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| New Coverage and Report on PSID Just Issued |
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 Hot Stock to Watch |
Company: PositiveID Corporation (OTCQB: PSID) |
Last:
Price: 0.0549
Change (%): + 0.0035 (5.99)
Volume: 83,025 |
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Investment Highlights
- Bio-Threat Detection Technology. Through the acquisition of MicroFluidic Systems in 2011, PositiveID became a leading player in molecular diagnostic systems for bio-threat detection. The Company’s flagship products are its stationary detection product M-BAND and mobile Firefly Dx, both of which provide evidence of biological threats with a high degree of sensitivity in a matter of minutes.
- Industry Giants as Partners. PositiveID has signed strategic partnerships related to development and/or distribution of its products with UTC Aerospace Systems, a portfolio company of United Technologies Corp. (NYSE:UTX), Leidos (f/k/a Science Applications International Corporation ) (NYSE:LDOS) and Boeing Co. (NYSE:BA).
- Revenue Generation. The agreement with UTC Aerospace Systems to support a U.S. Department of Defense contract will provide $841,000 in revenue to PSID through the remainder of 2014.
- Protected Intellectual Property. PositiveID has protected its M-BAND technology with 13 patents and 5 patents protecting the smaller, handheld system (Firefly).
Profile
The battles ongoing in Syria reportedly bombing their own people with chemical weapons last year, combined with the unrelated event of the Centers for Disease Control and Prevention discovering that at least 75 people were exposed to a possible anthrax infection, should provoke thoughts about biological warfare and just how deadly it can be. Although most developed nations have banded together in a pact to not allow the use of biological and chemical warfare, the sad fact is that bioterrorism is always looming as a possibility for mass destruction and a far more secretive - and less expensive - life destroyer than any traditional explosive.
Governments around the world are keenly aware of the potential of virulent pathogens, most of which the world lacks standards of care to treat. It’s one of the driving forces behind controversial research on infectious diseases where studies are being conducted on deadly and easily transmittable diseases in laboratories. Consider the influenza strain H5N1 (which has been around for nearly four decades), often dubbed “swine flu,” that kills a significant number of humans that acquire the disease from birds. The sickness swept across the U.S., causing a nationwide pandemic in 2009 and it’s not gone to this day, with researchers still trying to figure out a vaccine.
That’s just one example of how difficult pathogens can be to treat and the stack of corpses that can lay in the wake. The CDC has three categories of bioterrorism agents/diseases, ranked according to characteristics such as ease of dissemination and mortality rates. Category A consists of six agents, including anthrax, botulism, plague, smallpox, tularemia and viral hemorrhagic fevers. These agents are easily disseminated with a high mortality rate, meaning that they have a high potential to have a major impact on public health.
The list grows longer for Category B and includes things like food safety threats, such as salmonella or E. coli, staphylococcal enterotoxin B and viral encephalitis. Most people remember the anthrax threats around 9/11, but people should also remember the salmonella attacks in 1984 when followers of Bhagwan Shree Rajneesh poisoned nearly 800 people in Oregon by dumping salmonella-tainted liquid on items in salad bars at restaurants in what is still the largest bioterrorism attack in U.S. history. Luckily, salmonella poisoning is treatable and none of the victims died.
Given the high morbidity and mortality relating to the first two categories, it may be a bit shocking that Category C could actually be viewed as the scariest class, as it is relatively undefined and reserved for emerging pathogens that can be engineered for mass dissemination in the future.
Point being that bioterrorist attacks can come at anytime, anywhere, with no warning and with relative ease. Since many of the agents lack strong treatment options, detection of agents is critical to protect against potential attacks, something governments earmark billions of dollars for to keep the world safe.
PositiveID Corp. (OTCQB:PSID) is quickly making a name for itself as an emerging growth company and developer of biological detection systems for the American homeland defense industry, as well as rapid medical testing. In mid-2011, PositiveID acquired California-based MicroFluidic Systems, bringing a decade of specialization in the development and production of automated instruments for detecting and processing biological samples into its portfolio. The acquisition gave PositiveID a core technology used for airborne pathogen detection, rapid clinical diagnostics and sample preparation applications.
PositiveID is now working to commercialize its two flagship products, M-BAND and Firefly Dx, as the company transitions into the revenue-generation stage.
M-BAND, an acronym for Microfluidic Bio-agent Autonomous Networked Detector, is a bioaerosol monitor with fully integrated systems with sample collection, processing and detection modules that can be used either indoors or outdoors and under extreme heat or cold. The company has 13 patents protecting the technology. M-BAND utilizes the industry gold standard TaqMan® Real-Time PCR (polymerase chain reaction) with an end-point read and toxin immunoassays which are well established in the field for optimal specificity and sensitivity. The technology was developed under contract with the U.S. Department of Homeland Security Science and Technology directorate, which included $30 million in contract funding, to detect an attack with a biological weapon.
M-BAND performs high specificity detection for up to six organisms on the CDC’s category A and B select agents list. The current platform supports over 70 RNA/DNA targets via multiplexing.
Each M-BAND module is fully functional and adaptable. The machine runs autonomously for up to 30 days, continuously analyzing air samples for the detection of bacteria, viruses, and toxins with results in as little as two hours. Results from individual instruments are reported via a secure wireless network in real time to give an accurate and up to date status for fielded instruments in aggregate. The technology is designed with a high level of operational flexibility, as M-BAND can be remotely set to detect for DNA-based pathogens alone, with or without either RNA-based organisms or toxins, or for all three types of pathogens simultaneously at remotely programmable intervals.
