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 | $1.36
DDS - where Progenity's pill will release the drug (refresher)
Xljanez - Tofacitinib, and the insights preparing it for commercial success
Next week: Abstract: Monoclonal Antibody’s
DDS platform that they are studying in humans right now and how it works (simplified):
Quick diagram to show the colon to catch you up on where exactly it is. This is the part of the GI tract that Progenity’s DDS is aiming to achieve therapeutic drug treatment with. The DDS starts at the beginning of the colon by detecting more space around it, and slowly releases the drug solution over 12-16 minutes.
Recently two abstracts came out that are honestly pretty hard to understand. Below I will try to summarize and give you insights along the way. This week I am giving my thoughts about Tofacitinib study.
Abstract 1 | Title - “Tissue exposure correlates to endoscopic outcome”
The title of the article means: When the drug is exposed to GI tract colon tissue, they show a response in human patients for the first time.
This means that for the first time, a human study has been completed with tofacitinib and they showed response. This alone does not give us enough to know if delivering tofacitnib in the colon will be successful but let's dive further into the abstract and see what it tells us. (We have seen great response in animal models using 1/25 the amount of drug)
The first part of the Tofacitinib abstract announces their goals:
They want to see if they get a response with Tofacitinib
Biomarker - a molecule/substance that scientists can use to say if drug was effective or not, also used to detect disease (for example: Preecludia uses many biomarkers and computes them to determine whether or not the mother has Preeclampsia) Stat3 Phosphorylation - Simplified - This is a protein that is intimately tied to cytokines (things that cause inflammation in Ulcerative Colitis), they are wanting to determine whether or not this can be used to measure response using tofacitnib. Discovering another way to use a biomarker would be extremely helpful for clinical data and eventual acceptance by the FDA.
Cytokine - produced by immune cells that signal for more immune cells to show up!
Another reason they are performing this study is because very little is known of how small molecules (Tofacitinib) react in the human colon. Why is very little known about how these drugs work in the back end? It is due to the fact that nobody has ever been able to get small molecule drugs all the way through the intestines to the colon reliably and there has never been much interest. “Medicine” currently believes that the small intestines are the best place for small molecules to be delivered.
The study: 30 patients with Ulcerative Colitis were baselined (took measurements before dose) and then given 10 mg of Tofacitinib, they could taper down to 5mg if they decided depending on response. They checked for STAT3 & the amount of tofacitinib at 8 & 16 weeks.
They showed in their results some significant insights which will be overlooked by non-technical investors
They found that the tissue and the serum closely correlated in proportion. However, the tissue (the drug target site) had maintained a much higher number of the drug. This is great news to hear. This means, the drug stayed active in the delivery area and avoided entering into the blood plasma. The serum mentioned from above is the separated portion of the blood which does not contain the clotting which happens in blood. This makes the serum look clear. (You will hear plasma and serum) They essentially are very similar except that plasma has the clotting which can hide drug concentrations while undergoing a reaction or spectroscopy to determine the presence of drug/biomarkers. The clearness factor of the serum most likely helped the scientists correctly analyze the data.
The study reported that they wayyy over dosed the patients (No adverse events were discovered). They met all of the factors required to treat the patients from literature and most likely can taper the drug down substantially.
What I am finding in my research of GI disease, every patient’s system is wildly diverse. This is why a myriad of Ulcerative colitis and Crohn’s disease drugs are needed to treat the population as a whole. Progenity is definitely taking the best approach as they have other FDA approved drug candidates in their pipeline that I have discussed previously.
In this study they grouped the patients in Non-responders and Responders. This means some people’s system just did not respond to the drug, and others did.
They found that the STAT3 biomarker correlated with the Tofacitinib drug concentration. This is good news as it is another way to validate their data.
Lastly they suggest that they want to continue the research but for the next iteration, try to see how much they can deliver before having negative effects on patients. In this way they will be able to see the limits of this technology and how it will correlate to other small molecules.
Final thoughts from reading this study additional studies I’ve read previously:
Tofacitinib will be successful in humans by use of Progenity’s DDS platform. They could definitely expand the revenue for Pfizer quite a bit and take market share from Abbvie if they implemented their system with Tofacitinib.
Current Price: $1.35
2 Month Price Forecast: $3-6
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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