SeeThruEquity Conference Snapshots.
Breakthroughs! Guar! Disruptions! Plaque relief!
By Robert J. Flaherty
A Winning Jockey Whips Up Pressure BioSciences. A Core Technology Breakthrough! South Easton, MA -based Pressure BioSciences, Inc. (PBIO-0.23) President and CEO Richard T. Schumacher toward the end of his presentation was excited. "So this is the breakthrough! This is the first time I have ever used that word in a press release in 38 years. The lawyers weren't happy until I showed them what we had. Then they said, 'Go ahead. It's a breakthrough.' It is a game changer for us."
Pressure BioSciences focuses on the development, marketing and sale of proprietary laboratory instrumentation and associated consumables based upon its patented Pressure Cycling Technology (PCT) platform. It uses alternating cycles of hydrostatic pressure between ambient and ultra-high levels (up to 58,000 psi) to safely, conveniently and reproducibly control the actions of molecules in biological samples such as human, animal, plant and microbial cells and tissues. PCT enhanced systems address the challenging problems inherent in biological sample preparation. This is a crucial step performed worldwide by around 500,000 scientists working in biological life sciences research.
Their Barocycler and PCT-specific consumable product line combine to make up the PCT Sample Preparation System. Over 225 have been sold or leased to leading academic, government, biotech and pharma companies.
PCT is currently being used to enhance sample preparation for mass spectrometry, biomarker discovery, bio-therapeutics characterization, vaccine development, soil and plant biology, forensics and counter-bioterrorist applications. This PCT instrumentation is capable of cycling pressure at specific temperatures, pressure levels and time intervals to control interactions of bio-molecules, such as DNA, RNA, proteins and lipids.
Worldwide sample preparation is a $6 billion market and rapidly expanding. Pressure BioSciences has been successful in selling to scientists for use in preparing samples in small batches. Often requiring handling one test tube sample at a time, their instrument is highly manual.
As medical care expands the number of tests ordered is soaring. So are tests for all kinds of other non- medical research. To keep up many of the nation's 80,000 laboratories are turning to automation to perform large scale testing. That is where the action is.
Where the Action Is! To go there Pressure BioSciences needed to come up with a design to integrate its systems with automated high throughput (HT) sample preparation and analytical system formats installed in tens of thousands of research laboratories globally.
That is what the breakthrough is all about. The company has come up with a new Barocycler High Throughput PCT-based instrument system. It is a game changer in terms of expanding future sales potential. It will allow the Pressure BioSciences sample presentation system to integrate directly with a downstream analytical system from any of dozens of instrument manufacturers. The new breakthrough Barocycler HT instrument is expected to be released at a top scientific meeting in mid-June 2014.
Helping new discoveries. Ric also talked about the new Barocycler HUB880, which will be coming out in the first quarter. It's a top limit will be raised up to 100,000 psi, which is nearly twice the power of the existing HUB440. That will make the new HUB880 the only one of its kind in the world.
Here is a hint of what that extra power will uncover. "Our collaborator Dr. Bruce Kristal and his group at Harvard discovered lipids in fecal material from premature babies that are not normally found. Think of this as a potential noninvasive way of determining what may be happening in the GI (gastrointestinal) track of a little baby or preemie that you obviously don't want to be sticking with needles. You might be able to correlate what you are finding in the fecal material to some disorder in the GI track, such as cancer, Crohn's Disease or the like.
"I am happy about half of the new lipids found were only found by using PCT to break open the fecal material to release the lipids. We are very excited about this."
In his closing conference remarks Ric noted there were two things PBIO will stay focused on over the next three quarters. Ramping up record sales is number one. Sales have been increasing over the prior year each quarter and the goal is for that to continue that pace all of next year.
Number two naturally involves exploiting that "breakthrough." The goal is to commercialize the Barocycler HT (high throughput) instrument that can run -simultaneously- the universally accepted micro well plate with 48 test tube samples in strips. That sure beats handling one test tube at time!
