Pressure BioSciences, Inc. (NASDAQ:PBIO) Q1 2016 Results Earnings Conference Call May 18, 2016 4:30 PM ET
Richard Schumacher - President & CEO
Alan Stone - Wall Street Research
Geoffrey Scott - Scott Asset Management
Greetings and welcome to the Pressure BioSciences, Inc. First Quarter 2016 Financial Results and Business Update Call. At this time, all participants are in a listen-only mode. [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. Thank you, Mr. Schumacher. You may begin.
Thank you, Tim, and welcome everyone to our first quarter financial review and business update.
Before I start, I’d like to read the following cautionary statement. 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 filings 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 such statements are based.
So today, the agenda, I'm going to give a brief overview of the first quarter 2016 financial results. I’m going to then follow it with a general business update. Afterwards, I’ll be pleased to take a few questions.
For the first quarter, I want to say that we're very pleased with the financial and the operational achievements that we detailed in our filings on Monday and the press release today. As I've stated previously, we believe that PBI is an inflection point in 2016, both financially and operationally, and we certainly wanted to start off on a good foot and a good foundation and we believe we have.
We believe we met and exceeded many, if not all, of the significant milestones that we set up for ourselves in the beginning of the year. For the quarter itself, we reported total revenue of $510,478 versus $430,134 for the first quarter last year. This is an increase of about 16%. Leading the way was products and services which was $454,350 in revenue versus $359,364 for the same period in 2015. This was an increase of 26%.
Product revenue drivers were primarily instrument sales which increased 41% and consumable sales which increased 11%. Grant revenue was $80,770 compared to $56,128 in Q1 2015. This was a decrease of about 31%. First of all, I want to say that we believe this decrease is a short term decline. We still have $1 million grant which has almost another year to run and we had an issue with getting parts in which took longer than expected. Without the parts, we couldn't do some of the work that was necessary to be done.
So the bright side is that we turned the focus of several of our people who would have been working on the grant to other areas such as helping out in marketing and sales and in manufacturing. And the work they did in marketing and sales clearly had an impact on helping to achieve the large increase in products sales that we did after the first quarter and they also were instrumental in the building of our breadboard for our new instrument and also the prototype for the new instrument. I'll get into that a little bit later.
So although grant revenue was down appreciably at 31% that is not lost revenue. We will have that revenue, we believe, over the next nine months. And in addition, we’re able to make up that loss by increasing our products and services revenue by 26%, which not only made it up, but then added to it to give us the second time ever that we've broken $500,000 in a quarter.
Our operating loss for the first quarter of 2016 was slightly over $1 million and this compared to roughly $875,000 for the first quarter 2015. This was an increase in loss of about 19.6%. As we laid out in the Q and also in the press release, there were several factors that were primary causes for this increase.
In research and development, we hired, we mentioned this last month and we talked about the fiscal year last year we added a PhD level electrical engineer, someone that we sorely needed for quite some time. [Dr. Ma] joined us full-time in January.
He's been with us part time prior, during last year, but he joined us full-time in January and it's very important to have him on board as he is – as we develop this new instrument and bring all of our other instruments up to a level where we can achieve ISO certification and also CE marking for all of these new instruments and existing instruments. So I’m very happy to have Dr. Ma on board.
We've also had to increase our facility for accommodating the current and future growth in terms of our renting of our facilities for research and development. So R&D grew the most in terms of quarter to quarter comparison and primarily because of the hiring of Dr. Ma and the increased rental space.
Marketing/sales also increased, primarily marketing/sales increased because of additional marketing that we started to do a number of months ago, particularly in the beginning of this year. And also we are working hard with our key collaborators, these key opinion leaders and as we’ve talked about before, we are supporting them financially or we're supporting them with equipment or time in certain cases and this is a key reason why marketing/sales increased.
And also G&A, and G&A increased primarily because of costs, investor relations, public relations, advertising that was related to our successful fund raising, so all of these costs were partially offset by the increases that we saw in total revenue. The loss per common share both basic and diluted was $0.26 for the first quarter compared to $0.11 for the first quarter last year.
