Pressure BioSciences, Inc. · Pressure BioSciences Inc. Dutton Associates • 3721 Douglas Blvd.,...

Dutton Associates • 3721 Douglas Blvd., Suite 350 • Roseville, CA 95661 • Phone (916) 960-0623

Denise T. Resnik, M.S. [email protected]

Pressure BioSciences, Inc. August 4, 2008

Note 1: EPS estimates above are calculated on basic shares outstanding.Note 2: 2007 earnings are from continuing operations.

Note 3: Long-Term Liablities do not include $6.1 million in deferred revenue.

Year EPS P/E

Current Rating History

$8.003,103

Industry:Recent Price:52-Week Price Range:

REVS PSRFiscal Year Ending: DecemberPBIO

Healthcare, Biotechnology & Pharmaceutical

$2.81 - $7.78

Symbol (Nasdaq)

2006

2007

Balance Sheet Data (mil) 03/31/08

AAEE

Ownership and Valuation (mil)

Target Price (12 Months)Avg. Daily Vol. (3 mo.):

$3.30

2008

2009

- - - x- - - x- - - x- - - x

34.4 x11.1 x6.7 x2.6 x

($1.01)($1.11)($2.41)($1.55)

$0.2$0.7$1.1$2.7

11/27/07$6.09

$10.0012 Months

$4.1$4.6$0.0$5.3

Cash Equivalent:Working Capital:Long-Term Liabilities:Shareholders' Equity: Time Frame:

Shares Outstanding:Inside Ownership:Institutional Ownership:Equity Market Value:

2.1918%9%

$7.2

- - -

Date Assigned:Price at Rating:Original Price Target:

x $5.0 1.4 x2010 ($1.31)E

Update Report Rating: Strong Speculative Buy

Basis for Rating Pressure BioSciences, Inc. has developed a unique and superior technology for the preparation of biological laboratory samples and is in the early stages of commercialization of its product platform. While the rollout of this technology and the Company’s products has been somewhat disappointing (as reflected by the past three quarters’ revenues), we believe that with the sales force in place, sales should ramp up in coming quarters. The Company continues to drive its installed base of Pressure Cycling Technology (PCT) Sample Preparation Systems to enable it to realize increases in its recurring revenue streams from PULSE Tubes, ProteoSolve kits, and extended service contracts. Toward this end, the Company has increased the number of leads in the U.S. by over 2,000 and building its international distribution network with distribution agreements with three partners covering France, Switzerland, Belgium, Japan, and Korea. We expect that the shares will begin to reflect the substantial profits that we believe the Company can generate beginning in 2012. We are reiterating our rating of the Company as a Strong Speculative Buy with a 12-month price target of $8.00 per share. Company Description Pressure BioSciences, headquartered in South Easton, Massachusetts, is a publicly-traded company focused on the development of a novel, enabling technology called Pressure Cycling Technology. The mechanisms of action of the PCT sample preparation system differ significantly from other sample preparation methods. Specifically, cell disruption, or lysis, occurs when samples are subjected to well-controlled, alternating cycles of ambient and ultra-high pressure of up to 35,000 psi in the hydrostatic reaction chamber of either of the two Barocycler instruments sold by the Company. This use of rapid and repeated alternating cycles of hydrostatic pressure at controlled temperatures controls the interactions of bio-molecules and induces cell lysis for extraction of cell components.

Pressure BioSciences Inc.