This new instrument should be released next year at the major mass spectrometer meeting in Baltimore. It will be attended by thousands of scientists, some of whom are already using PBIO products for doing a smaller number of samples. It will be a wonderful opportunity to show off his breakthrough using multiple wells doing 48 samples at the same time. "A lot of labs doing a large number of samples should be very interested."
Still, I could understand why the stock price of Pressure BioSciences was weak. Sales, $1.4 million for the trailing 12 months, are booming but losses have gone up to $4.4 million for the trailing 12 months. More capital must be raised. All emerging companies have short term problems and longer term need to reach breakeven and then start marking money. The trick is to explain so investors feel more comfortable.
So I sent my hard questions to Ric. His prompt email reply follows.
"Bob, you have my resume. You know I have founded or co-founded two companies from scratch, one of them literally started in my garage. And I helped start a third company as part of a seven person founding group. All three went on to huge market capitalizations, and two were consistently profitable and market leaders.
"We believe Pressure BioSciences will be the same. As for our losses going up, they are paper losses only, a combination of stock payments to IR firms, stock options to our incredible employees and changes in the value of derivative securities. On a cash basis we have reduced losses significantly over the past two years to almost a bare-bones amount, as we have gone from a staff of 14 to 10.
"All emerging companies go through periods like this. Very few are run by a guy who has done it three times before , who has a technology platform that is as powerful and enabling as PCT and who has a team around him as hardworking , smart and dedicated as my team.
"I have personally led the raise of over $6 million over the past three years, all at or above the market. And I have kept the common share count under 12 million shares. (That is a market cap of only $2.7 million.) We are as frugal selling stock as we are in spending money.
"Finally, we expect to be at breakeven in two years and I stand by that guidance. Hope this helps."
It did. That response is good enough for me. Prior to founding Pressure BioSciences, Ric built Boston Biomedica, Inc. (Nasdaq:BBII) from scratch to the world's preeminent quality control company for infectious disease testing. It was acquired in 2004. I'll bet a winning jockey can do it again. Where's my bookie?
For more information please visit: www.pressurebiosciences.com.
Can GuarGlobal Ltd. Modernize Indian farmers to grow more Guar for the fracking boom? Few of us know that guar gum is used in paper, textile processing, explosives, detergents, ceramics, paints, pharmaceuticals, bakery goods or cosmetics. Less care that guar means "cow food" in Hindi.
By explaining middle men, especially speculators, drove the price up 1,500%, CEO Michael Shores of Dallas, TX-based GuarGlobal Ltd. (GGBL-0.57) perks up our interest in this edible cluster bean.
Demand from the U.S. is soaring because guar is an essential ingredient in drilling fluids used in hydraulic fracturing (fracking.) Guar gum is an environmentally safe natural product with the ability to swell by hydrolyzing with water. It increases fluid viscosity of chemicals in drilling perforations and along fractures and frees up even more oil and gas.
In the fracking process when the rock cracks the fracture fluid continues further into the rock and extends the crack still further. Guar also helps prevent fractures from closing when the drilling injection is stopped and the pressure of the fluid is reduced. Guar Gum is also used in oil well drilling muds where guar reduces water loss.
Today 60% of fracking customer demand for India's guar comes from the U.S. Prices have already gone crazy but new fracking users in Canada, Russia, the Middle East and China are appearing. Supply problems may become even more severe.
All of this would be wonderful except this edible cluster bean is grown mainly in semi-arid areas on the Indian sub-continent. Primitive farmers decide on what crop to grow annually. They gamble depending upon the over or under precipitation of unpredictable monsoon weather or exaggerated price swings caused by inventory stocks by big oil companies, guar processors or speculative investors.
Enter serial entrepreneur Michael C. Shores with a highly unlikely non agriculture background. It's mostly high tech where he has launched over $1 billion products into the marketplace. For the first time he is teaming up with an oil and gas savvy cloud -oriented classmate from the University of Arkansas now based in New Zealand. The classmates' mission is to save the day by rationalizing the agriculture of growing guar. The synthetic version costs double and is undesirable for the long run.