I'm now going to briefly comment on some operational and strategic events of the first quarter and, of course, the six weeks that have elapsed since the end of the first quarter. These were mentioned in our Form 10-Q, which was filed Monday and also in the press release that went out earlier today and also in some individual press releases that came out during the quarter.
First of all, in terms of these achievements in the first quarter, I will reiterate that we were very happy with the strong first quarter the first time – the second time we've ever broken $0.5 million in revenue, with very strong product sales and very strong instrument sales as part of those product sales.
We were added to the high-performing Richmond Club Index. The Richmond Index has been around for, I think, 17 years, but over the past 10 or 11 years it has exceeded the S&P index by an average of about 11% each year for those 10 years. So we're happy that we were added to the Richmond Index.
In addition, approximately $1.4 million was received in the final three months of the private placement of a fixed rate convertible debenture PIPE that we started last July. We went to bring in $5 million. We ended up with an oversubscription that took the total amount to $6.3 million. And again, $1.4 million of that came in the first quarter of this year. That financing ended on March 31.
I am happy to say that all five members of the company's Board of Directors participated in the final close. One of the reasons it was the final close is that we did not know – we knew it was oversubscribed. We did not know if we are going to be able to get everybody in. So the Board waited until the very end and when there was room for us to come in on the last couple of days, the Board did come in. About $165,000 was invested in cash from the company's five directors. So very, very happy to let everyone know that the company's directors continue to support financially this company.
The company's directors have both the previous directors, previous to July of 2012 and the new directors that came on, most of them came in board after July of 2012 have participated in almost every offering that we've had out there. It is often seen as better than purchasing stock in the open market because this is money that goes directly into the company to help the company grow. So again, about $165,000 was invested by the five directors of the company on March 31, the last day of the PIPE.
SCIEX, SCIEX is a global leader in the life science analytical technologies. They're a wholly owned subsidiary of the Danaher Corporation, which is a roughly $68 billion holding company in Washington D.C. SCIEX announced that they and we had entered into an exclusive comarketing agreement in January. So that's a major achievement, something that we've been looking for and trying to achieve now for over three years.
And I'm very happy that it came together and that we found a wonderful partner in SCIEX, a global leader as I mentioned in so many life science analytical technologies. And from what I've read, they are the number one company in selling mass spectrometers for proteomics or protein work and that's the primary area that we're focusing right now is proteomics, the study of proteins.
So it's great that our so-called low hanging fruit which is to put our instrument in front of a mass spectrometer that we're able to develop a comarketing arrangement with the leading company in the world in that area. And in fact, Emerging Growth LLC, a newsletter or a group that's come out with a discussion about the comarketing agreement between SCIEX and Pressure Bio. And in their discussion, basically a blog and a press release, they said that the combination of the two companies’ technologies in their opinion could result in superior biological insights and discoveries in a rapid and dramatic revenue growth for PBI.
It was also in the first quarter that SCIEX and Children's Medical Research Center, which is near Sydney, Australia, announced that they had joined forces to advance the promise of precision medicine and that they stated in that press release that came out in February that they felt they would benefit from SCIEX’s exclusive collaborators including PBI and that they specifically said they felt they could benefit from PBI’s PCT platform for increased protein quantitation and reproducibility.
We had our first participation with SCIEX in a very large event. It was a workshop at the US HUPO, which is the human proteomic organization, scientific conference which was in Boston in March. We – SCIEX, our friends at SCIEX asked if we would like to work with them on their workshop that have been set up months in advance. We took advantage of it.
We had about a third of the time of the workshop and had a wonderful opportunity to speak to a completely packed conference room door to door and people standing on all sides and we were able to talk about PCT and PCT SWATH and how PCT works and showed data on how others have published and indicated that the incorporation of PCT into the algorithm of sample preparation prior to mass spectrometry can add advantages to the users that they will not get and do not see when they do not use PCT in their sample preparation.