of 15

There are two components of Pressure BioSciences’ PCT sample preparation system. The first is the pressure-generating instrument known as the Barocycler®, which subjects a sample to cycles of pressure from ambient to ultra-high levels and back to ambient in a precisely controlled manner. There are two commercially available models. The Barocycler NEP3229 has the capacity to process three laboratory samples simultaneously, while the smaller NEP2320 Barocycler has the capacity to process one sample at a time. The second component of the sample preparation system is the specially designed, single-use processing containers, PULSE (Pressure Used to Lyse Samples for Extraction) Tubes, which contain the laboratory sample and appropriate buffer and/or solvent. In addition to these two components, the Company has developed two ProteoSolve “kits” for use specifically with its proprietary PCT system for efficient customized extractions. Pressure Cycling Technology has been shown to offer a number of advantages over other methods of sample preparation including ease and speed of extraction, increased yield of extracted materials, uniformity of results, safety of laboratory workers, and minimization of sample contamination. The Company’s PCT employs a unique approach that has the potential for applications in a broad range of established and emerging life sciences areas. At present, the Company is focusing its research and development efforts on sample preparation for genomic, proteomic, and small molecule studies, although it has patents on other applications as well. The Company believes its development of the ProteoSolveLRS kits will drive sales of the Barocyler instruments. Sources of Revenue Barocycler Instrumentation Pressure BioSciences’ instrumentation is available for sale or lease. Barocycler NEP3229 The Barocycler NEP3229 is a self-contained, high-pressure laboratory instrument generating up to 35,000 psi, designed to fit on a bench top, inside a biological safety cabinet, or on the shelf of a cold room. The Barocycler NEP3229 is capable of processing up to three samples simultaneously using specially designed, single-use PULSE Tubes. The Barocycler NEP3229 has an external chiller hook-up, automatic fill and dispense valves, and an integrated microprocessor with programmable logic controller accessed by keypad. Barocycler NEP2320 The Barocycler NEP2320 is a compact version of the NEP3229 and provides many of the same Pressure Cycling Technology advantages as the larger instrument. The NEP2320 quickly and efficiently processes one sample at a time and is designed to use a minimum amount of laboratory bench space. The NEP2320 uses external sources, including available laboratory compressed air, bottled compressed air, or a stand-alone compressor to create high and ultra-high hydrostatic pressure inside the Barocycler reaction chamber. This instrument uses the same PULSE Tubes as the larger Barocycler. Consumables Original PULSE Tube (FT500) FT500 PULSE Tubes are used in conjunction with both Barocyclers described above and transmit the cyclic pressure generated by the Barocycler instruments to the sample. In sample extraction, the specimen is placed on the lysis disk within this PULSE Tube to which the appropriate buffer has been added, the tube is placed in the pressure chamber, pressure chamber fluid is added, and pressurization begins. As pressure increases, the ram pushes the sample from the sample chamber through the lysis disk and into the fluid-retention chamber. When pressure is released, the sample (now partially homogenized) is pulled back through the lysis disk by the receding ram. The combination of physical passage through the lysis disk, rapid pressure changes, and other biophysical mechanisms breaks up the cellular structures quickly and efficiently, releasing the nucleic acids, small molecules, and proteins.



of 15

New PULSE Tube (FT500-ND) Pressure BioSciences recently unveiled a new consumable PULSE Tube which represents the expansion of its PCT product line. The new PULSE Tube, the FT500-ND, is a novel, single-use processing container designed specifically for Barocycler sample preparation instruments. The FT500-ND is based on the original FT500 PULSE Tube; it has a similar look and feel, yet it does not contain a lysis disk. According to the Company, the new PULSE Tube allows for rapid and reproducible processing of solutions and suspensions that do not require partial homogenization by passage through a lysis disk. In addition, this consumable can accept smaller sample volumes than the original PULSE Tube. ProteoSolveLRS The ProteoSolveLRS (ProteoSolve for Lipid Rich Samples) kit is designed for the safe, rapid, efficient, and reproducible extraction of proteins from lipid-rich samples, including adipose and brain tissues, organelles, and membrane preparations. Proteomic analysis of such samples is widely used in the study of diabetes, cancer, ALS, heart disease, and a number of other disorders related to obesity. The ProteoSolveLRS kit contains specific buffers, solvents, PULSE Tubes, and instructions for use with a purchased or leased Barocycler instrument. Research groups outside of the Company are beginning to publish data supporting Pressure BioSciences’ data showing the advantages of this method of protein extraction from lipid-rich samples over conventional methods. Consumable in Development ProteoSolve-SB The ProteoSolve-SB (Systems Biology) kit will provide a novel approach for the simultaneous extraction, isolation, and fractionation of nucleic acids (DNA and RNA), proteins, and lipids from animal and plant samples routinely used in laboratory research. The reagents and PULSE Tubes included in this kit are designed to work in synergy with Barocycler instruments to study nucleic acids, proteins, and lipids from the same research sample. To date, few techniques allow for the concomitant extraction, isolation, and fractionation of components, resulting in costly, time-consuming, and problematic processing issues. Data from the Company and from researchers at the Harvard School of Public Health show that the ProteoSolve-SB kit yields high recovery of nucleic acids and proteins, shows excellent reproducibility, and has resulted in the discovery of several unique proteins in certain cancer samples. Pressure BioSciences expects to be able to commercialize the ProteoSolve-SB kit before the end of 2008. Company Services Extended Service Contracts Pressure BioSciences offers one-year and four-year extended service contracts on all Barocycler instrumentation sold. These service contracts provide on-site scheduled preventative maintenance, on-site repair or replacement of all worn or defective component parts, and telephone support at no incremental cost for the life of the service contract. Fee-for-Service Pressure BioSciences occasionally performs PCT services on a fee-for-service basis. This is typically done in cases where the Company believes that the customer has a high likelihood of purchasing a PCT Sample Preparation System and/or will publish or present results of the work performed in scientific journals or in scientific meetings. Grants Pressure BioSciences views federal agency grants to be an important part of its business plan. These types of grants (National Institutes of Health [NIH] Small Business Innovation Research [SBIR] Phase I and II Grants) provide funding for work the Company is planning to perform as part of the development of its technology to support commercialization efforts. Pressure BioSciences was awarded two SBIR Phase I Grants. The first grant was awarded in September 2006 to fund experiments to demonstrate the feasibility of using PCT in the development of a new method for the extraction of clinically important protein biomarkers, sub-cellular molecular complexes, and organelles from cells and tissues. The



