Optifinancial Newsletter - Knowledge is power - Brad Mitchell
This is not financial advice nor recommendations. This is purely our own thoughts and opinions regarding the matter discussed below for entertainment purposes. This is not advice and is never intended to be.
Disclosure: We own PROG securities/shares at the time of publication. This could affect my biases in my analysis.
Progenity | $1.55
Tocilizumab - may use to capture 30% of the Ulcerative Colitis Market
DDS - Expanded thoughts on their future
I wrote a recent article covering their Abstract in plain language for the study of Anti-TNF and response of cytokines. They revealed in their study that they may have found a link to capturing more market with Isolating the cytokine that was responsible for causing some of the Ulcerative Colitis patients to not respond to Humira (Abbvie’s drug which makes about 9 billion a year from Ulcerative Colitis patients).
Interluekin 6 (IL6) was found to be extremely high in concentration in the body in the patients who had a high enough drug in them but still no response.
Remember that these cytokines send a message to the t-cells which cause inflammation and damage to the body. Humira suppresses a few of these cytokines, and that is why it is so effective in treatment.
From this finding of IL6, the next logical step is to figure out if anyone has created a drug to suppress this exact cytokine. After doing some digging, I found that a good drug to suppress this overactive cytokine is Tocilizumab
I believe that the doctors and researchers may embark on a journey to formulate a combination of Tocilizumab to help treat Ulcerative Colitis and Crohn's disease.
Currently, it seems that the medical field only thinks that tocilizumab has use in mainly Rheumatoid arthritis, but I think that will be changing.
Progenity’s DDS is capable of handling a liquid solution at which it can distribute this drug safely and topologically at the disease site. I think Tocilizumab would be an adequate and strong candidate for the future use of this.
I want to drive home another point about their DDS product, and what differentiates Progenity the most: Because they are targeting the disease site, and not injecting drugs. They limit exposure to the harmful effects of drugs.
You see this prevalent in their study results for other drugs. In their recent abstract for Tofacitinib (Pfizer’s drug), they stated that they are wanting to see how much more drug they can use before having adverse events. They are now designing a phase 2a study (Video here cut to 7 mins 55 seconds) for this which will start in late 2022. Dr. Bram Verstockt also mentions that possibly that steroids will not be needed as well which could be even better for patients.
DDS | Expanding the scope of their capabilities
The DDS is the product which slowly delivers a liquid drug at the very end of a person’s GI tract. Currently no other company has the technology capable to do this.
The DDS performs by using LEDs, sensors & machine learning to detect the anatomy of the GI tract.
It is very likely that what I speak about will not happen or be implemented, but I do think there is a high chance of these possibilities happening in the next few years for this technology.
Spectroscopy - detecting abnormalities/Tumors
The only two competitors Progenity faces right now are Chek pill and Pill cam. However, they solely focus on monitoring the GI tract. Progenity’s DDS/OBDS products will be used in conjunction to detect and pinpoint anomalies such as the tumor to make multiple targeted treatments. I believe Terry Research Lab has a mechanically engineered product that would also pair well with Progenity’s autonomous sensing technology. I do see a product in the future where Terry labs uses their suction/grab mechanism after detecting the tumor through Progenity’s light sensing/spectroscopy to tell where the tumor is located. This way the product would be able to mount onto the tumor and target it with extreme precision. This way harmful drugs would have much less effect on the patients and possibly have even higher efficacy. I am looking forward to Terry Research Lab’s further research on these products and can make great use of their suction, injection mechanisms.
It is apparent that technology can be used to treat chronic conditions effectively. I imagine there are some applications where patients can continuously take these pills to regulate or to monitor certain aspects. I expect the health monitoring market to be a late bloomer for Progenity. I think that they must go through the first phases of becoming accepted as a strong and safe company. I could definitely see them using their pill in conjunction with the apple watch or the apps on your phone. For instance, if you are a person who is worried about indigestion or needs to have a emergency release of sugar but do not have the ability to access it, this may be an effective way to remedy some precarious situations. I also think that tracking the body’s GI tract health over time will be a great indicator for physicians on patient risk factors. I could also see insurance companies adopting this as an effective annual tool to track a person's health for a physical. I think if insurance could prevent catastrophic disease early, (Usually higher cost to them), they may cover this type of diagnostic in yearly check ups.
Combining multiple drugs to effectively treat disease
From my research into GI tract diseases, they seem to have a lot of cross commonality in cytokine and immune responses. Due to the safety tolerability of the delivery methods, I am wondering why Progenity does not combine multiple drugs into a formulation to address different cytokines responses. For example: Combining Adalimumab and Tocilizumab to treat the whole population. Because it is topological, this would still most likely be fine and help completely rid patients of symptoms from these chronic diseases. I think Progenity could come up with a drug combination that would tackle all of the cytokines and would be a sure fire way of getting a strong response from the patient the first time they take the drug. This way insurance would not have to pay for multiple doctor visits for different specialists.
Further machine learning applications
Finally, I think the future in artificial intelligence and data will be where they can really deliver value to physicians, insurance and patients.
I think the data that they continually collect will be vital to their future. I could see a time where they do a diagnostic check and find biomarkers which would point to needing an increment in their current drug regimes or even possibly a decrease in the drugs that they are receiving. I think the data tracking over time could help predict future problems which doctors can plan to prevent for the patients. I also think that the data could be collected (bought from Progenity) by insurance to better represent risks which normally help the general population.
Another aspect to Progenity’s pill’s is that the can be cross trained from other data sets. For example, Progenity’s RSS pill finds from it’s data a way to detect tumors. Well that training can be implemented for Progenity’s DDS & OBDS pills. This way, they can deliver drugs but in the background run diagnostics which could end up saving someone’s life. These pills of course will have to start simple, but I do believe they will become much more and have a substantial impact on the healthcare industry.
This is another example of how versatile their autonomous delivery technology is. I think they have a large market basis ahead of them. They can interact with many companies and perform improvements/optimizations to drugs. They also can create new uses for drugs and possible new treatment avenues.
Current Price: $1.55
1.5 Month Price Forecast: $3-6
I am basing this off of a embargo lift on the Preecludia product line and news over licensing agreements
10-12 Year Price Forecast (2030-2032):
Bear case: $400 a share or $66 billion in valuation
If Progenity takes a bit longer on their goals and commercializes in 2028, I believe they will still be driving 3-4 billion a year and could be trading at a PE of 20.
Bull case: $1,200 a share or $198 billion in valuation.
If Progenity can start commercialization in 2025 and progress their technology through multiple revenue streams, we could see solid dominance and incredible growth. I think they could capitalize on Humira and then further large molecules (tofacitinib & GLP-1). If their Ionis partnership pushes through as well (60 billion market by 2030), we could see 9-12 billion a year. And with a PE of 20.
Disclosure: We own PROG securities/shares at the time of publication
All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.
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Until next week,
and the Optifinancial Team
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