Importantly, we completed the design and the build of the initial working model which is called breadboard of the new instrument that we've been developing for about a year which is called the 2320EXTREME. This is an enhanced version of the NEP 2320, which is our mainstay instrument that's been out for five years or so and it's our number one selling instrument.
We’ve made a number of design changes based upon feedback from Professor Aebersold and Dr. Gall and many others out there who have asked that could we look at doing certain things that might make the instrument more robust or even go to places where it hasn't been able to go to before in terms of pressure and algorithms of pressure, temperature and number of cycles and we've completely redesigned the instrument and lovely, wonderful opportunity to say that we've not only built the initial working breadboard, but we've also built the first prototype which is the model using all of the exact 100% of the parts that go into the instrument.
And even further, last week, our new contract manufacturer, who is about 15 minutes away from where we are in Eastern Massachusetts, finished the manufacture of the first two 2320EXTREME units and they’re working on two more this week. And as I mentioned in the press release, we've purchased parts for about 25 to 30 new systems and we are expecting to have these built over the next two to three months.
So we're very excited about this. This instrument is perhaps the best instrument we have ever developed. It is going to give the users, particularly in the proteomic area, some tremendous capabilities that they have not had before because we've been able to bring parts and capabilities to the instrument that really didn't exist when we first designed the instrument seven or so years ago. So very, very happy that we've taken it this far and that this new instrument is built and in fact we're expecting that we could have as many as three or four sales of a new instrument in the second quarter alone.
I also put in the press release a number of neat near term goals for the company. We've done this routinely now for the past year. For the second through the fourth quarter, we plan to continue to implement the sound path towards financial self-sufficiency and future growth and profitability. We know how important that is and we're going to continue on this path that we started about a year ago.
We intend to do everything we can to continue to increase our total revenue, our products and services revenue and even our grant revenue, and we're keeping in mind all the time not losing anything in our gross margins. We want to complete the manufacture of the 2320EXTREME, as I mentioned the first two units were developed and manufactured last week. They're going to be put into very harsh testing this week and next and made available for sale in June. And we have a very strong and aggressive commercialization plan for this new robust computer-driven highly capable new instrument. And we think it's going to be an amazingly high-selling instrument in the second half of this year and thereafter.
We plan to continue to support and expand our comarketing program with SCIEX. We have meetings with them every single week. We’ve already had our two training sessions. We have a major training session that's going to happen in Germany in the middle of June, which we're looking forward to, and we also have a major meeting of the year in the United States, the American Society for Mass Spectrometry also in June and we're talking with our colleagues at SCIEX about how we can work together at that meeting to make one plus one equals three.
We're still looking for a strategic marketing distribution partner for our new Barozyme HT48 high throughput system and also for the NMR and EPR PCT-based systems. We're not putting a lot of effort in that right now. We are a small company. We have limited resources and we do not want to misstep with our friends at SCIEX. So with everything that's going on, we have that on the back burner, but it's a goal for most likely Q4 of this year.
We want to implement and expand the marketing campaign for what we call the micro-Pestle; it's a patent-pending consumable device that we’re very, very, very excited about. The patent is moving through its prosecution and the data are continuing to be developed and are exciting.
We want to expand our sales and marketing capabilities to reach new countries, investigators in fields of use. We have started to talk with interested people that may want to join Pressure Bio in the sales area. We will be looking to expand our sales staff which is a staff of one as everybody knows in the second half of this year. We've already started to expand our marketing. We are not waiting for anything, for more salespeople or instruments to be developed. We started increasing our marketing reach in the first quarter of this year and that will continue.
And, of course, we've made it very public that we think it's important that we up-list the company to NASDAQ or the New York Stock Exchange venture market and we're working towards that. We continue to work towards that. Many of the things we do we take a look at what is important and how to do it as it relates to a potential up-list later this year. So it's still our goal to up-list the company to a major exchange by the end of this year.