of 15

second SBIR Phase I grant was awarded in March 2007, to fund the investigation of the purification of nucleic acids using PCT. The amount awarded under each of these grants was approximately $150,000. In recent news, the Company announced on June 24, 2008 that it has been awarded a Phase II SBIR Grant from the NIH. The grant is expected to help fund continuing experiments designed to further the development and commercialization of novel, automated, and reproducible methods for the extraction of clinically important protein biomarkers, subcellular molecular complexes, and organelles (including mitochondria) from cells and tissues using the Company's pressure cycling technology (PCT). Mitochondrial dysfunction has been implicated in diabetes, cancer, neurodegenerative disorders, stroke, head injury, and other disorders. The grant is for a total of $850,000, to be available over two years. Work on the project is expected to begin within several weeks under the direction of the Company's principal investigator, Dr. Feng Tao. The Company expects the grant to provide funding for collaboration with scientists at the Brigham and Women's Hospital in Boston for the testing the PCT Sample Preparation System to determine whether it can increase the standardization of mitochondrial isolations with increased yield and quality of mitochondria from various tissues and to facilitate biochemical studies of mitochondrial constituents that are often otherwise limited by solubility concerns. If successful, this work could facilitate drug development in diabetes, cancer, neurodegenerative disorders, stroke, and head injury; aid research into the roles that mitochondria play in these diseases; and potentially facilitate research directly into personalized medicine.



of 15

Commercialization Plan Update In actualizing its commercialization plan, announced in March, 2007, Pressure BioSciences has made considerable progress in some areas and has been somewhat disappointing in others. We believe that the Company’s near-term sales goals may have been somewhat unrealistic; however, now that the sales team is fully staffed and trained and a new, dedicated Vice President of Sales has been added to the sales staff, we believe that the sales number should rise accordingly. The following itemizes each area covered in the Commercialization Plan and the Company’s progress to date:

• Expansion of the Company’s domestic sales force from one full-time sales director in 2006. The domestic sales force was fully staffed to seven regional sales directors by the end of 2007, and in early 2008 the Company created a new position — Vice President of Sales — and hired Matthew B. Potter to fill the position.

• Increased sales of the Barocycler NEP3229. As of March 31, 2008, Pressure BioSciences has installed 29 NEP3229 Barocycler instruments, which represent a total of three in the first quarter of 2008, 13 in 2007, eight instruments in 2006, and five instruments in 2005. Its customers include researchers at academic laboratories, government agencies, biotechnology, pharmaceutical, and other life-sciences companies in the United States, and three foreign distribution partners.

• Commercial availability of a light-weight, more portable PCT model. The Barocycler NEP2320 instrument was rolled out in 2007. Four instruments were placed in first quarter of 2008 and seven in 2007.

• Launch of its first PCT-dependent research-use-only kit, ProteoSolveLRS. This kit, designed to extract proteins from lipid-rich samples in combination with PCT instrumentation, was launched in mid-2007.

