 2004. Basically, after the dust settled, I was left with three of my 300 people, shares equaling 30% of Panacos Pharmaceuticals, and all of the IP related to pressure cycling technology, or PCT. We kept the legal corporate structure, but changed the name of the company to Pressure BioSciences. We worked with Nasdaq to keep PBI a capital market, publicly traded company, and changed the stock symbol to PBIO. Then in February 2005 we did a tender offer and bought back nearly 5.5 million of our 7.5 million shares, which is why we have such a small public float today.
TWST: Would you explain pressure cycling technology?
Mr. Schumacher: In its simplest definition, pressure cycling technology [PCT] is the use of cycles of pressure to exquisitely control the interactions of molecules. We put biological samples in a pressure-generating instrument, turn pressure on and off, and subsequently control how the molecules react in the sample. In the past, a scientist would control these reactions through temperature and chemicals, e.g., making things move faster, combine more slowly, melt differently, break apart more completely, etc. With PCT, we do it with cycled pressure. The difference is that pressure moves at the speed of sound, is uniform, is gentle, it is safe, and it can be precisely manipulated. It is these advantages that make pressure cycling technology the powerful tool that it is. Everything in nature has a pressure profile; that is, every part of a sample will be affected to some degree by pressure. Once the pressure profile of a sample (such as a bacterium or a tissue from a biopsy) has been determined, the scientist can control the molecules in the sample (such as the DNA, the RNA or the proteins) by turning the pressure on and off. This will allow the scientist to rapidly, efficiently and accurately study the sample and, we hope, to make important discoveries.
TWST: What are the applications? Are you out of the viability phase, the testing phase?
Mr. Schumacher: We truly have an enabling platform technology with a vast number of applications. It is a bit daunting when you think about what we have at our disposal with the power of PCT. In the life sciences, the applications are very broad and very exciting in terms of what we can do with cycled pressure. As an example, PCT can be used to kill viruses, bacteria and other pathogens in food, in water, on dental tools, in vaccines and in other therapeutics. PCT can also be used to enhance diagnostic testing in clinical laboratories, as it can speed up the time it takes to complete a test, such as ones for cancer and infectious diseases. We can use pressure to purify proteins off of affinity columns rather than the harsh chemicals used today, which should give scientists a better product and a better yield of material. We have patents that give us the ability to use PCT in all of these areas, and also afford us the protection of knowing that others can't use PCT without the possibility of infringement.
Although these potential applications are all in very large markets that we believe would embrace PCT, we are a small company so we have decided to focus the vast majority of our efforts in the area of sample preparation. This is an area that is very important to scientific discovery, in that all samples must be prepared before they can actually be analyzed. We believe that the better the sample preparation, the better the chance for a successful experimental outcome.
PCT can be used to enhance sample preparation because it is rapid, safe, efficient, convenient and reproducible. A primary part of sample preparation is the need to break up cells and tissues to release RNA, DNA proteins, small molecules. Pressure can break apart cells and tissues very quickly, very easily, very safely and in a very reproducible manner. Recently, several independent scientists using PCT reported that they found certain novel proteins in their samples that they had never before seen in such samples using conventional methods, including cancer and stroke samples. These are, of course, very exciting data, because they indicate that PCT may be able to help scientists find markers of disease that they may not be able to find using other methods on the market today.
We believe that the sample preparation market is quite large, with as many as 400,000 researchers in 85,000 labs around the world who need RNA, DNA proteins, small molecules, lipids for their research. This is the market that we are selling into. However, because this sample preparation market is so big, we've narrowed our sample prep focus down to four specific areas. First is the enhancement of the enzymatic digestion of proteins using PCT. This is an area of immense interest, specifically with scientists using mass spectrometry to decipher proteins. Next is the area of research in soil, specifically looking at DNA and RNA that might be in soil through bacterial and other contamination.