Before I turn it over to Q&A, I’d like to mention a couple of things. I'd be remiss if I didn't talk about the market today. I had a number of calls. Quite frankly, I’m very pleased that there were several people that were concerned, but most people were telling me they were in the market, they didn't understand who was selling or why anyone would sell particularly with the strong achievements that we've had in the last year. But they were certainly there to buy the stock.
I look back to 1999; we’ve never had a day where we've broken 500,000 shares in those seven years and possibly we've never had a day we broke 500,000. And it wasn't just 500,000, it was clearly just 500,000 thrown willy-nilly at the market. They were, whoever was selling was just taking out every bid that came in.
But I think the important thing here to look at is because of the strong solid investor base we have and because of their faith in the company and in the employees here at Pressure Bio and in the PCT platform and in our plan that we've laid out, we had a lot of people that call me to say that they were very happy to be buying shares from whoever it is that was wanting to sell them what I call willy-nilly. So it was an interesting day and a long and short of it is we ended up just a $0.01 down after almost 600,000 shares traded. And it really didn't trade, they just got sold to anyone that wanted to buy them.
We have no idea who did it, why they did it. I think the important thing here is that the shareholder base that we've been developing now for a while stepped up and purchased pretty much everything that was thrown on the market, so that a week's worth of stock was bought up in a day, perhaps even a lot more than a week and the stock stayed pretty much where it was when it started. So I thank our very strong solid investor base for their perseverance and faith in the company.
I also want to talk briefly about SCIEX. I have had a number of people call or have seen me in meetings and asked me about SCIEX. I want to remind everyone that was just four months ago that the comarketing deal was signed, it’s a two-year deal. It's called crawling before we walk or walking before we run.
The 2016 plan for SCIEX was clearly already made and in progress when this deal was announced on January 12. So we're stepping in into a very large company that's already got its marketing and sales plans for the year in progress and we're being added to it. So I was very pleased that as soon as eight weeks after it was announced, we were able to be part of and participate in a SCIEX workshop at a major US meeting on proteomics and that we are talking to our friends at SCIEX also about participating with them in several things that will be going on at the larger meeting, American Society for Mass Spectrometry that is in early June.
I mentioned that there's a large training and participation in a, I think it’s two or maybe even a three day workshop and seminar in Germany in mid-June. We will be there. We will have several people there presenting and working with the SCIEX folks in Germany. We certainly anticipate that the deal with SCIEX is going to end up being a very strong driver of sales for the company.
I can say that there were no sales that were directly related to our comarketing deal with SCIEX in the first quarter. I look at that as extremely good news that just the organic growth of this company was – we were able to achieve the very good results that we achieved and break the $0.5 million mark for only the second time ever. And I cannot find a single sale there that was directly related to our comarketing deal. Certainly, the credibility that we’ve gained by having that deal announced probably played a role in some of the sales we had, but there were no direct sales.
We do expect that there will be a minimum of three or four sales in the second quarter that will be directly related to the comarketing deal with SCIEX. And as I've told many people this is just the beginning. This is the beginning. We're taking it. We're working with them as best as we can under the circumstances of already having their plan in place and we being a new group to come in and be added to their existing 2016 plan. But I'm very happy that we have already participated in one workshop, expect to participate in others. We’ll be part of the Germany group in the middle of June.
And the new instrument itself that we're developing, the 2320EXTREME is going to play I think a major role in bringing new customers and increasing revenue for both SCIEX and us as we believe that we will help them sell mass spectrometers as they will help us sell our Barocycler instrument.
I've also mentioned that we're excited about the micro-Pestle and that this consumable which is not yet played a major role in our sales, which again is good news. We think will have an impact in our sales in the second half of this year.
And the last thing is the successes of the first quarter included several very important infrastructure additions that that we needed, infrastructure that will allow us to develop and maintain and respond to orders, to questions from the industry, from potential customers about PCT and how we can fit in with SCIEX or other mass spectrometry companies and mass spectrometers. So very important to have that infrastructure built and so some of the successes of the first quarter were in fact related to that infrastructure, including two hires, one in manufacturing and one in R&D as I mentioned. Dr June Ma, our PhD-level electrical engineer.