• Expansion of its foreign distribution network in an effort to commercialize PCT globally in 2008. In order to market Barocyclers abroad, the Company received approvals for the CE Mark and the IEC610-1 for both instruments. In addition, Pressure Biosciences expanded its international distribution network from one long-term distribution partnership at the beginning of 2007 to three long-term partnerships by March 31, 2008, which cover Japan, France, Belgium, Switzerland, and South Korea. Guidance provided from the Company stated that it did “generate a number of sales ex-U.S. during 2007 and Q108. A few were directly to the distribution partners… so they could have the instrument for demo, internal use, etc. Also, two units were sold through the distributors into third-party sites to end users during Q1 2008.”

Pressure BioSciences’ goal in 2008 continues to be market penetration of laboratories needing a reliable, fast, and safe method for genomic, proteomic, and small molecule sample preparation, and to increase commercial operations to serve researchers at academic laboratories, government agencies, biotechnology, pharmaceutical, and other life-science companies in the United States and abroad. The Company believes there is a significant opportunity to sell additional Barocycler instrumentation to additional laboratories at current customer institutions and to expand its potential customer base to include hospitals, reference laboratories, blood banks and transfusion centers, plasma collection centers, pharmaceutical manufacturing plants, and other sites involved in each specific application. We believe that, if the Company is successful in commercializing its technology in the sample preparation market, its financial results will be positively affected by a combination of the sale and lease of the Barocycler instruments, a recurring revenue stream from extended service contracts, sale of single-use PULSE Tubes, and revenues from its ProteoSolveLRS kit and, upon commercialization, its ProteoSolve-SB kit.



of 15

Publications and Presentations Integral to the Company’s marketing of Barocycler instrumentation and consumables is the stream of third-party validation of PCT published in medical/scientific journal articles and presented orally or in poster format at scientific/medical meetings. These forms of validation largely result from Pressure BioSciences’ collaboration programs, however as use of PCT spreads, additional researchers are presenting data as well. The Company announced on July 1, 2008 that scientists from New York University School of Medicine and the Brooklyn Hospital Center presented results on June 30, 2008, on advances made in the areas of breast and colon cancer, stroke, and in vitro fertilization (IVF). The results were generated from studies using Pressure BioSciences’ ProteoSolveLRS kit in conjunction with PCT. Presentations were made at the second annual Advances in Bimolecular Engineering: Protein Design Symposium sponsored by the New York Academy of Sciences. The researchers found that PCT provided rapid and reliable extraction of proteins, and extraction of proteins not previously identified in their samples. Their research is focused on the discovery of new biomarkers which could result in new diagnostics and therapeutics for cancer and stroke. Their research is also focused on identifying biomarkers for embryo viability and competence prior to IVF. Using PCT and ProteoSolveLRS, the scientists identified two proteins in IVF growth media only seen in competent embryos. The researchers believe that these proteins may prove to be biomarkers that can enhance selection and result in more live births from single embryo transfers. In related news, the Company announced on June 9, 2008 that four independent research groups presented data generated using PCT at the recent Annual Conference of the American Society for Mass Spectrometry. Mass spectrometry is an analytic tool used for the identification and quantification of molecules present in solids, liquids, and gases. The scientists represented research groups from Pacific Northwest National Laboratories, Harvard School of Public Health, Commonwealth of Virginia Laboratory, and U.S. Food and Drug Administration (FDA). The presentations included three poster presentations and one oral presentation relating to research on bio-defense and on improving the preparation of samples for studies of proteins. Researchers at the Pacific Northwest National Laboratories found that the use of Pressure BioSciences’ PCT reduced the time required to break proteins down (digest) into their component parts, peptides. The researchers found that the standard enzymatic approach using the enzyme, trypsin, took 6 to 12 hours, however the same digestion process took 60 seconds using PCT in conjunction with trypsin. The researchers further reported that high pressure digestion "resulted in a noticeable improvement in the number of (peptide) identifications." In similar work, researchers at the Commonwealth of Virginia Laboratory found that PCT, in conjunction with the enzyme trypsin "dramatically reduced" the time and complexity required for trypsin digestion of proteins. Researchers at the Harvard School of Public Health found that the use of PCT in conjunction with the ProteoSolveLRS reagent kit increased the efficiency of extracting proteins from lipid-rich samples compared with standard methods. The researchers reported that protein extraction is a “major bottleneck in studying obesity and obesity-related diseases (such as diabetes, heart disease, neurological disorders, and some cancers)” and found that the combination of PCT and ProteoSolveLRS resulted in a much faster, less expensive, and higher quality extraction process, compared to current methods. Researchers at the FDA reported their use of PCT to extract proteins from E. coli and Salmonella enteri prior to protein profiling. They reported that using PCT allowed them to identify different strains of E. coli 0157:H7 isolated from food-borne outbreaks. The scientists discussed the importance of differentiating bacteria to the sub-strain level for their work in bio-defense.