Shores considers this adventure a second act in his life. Besides making more money Shores wants to give back as well. Even a few dollars more of annual profit to farmers in India would make a huge difference in their lives.
GuarGlobal's goal is to create a farmer/partner program to increase and stabilize an annual harvest of guar for the fracking industry. The business model is to put a farmers/partners cooperative together and cut out some of the speculative middlemen traders who have contributed to the crazy price swings. This means sharing more profits with farmers and going more directly to end users.
The idea is interesting. GuarGlobal would provide guar seed to farmers each year in return for the opportunity to purchase harvested guar at favorable prices. That way more farmers would plant guar each year. Yields and output would be increased by introducing more advanced agricultural methods. The prospect of creating a more reliable supply would give GuarGlobal an edge. It would enable GGBL to get forward contracts from end users who would be rewarded with more stable guar prices instead of wild fluctuations.
Present guar production depends on how many Indian farmers who own small to medium size farms (five to 250 acres) decide to grow guar as their main crop. These farmers rely on the monsoon season and traditional farming practices. They get little help from the Indian government. These challenges often lead to low productivity.
Guar Global's Shores aims to introduce modern methodologies, including satellite based reconnaissance imagery and weather forecasting combined with managed fertilization and pest controls along with regimented irrigation and mechanical harvesting to regulate , standardize and maximize land use for best practice growing optimization. With modern inputs yields and quality will increase dramatically and lead to a stable and profitable industry sector offering sustainable growth opportunities.
An offbeat way for an entrepreneur to try and give back. Right now it is Shores who is indebted to the Indian farmers. His truck got stuck in the mud and they flocked to help him. Although they clearly needed his tip, they all refused his attempts to pay them for helping. That was not something they would take money for doing. Will enough change their ways to join a cooperative? GGBL will be just an interesting a concept company until farmers become partners and revenue flows.
For more information please visit: www.guarglobal.com.
Go Green with Undervalued MagneGas' Disruptive Plasma Arc Technology. If Tampa, FL-based MagneGas Corporation (MNGA-0.60) succeeds several industries will be turned upside down. One target is the $5 billion metal working industry. It has not seen disruption in 80 years because it is reliant on acetylene fueled torch welding. Acetylene flame is toxic and emits shoot, but it is very hot and fast enough to handle emergencies. Is it destined to become a memory?
If so, it will be because of MagneGas's environmentally safe even hotter flame. This new GREEN metal cutting and welding fuel cuts cleaner, faster and safer with less slag. It produces higher quality cleaner cuts with a narrower groove or notch, no top edge rollover and a smaller heat affected area.
Chief Financial Officer Luisa Ingargiola described several one- time events which had come together in a perfect storm in 2012 to depress the stock so that all the many emerging positives were overlooked. She made a compelling case that her stock was undervalued. Let us see if we can capture the essence of her argument.
She explained their patented Plasma Arc Flow technology and recent moves to monetize it after the retirement of its founding scientist from MIT and Harvard. The resulting MagneGas is a natural gas alternative and metal cutting fuel made from liquid waste. Its Plasma Arc Flow process gasifies liquid waste, creating a clean burning fuel that is essentially interchangeable with natural gas but with lower greenhouse gas emissions. Plasma Arc Technology converts liquid waste to hydrogen based fuels, which can be used for metal cutting, cooking, heating and powering natural gas bi-fuel automobiles. It also has potential in Third World countries in helping to safely dispose of currently untreated human waste.
MagneGas custom builds liquid waste recyclers to customer specifications. Products range from a 50KW unit that produces MagneGas for a metal cutting shop to a 1 megawatt plant to capable of processing liquid wastes in high volume. Gasification Mode is for processing oil based or hazardous liquid waste and the maximization of fuel production can be in various configurations. Sterilization Mode to process sewage sludge or manure requires a test unit to ensure local regulatory approval prior to construction.