So Tim, I'd like now to bring you back on and have you open up the lines for in case there's anybody who has any questions.
[Operator Instructions] Our first question comes from the line of [Daniel Wong], a private investor.
Rick, I wanted to congratulate you on the stock today. I mean it definitely shows a lot of strength there. And my question comes regarding the 2320EXTREME that you're talking about, obviously SCIEX is helping with that, but how does it go farther into other sales channels in maybe non-mass spec market?
The 2320EXTREME was based on – a number of changes to the 2320 to make it what we call the EXTREME were based on a number of recommendations from Professor Aebersold, Dr. Gall and others in the life sciences industry who were using our 2320. Clearly, we made this with the idea that it would be a leading instrument with whomever we were to partner with.
At the time, we did not know it was going to be SCIEX, but whoever we’re going to partner with in a comarketing arrangement. And so it’s a good question because I think perhaps people may misunderstand, this is not an instrument that is only for the SCIEX deal or the PCT SWATH procedure. This is an instrument that will replace our 2320; it will replace a microprocessor that's 15 years old.
It works, but now the capabilities of the computer will be able to allow these investigators to do so much more than they can do with the existing instrument. It can go to higher pressures, it can have better control of temperature both hot and cold temperature, it will have a better digital displays; it'll have USB ports for downloading information. It's just a [indiscernible]. It is also an instrument that is going to be available for sale across the board. So it's not just going to be available for customers using the SCIEX mass spectrometry.
It’s going to be available for any lab that's doing mass spectrometry or any lab that needs to do any type of extraction, processing, digestion of proteins prior to analysis, whether it's using 2D gel electrophoresis, mass spectrometry or anything else. So it's a good question because it's important that everybody understand this instrument is going to be made available to everyone that is in the proteomics field that can use it.
I only have one other question [indiscernible] that Dr. Aebersold published two weeks ago. I'm obviously talking about the micro-Pestle and obviously being a new consumable, how is the company going to be taking advantage of this new consumable?
Dr. Aebersold and others published probably 10 days ago, 10 days to two weeks ago on some new data on the micro-Pestle. The micro-Pestle is, as I said, we've applied for a patent. We think it's very unique and very novel. It uses the pulses of pressure you get through PCT to help break apart tissue samples.
But most importantly because of the way it works, it allows a scientist who would normally take a sample of tissue, let's say, a biopsy sample and one or two things would happen, either it would be too small to be processed to be then analyzed by mass spectrometry or if it wasn't too small they would most likely in most cases have to transfer it to two or maybe even three different tubes and each transfer you can lose sample and you have a chance for contamination. What the micro-Pestle does is it allows you to use very small samples that you could never run mass spectrometry on and allows you to use them and process them and make them available for mass spectrometry.
And number two, you do not have to transfer out of the micro-Pestle until the time you're ready to put the sample into the mass spectrometer. So we've gotten away from the need for processing into two or three different tubes and we also enabled investigators who are looking at very, very small tissue samples like needle biopsy samples and we are now enabling them to use that sample and use downstream mass spectrometry for the analysis which they have not been able to do before.
So the paper from Professor Aebersold is just a – it's another very important piece of information from a very important key opinion leader that says that PCT and PCT with the micro-Pestle can in fact enable scientists to do things that they haven't been able to do before.
And without going too far down the road, I can say that what's exciting about this is that this is one of the uses of PCT and one of the consumables that could eventually find its way into the clinical market. The research market is very big. If all we did was spend our lives supplying the needs of the research market, we have I believe a very successful highly-valued company. But if we can augment that by having some of our instruments and our consumables find their way into the clinical market, the clinical diagnostic market, well, then that really opens up the potential for this company.