of 15

First Quarter 2008 Highlights Pressure BioSciences announced on May 1, 2008 that total revenue for the first quarter of 2008 was $132,376 compared to $131,621 for the first quarter of 2007. Revenue from the sale of PCT products and services was $81,473 for the three months ended March 31, 2008 quarter as compared to $37,943 for the prior year period. Sales revenues were generated by the installation of seven PCT instruments compared with one in the first quarter of 2007. The seven installations comprised of the sale of two NEP3229s and one NEP2320, as well as the lease/rental of one NEP3229 and three NEP2320s. Also contributing to revenue was an increase in sales of PULSE Tubes and ProteoSolveLRS kits, while grant revenue, which tends to fluctuate, decreased to $50,903 during the first quarter of 2008 from $93,678 in the same period in 2007. The Company posted a net loss for the quarter of $1,341,105 or $0.61 per share, basic and diluted, compared to a net loss from continuing operations of $259,583 or $0.13 per share for the same quarter in 2007. Research and development expenses of $490,931 in the quarter represent a 6.4% increase over the $461,532 posted for the same period of 2007, reflecting increased activity for the development of ProteoSolve kits. Selling and marketing expenses were $463,161 and $256,530 for the respective quarters in 2008 and 2007. This significant increase reflects the hiring of seven sales directors and a Vice President of Sales. General and administrative expenses increased by 4.2% from $481,082 to $501,248. Interest income decreased from $71,602 to $30,308 as a result of a decrease in cash as well as decreased market interest rates.



of 15

Table 1. Income Statement

3/31/2008 3/31/2007

Revenue

PCT Products, Services and Other 81,473$ 37,943$

Grant Revenue 50,903$ 93,678$

Total Revenue 132,376$ 131,621$

Costs and Expenses

Cost of PCT Products and Services 48,449$ 31,654$

Research and Development 490,931$ 461,532$

Selling and Marketing 463,161$ 256,530$

General and Administrative 501,248$ 481,082$

Total Operating Costs and Expenses 1,503,789$ 1,230,798$

Operating Loss From Continuing Operations (1,371,413)$ (1,099,177)$

Other Income

Realized Gain on Securities Available for Sale -$ 727,473$

Interest Income 30,308$ 71,602$

Total Other Income 30,308$ 799,075$

Income (Loss) from Continuing Operations before

Income Taxes (1,341,105)$ (300,102)$

Income Tax from Continuing Operations -$ 40,519$

Income (Loss) from Continuing Operations (1,341,105)$ (259,583)$

Discontinued Operations

Loss on Discontinued Operations -$ (378,503)$

Net Income (Loss) (1,341,105)$ (638,086)$

Per Share Results — Basic and Diluted

Income (Loss) from Continuing Operations (0.61)$ (0.13)$

Income from Discontinued Operations -$ (0.18)$

Net Income (Loss) Per Share — Basic (0.61)$ (0.31)$

Weighted Avg. Number of Shares — Basic and

Diluted 2,192,175 2,065,425

For the Three Months Ended

Source: Company filings

As of March 31, 2008, the Company had cash and cash equivalents of $4.1 million, compared with $5.4 million at the end of 2007. And while the Company’s accounts receivable were similar in the quarters for 2008 ($106,867) and 2007 ($118,471), Pressure BioSciences’ inventories increased sharply in the first quarter of 2008 ($595,060) versus the quarter in 2007 ($172,548) as a result of the receipt of instruments that were previously on order. This increase in inventory enabled the Company to provide instruments to each of its Sales Directors for demonstration purposes, and will allow the Company to install instruments in the future at a much more rapid rate. While we are somewhat disappointed in the number of installations of the PCT instruments this quarter, we believe that Pressure BioSciences is poised to significantly increase its sales. The sales force is in place and the current availability of instruments should prevent any roadblock to success in the quarters ahead.