Third is the area of obesity and obesity-related disease research, such as diabetes Type II, cardiovascular disease, some cancers and some neurological diseases. These diseases require the study of tissues that are full of adipose (fat) tissue; pressure has a wonderful way of getting proteins out of such fat tissues much faster and more accurately than current methods. Finally, the fourth area of our current focus is in the area of counter bioterrorism, because the speed, safety and versatility of PCT offer enormous advantages to researchers studying potential bioterror agents, such as viruses and bacteria.
TWST: Which business challenges are you looking out for?
Mr. Schumacher: The biggest challenge we have is market acceptance. I have been in this business a long time, and I know first-hand how difficult it is to gain market acceptance of new, cutting-edge technology. As an example, I left my research position at a Harvard Medical School affiliated laboratory to start Boston Biomedica, to commercialize a novel technology that I believed could bring a level of quality to infectious disease testing that was seriously missing at the time. I had good reason to believe that better quality control was needed in blood banks and in hospitals to ensure the accuracy of the test results on blood earmarked for transfusion. At BBI, we developed a product line that has since been shown to have saved many lives and to have kept thousands and thousands of people from contracting debilitating disease. But I have to tell you that it was very difficult in the beginning to get blood bank and hospital laboratory directors to understand the importance of spending money they had not spent before to increase the quality of the results that they were reporting, because the products we were touting were so novel and new. I think we all realize, when you have cutting edge technology that is really that new, it is often difficult to get market penetration until the market leaders begin to accept the product, which is generally through publications, presentations and word-of-mouth. Finally you get to a tipping point and everybody says, my gosh, I should have this product, I need this product. At that point, it is sometimes hard to keep product on the shelf, the same product you actually had trouble giving away months earlier! That is what happened at Boston Biomedica and that is what we are hoping will happen soon at Pressure BioSciences, Inc. We said during our August 14th conference call (available on our website), in the Q2 10-Q that we recently filed, and in the financial press release of August 14th, that we had already installed more instruments halfway through the third quarter of this year than we've installed in any of the previous four quarters of initial commercialization. We also stated that we expected to install at least 14 during Q3, as compared to seven or eight in each of the previous four quarters. We furthermore said that we've had more phone calls, more interest and more requests for demonstrations in the past two months than we've had in previous six to eight months.
A lot of this increased interest in PCT is coming from the fact that in the past two to three months, many presentations and publications have been made by independent scientists that highlight the advantages of PCT. For example, five papers were presented at the June Mass Spectrometry meeting in Denver, indicating that PCT enhanced research studies by helping scientists get to their answers much quicker and in a much more efficient way than using any of the other technologies that they've tried. Several other papers discussing the advantages of PCT were presented at a New York Academy of Medicine meeting in New York and at a scientific meeting in Philadelphia. All of these presentations and publications are on our Website. What this all means, I believe, is that PCT is finally being accepted by a number of important research scientists, and this generally means that others will be more willing to give PCT a try. This has manifested itself into much more interest in PCT. All of a sudden when we come in each day we now expect to have phone calls and e-mails waiting for us from interested scientists, where a few months ago we came in hoping to have phone calls and e-mails. Quite a difference!
TWST: Do you have sufficient capital to get you to profitability?
Mr. Schumacher: We have funded our efforts thus far from the $4.5 million left over after completion of the tender offer and from the approximate $7 million we raised by selling our shares in Panacos Pharmaceuticals. This total of about $11.5 million was sufficient capital to enable us to start over from scratch in 2005 and build the infrastructure and product line that we have today. However, we did say on the August 14th conference call and in the proxy and the second quarter 10-Q that we believe that the cash we currently have will get us into early 2009, but we do not believe that we will turn the corner to profitability until 2010. Therefore we indicated that we will need to raise cash over the coming months.
To that end, we indicated in the August 14th press release that we've hired a great investment banking group out of King of Prussia, Pennsylvania, called Emerging Growth Equities or EGE. EGE has been successful in this very tough climate of 2008 in raising millions of dollars for companies similar to us. We've hired them to help us raise $8 million, which is an amount that we believe will be sufficient to get us to profitability. We anticipate that we'll be successful in raising this money over the next 45 to 90 days.