And studying tissue, needle biopsy tissue is something which is done millions of times a year. So I have had one pathologist who has looked me straight in the eye and he has said to me if this works as well as we think it works, we will go to the board and ask permission to bring your instrument and your consumable into the clinical market in their country and this is in Switzerland.
So we're very, very excited with this follow on paper from Dr. Aebersold and certainly that's something we have a lot of short term things that we believe will happen that will add value to this company, I mean this year and next year, and then we have some long term things that could really change the dynamics in an extremely large way.
Our next question comes from the line of Alan Stone of Wall Street Research.
Congratulations on the first quarter achievements and many, many accomplishments there. I was wondering if you can elaborate a little bit on the mix of the consumable versus the instrument sales. I see that in the first quarter it was about three quarters of the revenue or slightly under three quarters was from instrument sales and about quarter or less on consumables. And I was wondering how you see that pattern potentially changing as you progress into the remainder of the year and out into the future?
I don't think it's going to change remainder of this year. I would not expect a change, Alan. You're absolutely right, whether it's three quarters, 80%, 70%, but a very large amount of our product sales were instruments. I've mentioned on previous calls that the gross margins we have on instruments is not that less, that much less than what we get on consumables.
Now, down the road, if you're looking at 2017 and 2018, I believe you will see gross margins increase on consumables because as they – as the sales of consumables increase and we start to order them in larger batches, we can get very good discounts from the manufacturers.
But right now, we are absolutely with the sales force of one person and even one person Roxana McCloskey, Roxana was 100% in sales. She's now – half of her time is in marketing. She is our liaison with SCIEX. She spends a lot of time working on the things that we're working on with SCIEX. So she's back down a bit in her ability to be out on the road and looking for sales. So we need to drive the installed base, Alan, it's very clear to all of us.
We need to get exposure; we need to get acceptance; we need scientists, key opinion leaders or non-key opinion leaders to buy the instrument and to publish their data so that they can show the advantages of pressure cycling technology platform. So I would not expect to see a change. I would expect for it to continue the majority, the super majority of our sales and products will be instrument sales for the rest of this year, particularly with a new instrument coming out in June, the 2320EXTREME coming out in June.
I’d expect that the more instruments in the field, the more papers are published, the more presentations are made and that is a major driver of our sales. That will change in 2017 or 2018 when we begin to be accepted more in the market and when we have more sales people. We will then be able to spend more time on consumables.
And I think you will see the consumables at some point will probably – revenue will probably exceed the revenue of the instruments. But that's ways away. Right now, with a very good margin on instruments, with the need for getting the information out there, we're going to push, we're going to drive, we’re going to do everything we can to drive the installed base of instruments.
And then one other question. I note that you were very successful in the PIPE financing and close out oversubscribed in the first quarter. I was wondering what your plans are going to be for continued financing as you get into the remainder of the year?
We haven't announced anything, so there's not much I can say about that. We have been successful. We've had people call, who have in their words missed the boat on the PIPE and wanted to know and just basically said if you're going to do anything else down the road, please give me a call. I'm an accredited investor. We had several people either that participated earlier or that missed the boat earlier that have said if we do anything.
Right now, we haven't announced anything. We've been very, as you know, Alan, because you've been following us for a lot of years, probably as many years as anybody on this conference call, which we appreciate by the way. And I think you know that we walk the line between how much money we raise and when we raise money to – versus the dilution that it brings.
And so we've been successful so far. And if we need to bring money and we'll find a way to bring it in. And if we don’t, we'll grow it. Unlike a lot of companies our size, we have sales; we have sales that are increasing; and the sales are certainly helpful in helping to grow this company.
[Operator Instructions] Our next question comes from the line of Geoffrey Scott of Scott Asset Management.
Quick question on the revenue, you said – I'm trying to disaggregate the products and services, you had $454,000 of products and services and then you broke it down into $332,000 of instruments and $44,000 of consumables, but that only adds up to $376,000. We're missing kind of $75,000. What was the rest of it?