It can be a little power plant! It occupies a small footprint and runs in a completely sealed environment.
Revenues from the three months ending September 30, 2013 fell to $125,410 from $201,096 in 2012. Cash was only $579,098 down from $1.4 million. So the stock dropped. Overlooked is their strategy in place to monetize their technology with initiatives on improving focus on external customers especially large strategic ones, enhanced technology collaboration, significant cost reductions, accelerated R & D testing and third party validation of fuels and equipment.
There are signs of success like strategic partnership with General Motors, the U. S. Navy and two big fire departments, Clearwater and one soon to be announced. Also $276,000 of a $500,000 test equipment sale to Kazakhstan has already been received. A $100,000 deposit from an unnamed U.S. company has been received to pursue the use of MagneGas in co-combustion of coal burning plants.
With a total stock market cap of only $16 million, MagneGas is well positioning to reward early backers by turning liquid waste into energy.
For more information please visit: www.magnegas.com.
From Russia with Love: AtheroNova = New Arteries! I figured it out. AtheroNova means "new arteries" and, brother, do we need them. About one in three Americans (83 million of us) suffer from cardiovascular disease and 90% of all adult Americans' arteries suffer from 10% or more blockages from the buildup of harmful plaque.
For decades the situation seemed hopeless. But on Nov. 12 the U.S. patent office issued a patent on "Dissolution of Arterial Plaque using Hyodeoxycholic Acid" to Irvine, CA-based AtheroNova Inc. (AHRO-0.40). The main mission of Chairman and CEO Thomas W. Gardner's start-up is the stabilization and compression of plaque. Bile acids synthesized in the liver from cholesterol are a natural internal detergent. AHRO's lead product AHRO-001 is designed to pioneer using bile acid to attack plaque and make a major reduction in deaths from cardiovascular disease.
"Jaw dropping results" from a UCLA designed study on mice revealed those treated with AtheroNova's product had 95% less human kind of plaque than untreated ones. Toxicity also was low.
"We have more than one dog in the show," Gardner adds. Besides compressing plaque? "Raising the level of bile salts in the blood stream fools the body into making it think it just had a big dinner. What does your body do then? All good things."
Some of them are lowering the absorption of cholesterol and also lowering LDL, inflammation and lower glucose (too much causes diabetics). The biggest thing is up regulation of genes to reverse cholesterol transport.
If tests progress as hoped there will be a commercial product to safely regress atherosclerotic plague and improve lipid (similar to fat) profiles in early 2015- in Russia. It will take longer before we can have a commercial plaque compression compound in the U.S.A.
Its first Phase I safety clinical trial of its lead product AHRO-001 has just been conducted in Russia with a licensing partner and results will be released shortly. Why Russia and not in the U.S.A. which will not recognize the Russian toxicology tests?
Speedy revenues. AtheroNova did a licensing and development agreement with Maxwell Biotech Group. This Russian company is 50% owned by the Russian government and 50% by Russian capitalists. CardioNova (new heart), a Maxwell subsidiary, agreed to pay for funding Phase I and Phase II clinical studies in Russia in return for an equity investment. Phase I is complete so far as safety enrollment and dosing and Phase II is scheduled to begin in early 2014.
In addition, CardioNova receives a commercialization license for what was the old Soviet Union: Russian Federation, Belarus, Ukraine, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Moldova, Azerbaijan and Armenia.
This a good deal. Besides being left future sales in the rest of the world, Gardner believes that AtherNova could begin generating licensing revenues from that Russian agreement in early 2015. CardioNova will go for commercialization much sooner than our FDA would allow here.
"But we don't want to depend only on Russia," Gardner says. Russian toxicology work is good stuff but the FDA won't accept it. So AtheroNova will be doing its own studies here in the U.S. and in many other countries too. Study must focus on satin interaction because the world is on satin drugs and a new bile acid compound must fit in with them.