Every 30 days, the system requires replacement of the chemical reagents that are integral to detecting organisms. This creates a razor/razorblade business model to help ensure long-term revenue to PositiveID. With research estimating that the company will have sold and deployed up to 2,500 units in the next six years, a considerable appreciation in corporate value from current levels could be expected if projections are met.
Cash flow has already started for PositiveID regarding M-BAND. The company entered into a contract with UTC Aerospace Systems, a portfolio company of United Technologies Corp. (NYSE:UTX) to support a U.S. Department of Defense contract, which will provide $841,000 in revenue to PSID through September. This cash stream reduces the need for PositiveID to raise capital in the near term that could potentially be dilutive. PositiveID has pulled in some deferred license revenue previously through an exclusive license agreement with Boeing Co. (NYSE:BA). Boeing previously paid the company $2.5 million for manufacturing and sales rights to M-BAND in North America. Boeing will sell the product in North America, with PositiveID selling reagents and assays to Boeing, while maintaining rights to M-BAND sales outside of North America.
Further, in April the company announced its teaming partner Leidos was awarded a prime contract by the U.S. Defense Threat Reduction Agency to conduct research and development to combat weapons of mass destruction, aligning PSID for horizontal growth and possibly serving as a funding source. The prime contract, which has a five-year period based on performance and a five-year extension option, has a total value of $4 billion for all awardees if all options are exercised.
It’s not just M-BAND that has caught the attention of the government; Firefly Dx, a next generation of M-BAND, has also. Firefly has five patents protecting the technology. The cost-effective, point-of-need detection system is a two-part device consisting of a portable handheld instrument with wireless Bluetooth communication and disposable single-use cartridges containing all necessary analytical elements that can be deployed in a wide array of environments and deliver diagnostic results in only 20 minutes. Similar to M-BAND, the simplicity of the technology allows even minimally trained personnel to use the product. It is expected that the primary use of Firefly Dx is to be in agricultural screening in both domestic sectors and developing countries, point of need monitoring of pathogenic outbreaks, and for the detection of biological agents associated with weapons of mass destruction.
The Firefly Dx system combines sample lysis, purification, PCR analysis, and the identification of nucleic acids of interest. The system will be capable of processing a variety of sample types, including whole blood, buccal and nasopharyngeal swabs, urine, and environmental field samples. By taking advantage of the TaqMan®-based PCR assay and real-time detection, the Firefly Dx system can be adapted to measure altered gene expression levels such as those observed in endocrine diseases, radiation exposure, and cancer. Results can be immediately obtained and processed on site via SMART phone or computer interface with a specialized, mobile application and Cloud-based data sharing and storage.
In May, PositiveID signed a Space Act Agreement with NASA's Ames Research Center. Under this Space Act Agreement, NASA will assess the Firefly technology for potential ground and space applications, while PositiveID will assess the technology to improve its development of the Firefly hardware for extreme environments, such as Department of Defense field applications.
Based upon the aggregate of recent developments, PositiveID issued revenue guidance for the first time, projecting revenue between $4 and $10 million through the end of 2015 (2014 and 2015 combined). The company has reason to be confident in its outlook, given that it says $3.3 million is already in backlog. On that point, it’s notable that PositiveID currently has a market capitalization of only $4.4 million. PSID is not relenting in its efforts to grow revenue further, announcing that it has submitted for contract opportunities for M-BAND and Firefly through multiple agencies, including the Dept. of Defense, Dept. of Homeland Security and Dept. of Health and Human Services.
PositiveID is led by Chairman and CEO (and acting CFO) William J. Caragol. Caragol has an extensive history in top-level management, serving as CEO, CFO and on the board of many companies, such as Verichip and Millivision Technologies (a tech company focused on security applications), as well as serving as a consulting partner with Washington, D.C.-based East Wind Partners and spending eight years at Deloitte and Touche. President Lyle Probst has more than a decade of management experience through his roles at MicroFluidic Systems and Lawrence Livermore National Laboratory. Probst has worked on biodetection programs involving the Dept. of Homeland Security, worked on the development and deployment of BioWatch Generation 1 and was the principal investigator/developer of the BioWatch mobile laboratory at SAIC. That is just a small sample of the well-connected technology and biodefense experts at PositiveID shepherding the company’s products to commercialization. PositiveID has also strengthened its advisory board recently with the addition of U.S. homeland security and counter-terrorism expert Thomas DiNanno, as well as a business development expert (and winner of the three-way Republican primary for Lt. Governor of South Carolina in 2006) Michael Campbell.
Shares of PSID experienced a solid climb in the first half of 2014, including hitting a high of 13.8 cents in February, but have pulled back to 5.5 cents while forming a technical support around 4.5 cents. It is arguable that the company is undervalued with its paltry market cap with the company projecting revenue in the next year-and-a-half that could be more than twice its current valuation. The company’s detection products fall into an area of critical need in multi-billion-dollar markets that position the company for exponential growth in the near- and long-term. The seasoned leadership team, which has forged partnerships with industry behemoths and has inroads to government programs, certainly has the skill set and resources to see the company realize substantial sales as biological threats will always remain a very real threat to America and other countries. Simply, the market is there, the team is there, the products are there and the alliances for sales are there. It is for these reasons that we at AllPennyStocks.com have decided to turn our latest U.S. corporate spotlight on PositiveID Corp. (OTCQB:PSID) and encourage all of our members to immediately begin their due diligence and promptly add it to their watchlists.
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