We have some services that we offer and we also include in that some things that are ancillary that we don't really put into it as instruments. It may be small parts that are consumables that are parts and instruments. So the consumables you see are not consumables or instruments, Geoff. Those are the one-time use consumables.
I'd be happy to kind of break it out for you offline, but there are some services that we do, that we provide, some in-house testing that we do for people that maybe can't afford an instrument but they like to have something done for them. So we're happy to do that at a fee. And we also have some sales of parts that will not – we do not at this point throw into the bucket of consumables.
The SCIEX comarketing, is that comarketing only for the 2320EXTREME?
It is, it is right now. It's a good question. In my opinion, I think that there’s a number of things that will – could happen with the SCIEX comarketing agreement over time. We’re getting to know each other. We started with the, I wouldn’t say the 2320EXTREME, in a way it is because we're phasing out the 2320 itself because of this new instrument when it comes out.
But right now, it's just a 2320. But my guess is that they're going to have customers and I'm certain of this, they're going to have customers who can use our other instruments. And as we get to know each other and as things start to work and click, you can be assured that we'll be sitting down with them talking about expanding the comarketing into some of our other instruments, like the Barozyme and the Hub.
You said there’s going to be three or four sales in the June quarter, is that three or four different customers or one customer taking three or four machines?
Two customers. We have one customer that's interested in three machines and another customer that's interested in one machine. My lawyers don't obviously like us to start saying things like that, but we've already received the purchase orders and we've already installed one of the four. So I feel pretty certain – it's not for sure, but I feel pretty certain that we will sell four of the new instruments once they're ready. Obviously, it depends on us not running into a snag. We do not believe we will.
The prototype and the breadboard have been working tremendously well and whatever little glitches come up, we fix very quickly. So I feel very strong that we're going to have at least six or eight instruments available for sale by June 30 and that four of them we have plans on closing and shipping. One has already been shipped and installed.
Now, we do have other interested parties. We have expressed to certain people, to certain groups that we have – we're running out of the older model. We have the newer model. The newer model is $10,000 more, Geoff. I knew, I'm going to get you before you even ask me that because I know you want to know, you’re going to ask me that.
This is the EXTREME, right?
The EXTREME is $10,000. It's actually about – all in all, it's actually about $15,000 more than the current instrument because of all of the bells and whistles that we put on it. And we have probably another half a dozen interested individuals who were talking to us about PCT and several of them are very interested in the EXTREME at this point. So it's four, but if we can build six and approve and release six, we're going to do everything we can to get a couple more sold.
The machines that will be going down to Australia are going to be the 2320s or the EXTREMEs?
No, that's the three EXTREMEs, that's the other group. I mentioned that, you were on the call when I mentioned that. The first purchase order received for the 2320EXTREME was Children's Medical Research Institute in Australia and they're going to be testing 70,000 samples over the next seven years. So it's important for them to have the latest and greatest pressure cycling instrument. So three will be going to Australia in June and one has already gone to a customer in the States and is already – one has already been, I should say, received and will be installed as soon as it's available.
Can you describe your perfect marketing partner for the HT48 then?
The HT48 is primarily made for one part of the analysis of a protein in a research lab and that's what we call the digestion part. It’s very tricky, it’s very time consuming and under pressure and under PCT, investigators have shown it to be more reproducible, more controllable, better quality and often much, much faster. We're talking hours to minutes.
So I'm not – don't get me wrong, the customers of Barozyme are the same customers of the 2320EXTREME, except when I say same customers, same mass spectrometry customers. So I believe that a company like SCIEX could be a perfect partner for the Barozyme. But we've got to walk before we run and not complicate.
PCT, you've been around for three years now, Geoff, I think, and you've got to understand it. But it's not something which is just readily accepted out there. So we decided that we would start with one instrument which is 2320 and see what happens. I believe that when we have this first quarter call next year, we'll have a partner for the HT48 and that partner could in fact be SCIEX or a SCIEX-type company, because a mass spectrometry lab is what we're shooting for for that for the HT48.
The micro-Pestle will be used only with the 2320?