of 15

Table 2. Balance Sheet 3/31/2008 12/31/2007

Current Assets

Cash and Cash Equivalents 4,146,820$ 5,424,486$

Accounts Receivable 106,867 118,471

Inventories 595,060 172,548

Deposits 211,561 553,483

Prepaid Income Taxes 58,463 56,863

Income Tax Receivable 249,541 249,541

Prepaid Expenses and Other

Current Assets 220,407 94,783

Total Current Assets 5,588,719 6,670,175

Property and Equipment, Net 339,713 257,797

Other Assets

Intangible Assets, Net 316,132 328,290

Total Assets 6,244,564$ 7,256,262$

Current Liabilities

Accounts Payable 378,609$ 152,729$

Accrued Employee Compensation 364,144 377,190

Other Accrued Expenses 189,642 186,840

Income Taxes Payable 5,889 4,519

Deferred Revenue 9,911 15,075

Total Current Liabilities 948,195 736,353

Long Term Liabilities

Deferred Revenue 6,127 6,767

Total Liabilities 954,322 743,120

Stockholders' Equity 5,290,242 6,513,142

Liabilities and Stockholders' Equity 6,244,564$ 7,256,262$ Source: Company filings



of 15

Outlook We continue to take a more conservative position with regard to the ramp-up of sales and have scaled back our installation estimates for coming quarters. In addition, we anticipate that the smaller NEP2320 will comprise a growing proportion of unit sales and that leases will continue to be a significant portion of the Company’s revenues. In our earnings model (below), we assume the placement mix of the NEP3229 to be 67% leases and 33% sales. In contrast, we assume the placement mix of the NEP2320 to be 25% leases and 75% sales. We anticipate that the Company will continue to increase spending on selling and marketing activities to further raise awareness of PCT within the scientific community and to maintain an active research and development program. Accordingly, we expect the quarterly operating losses from continuing operations to remain over $1 million through 2010. We expect 2011 to be a transition year, with the Company approaching profitability by year-end. Largely reflecting the absence of securities gains and tax benefits, we expect the Company’s net loss to increase from $2.3 million in 2007 to $5.3 million in 2008 and $5.2 million in 2009. Even with the influx of $633,750 from the 2007 private placement and the newly-awarded NIH research grant, our projections anticipate that the Company will seek to replenish its cash position no later than early 2009 with an equity financing. Pressure BioSciences is continuing to work to drive its installed base of PCT Sample Preparation Systems to enable it to realize increases in its recurring revenue streams from its two versions of PULSE Tubes, ProteoSolve kits, and extended service contracts. Toward this end, the Company has obtained over 2,000 leads in the U.S. representing laboratories and scientists conducting research which the Company believes would benefit from PCT, and is building its international distribution network with distribution agreements, in addition to its three partners covering France, Switzerland, Belgium, Japan, and Korea. We believe that aided by sustained rapid growth for instrument sales and growing PULSE Tube sales, kit sales, and service contract revenues, Pressure BioSciences will achieve profitability in 2012. It should be noted that, over time, we expect PULSE Tube usage to expand, not only in proportion to the increase installed base of Barocyclers but also as laboratories find additional uses for the PCT technology.

Table 3. Projected Barocycler Unit Sales (Sales and Leases)

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year

2008 7 12 18 24 61

2009 27 30 33 36 126

2010 40 44 48 52 184

2011 58 64 70 76 268 Source: Company filings and Dutton estimates



of 15

Table 4. Earnings Model

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Act. Act. Act. Act. Act. Est. Est. Est.