Why could the results of the next U.S. study be so valuable? Those plaque fighting genes which are up regulated by AtheroNova's bile acid compound are down regulated by satins. "That's really the reason why satins in the past have not shown any kind of dramatic plaque regression," says Gardner. "There have been big studies done on it."
A one to five percent reduction in plaque would be a blockbuster homerun drug. But Gardner claims the bar is set very low. His dream is to clear it with much higher results. Of course, there will be all the usual trials to pass and unexpected technical and financial hurtles to overcome.
With about 40 million shares and a total stock market cap of "peanuts" ($16 million) he will have to raise capital to do all the ambitious things on his agenda. But this is CEO Tom Gardner's fourth public company and his team also has a record of successes. They know what has to be done and how to do it.
For more information please visit: www.atheronova.com.
FOLLOW UPS: Three of our open sponsored Flaherty Special Situations have reported important positive developments of great significance. Building companies takes longer in the real world than momentum investors going in and out concede. Or maybe it just doesn't matter to them. Long term investors are becoming an endangered species.
Armada Oil, Inc. recommended in August 2013 (AOIL- then .0.30; recently 0.20) recently announced that the deadline to commence its first test well on its Niobrara Shale, WY lease from Anadarko Petroleum (NYSE:ARC) has been extended from a way too tight Dec. 31, 2013 to next July. That's a huge plus. Now AOIL has more time to raise funds and organize. The odds of succeeding and keeping this important relationship have dramatically improved.
Equally important, AOIL needed to raise millions to carry out its strategic plans. After a long deafening silence management recently announced they hoped to conclude a financing deal to accomplish all that they had outlined by the end of November. It is vital for micro caps to raise money in this large cap market. Capital is the key to surviving.
The stock remains down because the second shoe has not dropped. The completed deal and the terms! So investors watch and wait. But the overall situation at AOIL is much better. It has gone from being in danger of losing its lease and perhaps not even surviving to where it has a fine future.
Graphite One Resources, recommended in April 2013 (GPH.V-then C$18 ½ recently C$17) is still in the game. Management's goal was to raise $10 million to continue drilling in the brief Alaskan summer. Millions less money came in late and their exploration season was cut in half. But progress continues. GPH is still on target to open its maiden mine in 2017. GPH has a huge deposit and stands to become America's only large domestic supply. Ultimately its value should be achieved as GPH advances toward production and proves up more of what it has.
MCW Energy Group, recommended in Nov. 2012 (MCW.V-then C$1 recently C$1.15) had difficulty doings things as fast as promised. But pilot plant equipment is now in place to see if the Russian technology MCW now owns will be able to commercially recover oil from the Utah tar sands. Huge mineral holdings bought for a song would hit a high note. Licensing revenues would soar. Good to see more progress.
Naturally, the pilot plant must deliver as promised. That will really determine the value of what MCW.
God bless them! At the beginning of this newsletter I mentioned being stuck on a train during a long delay. To pass the time I took out my New York Times and did my daily reading. But as I looked about I had the only newspaper. The day of the print publication is rapidly ending.
Everywhere passengers were using hand held mobile devices plus a lap top and two tablets. They were talking, doing work or playing games. Few seemed to be getting news. Most interesting was an absorbed little girl sitting on friendly stranger's lap. She was moving her thumb with blazing speed over a tiny mobile keyboard.
What will her generation be like? They don't need TV news; they know it already from their devices. They are rarely alone as they constantly tweeter each other. They will know more science and more about the universes, but much less about the classics. They are commercially exploited and sexualized way too early. They will be freer than any human beings have ever been. Many will be destroyed by drugs or overwhelmed by the choices they have. The survivors who meet the new tests will have the potential to do things we can't even dream about today.
God bless them! Each new generation must meet the challenges of its time. Mankind's evolutionary adventure continues.-RJF