It can be used with our Hub instrument. At this point, it cannot be used with Barozyme although there are changes that we can make to both the micro-Pestle and we've built them into the patent. And there's changes we can make to the Barozyme that might allow it to be used with Barozyme. But right now, it is a consumable that is clearly meant for the 2320EXTREME or the Hub, which is the other instrument that is sort of taken a backseat to the 2320 right now, but could be a very big seller in the next year or two.
If somebody were to purchase 2320EXTREME, do they then have to go through an evaluation process for the micro-Pestle or is it something that they don't have to change their process at all?
They really – you have to be trained on it, but it is not that different than the normal consumable, major consumable that goes with the 2320 or the 2320extreme so that it will not require a lot more. I'm literally thinking that in the course of an hour, we can train someone on how to use the micro-Pestle versus using the normal micro-tube which is not with the micro-Pestle.
The difference is that the micro-Pestle has a cap that has like a baseball bat attached to it, it goes inside the tube and as pressure is exerted, the tube actually contracts and squeezes the tissue between this baseball bat hooked to the cap and the size of the tube. And it kind of turns and it homogenizes breaks it up. It allows mother nature to do what people are doing by hand or with small beads or other methods that are not nearly in our opinion as reproducible or as quality-minded as is the micro-Pestle.
So it's a small amount of training, it is not going to be a stumbling block. In fact, it's going to be a leader, it's going to lead people to buy our 2320EXTREME when they see the data that professor Aebersold and others are starting to generate or even starting to publish.
There are no further questions in the audio portion of the conference at the time. I’d now like to turn the conference back over to Mr. Schumacher for closing remarks.
Thanks, Tim, and thanks everybody for joining. Again, we're very pleased with the first quarter results. We had some major operational goals, which we achieved primarily in finding and setting up the partnership, the comarketing agreement with SCIEX and also with the development finishing design in developing the breadboard and then the prototype and now the first two production units in our new facility, not our facility but with our partner’s new facility, wonderful company called CBM in Taunton, Massachusetts and they are ISO certified and they make instruments for some very, very large companies around the country and around the world. So we're very excited to have them as our contract manufacturer.
So those are key operational goals that we had. But in addition, we were able to finish raising another $1.4 million and in addition show an increase, a substantial increase in sales particularly in product sales and within products and instrument sales. So with all this going on, I was very pleased with the results of the first quarter. I am looking forward to the second quarter.
The second quarter has started off well. We've already given guidance that we believe that we will significantly increase revenue well past the $1.8 million that we had last year and the $1.3 million the previous year that revenue in 2016 even without the SCIEX deal kicking in very early into the year, because as you know we're talking really second half of the year to really see some return from this investment. Even without that, we expect to have revenue in $2.25 million, $2.5 million range, if not more. And we expect to concurrently bring out the 2320 and continue to grow the business itself and the staff.
So we have a lot of things on the agenda. It's never scared us before. We've been successful in doing it. So I'm looking forward to the second quarter. And to everyone on the call, today was a very interesting day. I think my parting comments are I've had multiple people over the last year to say to me they're worried about our liquidity, they're worried about our turnover, they're worried that if somebody were to throw a lot of stock on the market willy-nilly that it could crush the company. And I think today was an unexpected test of that. And what it showed me is that we do have some very strong supporters out there who are eager to step up buy what they consider, obviously consider cheap stock. And what several people called me and called cheap stock.
So I appreciate all the investors who stepped up. We don't know what happened today. We have no idea who is selling and why they were selling, especially after such a good year last year and a good first quarter. But as one person said to me their loss is my gain, so we're very happy that we've been tested and we've sold over half and the company traded or the company’s stock traded over 0.5 million shares, almost 600,000 shares and we ended up almost back where we started. So I think that shows the support that we have in the wonderful shareholder base.
So thanks everybody. Good luck to everybody on what you're working on and appreciate your continued support of Pressure Bio and look forward to talking to everybody in middle of August. Bye.
This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.
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