Revenue

PCT Products, Services and Other 37,943$ 136,355$ 106,787$ 118,702$ 81,473$ 155,600$ 243,175$ 334,900$

Grant Revenue 93,678$ 65,772$ 31,265$ 55,368$ 50,903$ -$ 106,250$ 106,250$

Total Revenue 131,621$ 202,127$ 138,052$ 174,070$ 132,376$ 155,600$ 349,425$ 441,150$

Costs and Expenses

Cost of PCT Products and Services 31,654$ 57,629$ 42,276$ 77,492$ 48,449$ 88,692$ 138,610$ 198,093$ Research and Development 461,532$ 538,015$ 519,303$ 503,879$ 490,931$ 500,000$ 500,000$ 500,000$ Selling and Marketing 256,530$ 350,823$ 379,448$ 399,718$ 463,161$ 470,000$ 475,000$ 500,000$

General and Administrative 481,082$ 624,462$ 578,238$ 490,957$ 501,248$ 520,000$ 535,000$ 550,000$

Total Operating Costs and Expenses 1,230,798$ 1,570,929$ 1,519,265$ 1,472,046$ 1,503,789$ 1,578,692$ 1,648,610$ 1,748,093$ Operating Loss From Continuing

Operations (1,099,177)$ (1,368,802)$ (1,381,213)$ (1,297,976)$ (1,371,413)$ (1,423,092)$ (1,299,185)$ (1,306,943)$

Other Income

Realized Gain on Securities Available for Sale 727,473$ 1,301,247$ -$ -$ -$ -$ -$ -$

Interest Income 71,602$ 80,482$ 75,732$ 58,784$ 30,308$ 25,000$ 19,000$ 6,000$

Total Other Income 799,075$ 1,381,729$ 75,732$ 58,784$ 30,308$ 25,000$ 19,000$ 6,000$

Income (Loss) from Continuing Operations before Income Taxes (300,102)$ 12,927$ (1,305,481)$ (1,239,192)$ (1,341,105)$ (1,398,092)$ (1,280,185)$ (1,300,943)$ Income Tax (Benefit) from Continuing Operations (40,519)$ (3,516)$ (209,503)$ (266,676)$ -$ -$ -$ -$

Income (Loss) from Continuing

Operations (259,583)$ 16,443$ (1,095,978)$ (972,516)$ (1,341,105)$ (1,398,092)$ (1,280,185)$ (1,300,943)$


Income (Loss) from Continuing Operations (0.13)$ 0.01$ (0.53)$ (0.47)$ (0.61)$ (0.64)$ (0.58)$ (0.58)$

Weighted Average Number of Shares —

Basic and Diluted 2,065,425 2,065,425 2,065,425 2,065,425 2,192,175 2,192,175 2,200,000 2,250,000

2007 2008

Table Continues on the Following Page



of 15

(Continued) Table 4. Earnings Model

Q1 Q2 Q3 Q4 2007 2008 2009 2010 2011

Est. Est. Est. Est. Act. Est. Est. Est. Est.

Revenue

PCT Products, Services and Other 483,400$ 530,325$ 625,275$ 678,250$ 399,787$ 815,148$ 2,317,250$ 4,794,425$ 7,640,875$

Grant Revenue 106,250$ 106,250$ 106,250$ 106,250$ 246,083$ 263,403$ 425,000$ 212,500$ -$

Total Revenue 589,650$ 636,575$ 731,525$ 784,500$ 645,870$ 1,078,551$ 2,742,250$ 5,006,925$ 7,640,875$

Costs and Expenses

Cost of PCT Products and Services 246,534$ 270,466$ 318,890$ 338,971$ 209,051$ 473,844$ 1,174,861$ 2,157,491$ 3,109,836$ Research and Development 500,000$ 500,000$ 500,000$ 500,000$ 2,022,729$ 1,990,931$ 2,000,000$ 2,000,000$ 2,000,000$ Selling and Marketing 525,000$ 550,000$ 575,000$ 600,000$ 1,386,519$ 1,908,161$ 2,250,000$ 2,650,000$ 3,050,000$

General and Administrative 565,000$ 580,000$ 595,000$ 610,000$ 2,174,739$ 2,106,248$ 2,350,000$ 2,590,000$ 2,830,000$

Total Operating Costs and Expenses 1,836,534$ 1,900,466$ 1,988,890$ 2,048,971$ 5,793,038$ 6,479,184$ 7,774,861$ 9,397,491$ 10,989,836$ Operating Loss From Continuing

Operations (1,246,884)$ (1,263,891)$ (1,257,365)$ (1,264,471)$ (5,147,168)$ (5,400,633)$ (5,032,611)$ (4,390,566)$ (3,348,961)$

