Biora Therapeutics May Have The Solution To Pfizer’s Xeljanz Woes And Is An Attractive Target

Biora Therapeutics May Have The Solution To Pfizer’s Xeljanz Woes And Is An Attractively Priced Acquisition Target


  • Biora's PGN-600, a second life for Pfizer's Xeljanz.

  • JK Inhibitor entering TNF Inhibitors market.

  • Improving lives of Ulcerative Colitis patients.

  • Ideal collaborator candidate for large Pharmas.

While many stocks have suffered declines this year, perhaps no industry has taken a bigger hit than the biotechnology sector, with many stocks depressed over 50% or more. At the same time, however, a number of large pharma companies are flush with cash thanks to Covid vaccine sales. The combination has opened the door for what many predict will be a new wave of M&A activity in the sector. Large pharmas have made no secret of their intention to aggressively seek out acquisition targets. Pfizer in particular is expected to have up to $175 billion in buying power by the end of 2022 and recently hired two senior executives with M&A experience, spurring expectations of a buying spree.

One promising target is Biora Therapeutics. The company is developing a suite of smart pills it hopes may one day replace IV infusions and colonoscopies. The company, formerly known as Progenity, IPOed in 2020 as a prenatal testing company and gained some hype last fall after releasing promising results from a pre-eclampsia test it was developing. Facing declining revenues from a drop-off in pre-natal testing during the pandemic and increasing scrutiny of the industry as a whole, the company exited the business altogether and refocused its efforts solely on developing this promising drug delivery technology, over which it has spent the past five years securing important patent protections. The technology spurred a massive investment from life sciences-focused fund Athyrium Capital Management, which is the company’s largest shareholder with more than 67 million shares. Athyrium has continued to provide additional funding to the company through purchase of convertible notes and warrants.

The farthest along of Biora’s products is PGN-600. It is part of the company’s DDS (Drug Delivery System) line and is designed to topologically apply tofacitinib (Xeljanz) directly to colon tissue. The company has produced promising preclinical research this year that indicates this product could be an attractive acquisition target for Pfizer. With Phase 1 trials set to start later this year, this article explores the profit potential of this single product for this attractively-valued company.

How PGN-600 Could Unlock a $10 Billion Market for Pfizer

Xeljanz is an anti-inflammatory drug belonging to a class known as JAK inhibitors. Initially developed for arthritis, it was approved for the ulcerative colitis (UC) indication in 2018, but has come under FDA scrutiny because of serious reported side effects including blood clots, stroke, heart attacks and elevated cancer risk. The drug already carries a black box warning and the FDA has mandated additional longer-term studies post-approval, the results of which have not been promising. While the FDA has so far demurred from more severe action, sales of the drug have dropped off significantly, down 31 percent year-over-year in Q1 2022. The drug will also begin losing patent protections within the next few years. Pfizer is clearly concerned about its viability in the UC market, and acquired Arena Pharmaceuticals last December in a bid to expand its UC treatment options. But recent studies conducted by Biora have provided strong evidence that changing how Xeljanz is administered to UC patients may both increase efficacy and curb the side effects.

In a study Biora presented in January and May of 2022, Xeljanz was administered directly to UC patients’ colon tissue using endoscopy or injection. The results showed that direct application of Xeljanz to the colon resulted in an average of 100x greater levels of the drug observed in colon tissue versus oral administration, as well as 5x decreased concentration in the bloodstream. The higher concentration in colon tissue correlated with higher UC remission rates for patients, and patients exhibited no side effects, though longer-term studies will be required to confirm this. This study notably focused on patients, known as primary non-responders, who have shown limited or no benefit from induction therapy from another class of UC drug known as anti-TNF. Abbvie’s Humira and Jannsen’s Infliximab dominate this category. More than 30 percent of anti-TNF patients show some level of primary or secondary non-responsiveness. The study therefore provided proof of concept that not only can Xeljanz be safely administered to UC patients, but that it may also provide relief in combination therapy with anti-TNF induction treatment. Or in other words, it could allow Pfizer to (1) expand its market to patients using JAK inhibitors, (2) gain market share among Abbvie’s Humira and Janssen’s Infliximab patients, and (3) provide a new delivery mechanism that may give Pfizer a leg up over other competitors in the field of UC that use painful injections for drug administration like Takeda’s Vedolizumab.