Other Income

Realized Gain on Securities Available for Sale -$ -$ -$ -$ 2,028,720$ -$ -$ -$ -$

Interest Income 30,000$ 40,000$ 30,000$ 20,000$ 286,600$ 80,308$ 120,000$ -$ -$

Total Other Income 30,000$ 40,000$ 30,000$ 20,000$ 2,315,320$ 80,308$ 120,000$ -$ -$

Income (Loss) from Continuing Operations before Income Taxes (1,216,884)$ (1,223,891)$ (1,227,365)$ (1,244,471)$ (2,831,848)$ (5,320,325)$ (4,912,611)$ (4,390,566)$ (3,348,961)$ Income Tax (Benefit) from Continuing Operations -$ -$ -$ -$ (520,214)$ -$ -$ -$ -$

Income (Loss) from Continuing

Operations (1,216,884)$ (1,223,891)$ (1,227,365)$ (1,244,471)$ (2,311,634)$ (5,320,325)$ (4,912,611)$ (4,390,566)$ (3,348,961)$


Income (Loss) from Continuing Operations (0.44)$ (0.38)$ (0.37)$ (0.37)$ (1.11)$ (2.41)$ (1.55)$ (1.31)$ (1.00)$

Weighted Average Number of Shares —

Basic and Diluted 2,750,000 3,250,000 3,300,000 3,350,000 2,078,657 2,208,588 3,162,500 3,350,000 3,350,000

2009 Full Years

Source: Company filings and Dutton estimates

Pressure BioSciences, Inc.


of 15

Conclusion While we are concerned by the recent pace of sales and leases, we believe that Pressure BioSciences will demonstrate its ability, in coming quarters, to place an increasing number of Barocyclers. As the installed base grows, we believe that investors will gradually come to appreciate the potential for substantial profits beginning in 2012. We continue to rate Pressure BioSciences’ shares a Strong Speculative Buy with an $8.00 12-month price target.



of 15



of 15

Analyst: Denise T. Resnik, M.S. Denise Resnik's career in the pharmaceutical industry has spanned over 30 years. For the past 24 years, she has consulted to large, global pharmaceutical companies and emerging biotechnology companies in the area of new drug development. She co-developed a training program for physicians entering the field of clinical research and has taught the program to physicians around the US and abroad. Most recently she is liaising between a large pharmaceutical company and government health agencies to develop public-private partnerships to the benefit of both entities. Prior to her consulting activities she worked in pre-clinical research at Harvard Medical School and subsequently in pre-clinical and clinical research for large pharmaceutical companies. Ms. Resnik holds a master's degree in pharmacology and a bachelor's degree in biology.

Analyst Certification: I, Denise T. Resnik, M.S. hereby certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.

Pressure BioSciences, Inc., 14 Norfolk Avenue, South Easton, MA 02375 Phone (508) 230-1828, www.pressurebiosciences.com.

Dutton Associates. John M. Dutton, President, 3721 Douglas Blvd., Suite 350, Roseville, CA 95661 Phone (916) 960-0623, Fax (916) 960-0641.

Information, opinions or recommendations contained in Dutton Associates' research reports or research notes are submitted solely for advisory and information purposes. The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Such information and the opinions expressed are subject to change without notice. A Dutton Associates research report or note is not intended as an offering or a solicitation of an offer to buy or sell the securities mentioned or discussed. Neither the Firm, its principals, nor the assigned analysts own or trade shares of any company covered. The Firm does not accept any equity compensation. Anyone may enroll a company for research coverage, which currently costs US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $32,000 from The Company for 4 Research Reports with coverage commencing on 09/12/2007. Reports are performed on behalf of the public, and are not a service to any company. The analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests and insure independence. Please read full disclosure and other reports and notes on the Company at www.DuttonAssociates.com. The views expressed in this research report or note accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by Dutton Associates is in any way related to the specific recommendations or views contained in this research report or note. Periodic Research Reports and Research Notes on this Company are available at our web site: www.DuttonAssociates.com. © Copyright 2008, by Dutton Associates

Pressure BioSciences, Inc. · Pressure BioSciences Inc. Dutton Associates • 3721 Douglas Blvd.,...

Documents

Transcript of Pressure BioSciences, Inc. · Pressure BioSciences Inc. Dutton Associates • 3721 Douglas Blvd.,...