Tissue Exposure Graph (Biora Corporate Presentation, June 2022)

Results (Biora Corporate Presentation, June 2022)

Drug plasma level (Biora Corporate Presentation, June 2022)

Higher Colon Tissue concentration (Biora Corporate Presentation, June 2022)

In dollar terms, this could mean an additional $6 billion to $10 billion in U.S. revenues for Pfizer based off of Humira’s $20 billion in sales last year. It means that Xeljanz could not only capture the entire JAK inhibitors market but also gain a healthy share of the anti-TNF market when used as a combination therapy with Humira or Infliximab.

PGN-600 Is Rapidly Advancing to Clinical Trials and May Be Eligible for Faster FDA Approval (Path 505(B)(2))

Biora has taken a methodical approach to its preclinical trials of PGN-600. This year it has already completed device safety studies in healthy volunteers in both fed and fasting states using saline in the device, which showed about a 90 percent deployment accuracy rate and no side effects. The company has also completed a one-week toxicity study in animals that also demonstrated no safety issues. A study of the device in UC patients is currently underway with results expected by the end of Q3.

These results would sufficiently support an FDA application for Phase 1 study approval, and indeed Biora submitted a Type C meeting request in early May and expects a response from the FDA in August. Interestingly, however, Biora has designed and is initiating this quarter an additional eight-week toxicity study using a larger cohort of animals, which will compare the Xeljanz pill with PGN-600 dosing of both 10mg and 25mg. Such a study is atypical and expensive, which raises a question as to why a non-revenue producing clinical stage biotech company would embark on it. CEO Adi Mohanty noted on the Q1 earnings call that additional animal studies would generate data that would mean a lot in terms of how the company proceeds and would help company to better present its case to the FDA. Mohanty also noted that similar additional animal studies in its OBDS product line are being done at the request of the company’s unnamed large pharma collaborators. It is quite possible that the same applies to this DDS toxicity study and that Pfizer is unofficially behind it. If so, longer-term confirmation of reduced side effects may lead to public disclosure of a collaboration with Biora for development of PGN-600.

As part of its FDA meeting request, Biora expects to discuss the approval pathway for PGN-600. As a drug/device combination using an already-approved drug (Xeljanz), Biora may qualify for 505(B)(2) status, which would allow it to skip phase 3 trials.

If the FDA gives the go-ahead, Biora plans a Phase 1a trial in Q4 which will last for eight days. This will test the device in healthy volunteers using Xeljanz and will evaluate safety, tolerability and PK/PD. Soon after the Phase 1 trial is completed, the company plans to initiate a disease interventional study, where the company may learn more definitively about the benefits its solution can bring to UC patients. Most likely company will test combination therapy in this disease interventional study.

In early 2023 the company plans an eight-week p2a study in anti-TNF non-responder UC patients. Biora will therefore be eligible to submit its FDA approval application by Q4 2023. Keep in mind that Pfizer acquired Arena while its Phase 2 was still ongoing.


The stock currently trades around .70, with a market cap of $124 million, nearly a 90-percent discount off of its 52-week high reached last November. Its recent PGN-600 study results as well as a separate promising result in another product line prompted HC Wainwright to increase its price target to $6. The stock also received a $4 price target from BTIG in May. These targets already represent a 600 percent return and are expected to increase as Biora advances through its clinical trials. Ignoring its other product lines and focusing exclusively on PGN-600, a potential $9 billion market (JAK inhibitor plus anti-TNF combination therapy) would translate to a share price of $50 per share in three to four years’ time.


  1. Biora generates no revenue currently and its cash position is low. It reported $67 million at the end of Q1 with a projected $15 million quarterly cash burn, meaning it is funded until early 2023. The company has an open at-the-market offering of $90 million. As of Q1 it had only used about 10 percent. This presents a risk of dilution if capital infusions from pharma partners do not materialize before year-end, which may be exacerbated should the FDA require additional data before allowing Biora to proceed to Phase 1. The company also carries significant debt, mostly held by Athyrium.

  2. As a preclinical biotech, Biora carries the same risk as others in terms of failure of its product lines. Its animal data has been extremely promising but such results do not necessarily transfer to humans.


Biora is well-positioned as an acquisition target based on a single one of its product lines, each of which has the potential to generate billions of dollars in revenue. Its data has shown progressive and consistently good results thus far. At the current valuation, we believe there is significant potential upside and that this company would make a good addition to a well-diversified long-term portfolio.

P.S My special thanks to Karen and Brad for their tremendous contribution in writing and publishing this article.

Disclaimer: We are long in BIOR Stock and our views could be biased. This article is NOT a financial advice!

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