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 | $1.53
Abstract: Monoclonal Antibody’s
The goal of the study
Why do this study? What is the motivation?
Descriptions of terms
Tapping further into the Ulcerative Colitis (UC) market
I will go over this study in plain language and give you insights along the way.
This study has quite a few implications which are not easy to extracted due to the technical information and terminology that was used.
Let's start with what their goal was:
They wanted to see how patients with Ulcerative Colitis responded to different levels of drug. They checked different components: serum (blood without the plasma), colonic mucosa (mucus that lines the intestines), and faeces (the excrement). They checked 2 main things: concentration of drug and also numbers of cytokines in the different components.(List further below with short descriptions of cytokines)
Why are they doing this study?
Currently 30% of patients with Ulcerative Colitis (roughly $2.5 Billion of lossed revenue a year)
Do not respond to Anti-TNF monoclonal antibody treatment (Humira and others such as infliximab).
This means if Progenity finds a link to why these patients do not respond to the UC drugs, they can potentially discover and create intellectual ownership of this. They may also be able to design a drug that correctly triggers the pathways for a bodily response to Humira.
List of the Cytokines the tested for (cytokines signal certain t-cells to show up and can cause inflammation):
TNF - Tumor Necrosis Factor, essentially something that signals T-cells Anti-TNF - this is what humira is, it stops TNF from being produced.
IL6- A protein that is produced around areas of acute inflammation, This IL6 is produced at the disease site where Ulcerative colitis exists. It usually is a good indicator for doctors to figure out if a patient has a chronic/autoimmune disease.
IL12p40- Similar class as the IL6 & IL10, however acts as a chemoattractant for macrophages and promotes migration of bacteria. Normally is associated with inflammatory responses (I think they were studying IL12p40, as not much has been known of it’s function. I think this is something that might give researchers the link that they need to understand why some patients respond to humira and others do not.
OSM- Another type of cytokine, that has differences and is extremely complex. Basically what we know about it is that T-cells can stimulate OSM, which also helps promote more production of IL6. Seems like there is an interplay between all of these cytokines and how they correlate to the bodies immune reponse.
Anti-TNF/TNFalpha - Is a ratio of how much drug there is per t-cell signaling protein. Progenity uses this in the study to determine which patients responded to the drug and which did not respond. They also used this to decide which patients had sufficient drug in their system to make conclusions off of. They use Bad NR and Bad R as non-sufficient drug (interesting that they didn't give us how much drug they gave them or how they administered it) and then they also had Good NR and Good R which showed the patients who had sufficient drug. I will talk later on the link that they found which could open up the market to 30% more patients.
Here are the values that they received. The p-values on the right essentially show the statistical significance between the two groups. Simplest/Best way to explain it is that if the results are similar, the p-value is closer to 1. If the p-value is lower, that means the difference between the two groups is greater. For example p = .001, means that there is a large difference between the responder and non-responders.
Take a look at the FAECES comparison between the two:
Much more cytokines were shown in patients who responded well to the drug, than the patients who did not respond to Humira. That’s why they received a p-value of lower than .001.
Finally (shown below), the most important aspect/finding they had from this study was finding that the group that had sufficient drug concentration but no response had high levels of IL6. Remember, IL6 is a protein that is produced that causes T-cells to create an inflammatory response. They called this group “Good PK No Response”. The group that had a response and sufficient drug concentration “Good PK Response” had very little IL6. This shows that there is some sort of linkage between the two.
This shows that in the patients who do not respond to UC, they need a IL6 suppressant to completely treat for Ulcerative colitis. This means that Progenity may have found the final linkage to unlocking 2.5 billion of revenue with IL6 cytokine suppressants. They may need to partner or design the drug with other biotech companies but, I think they stumbled onto a lucrative pathway through this study.
One question I still have is how was the drug administered? Was it via injection? Or was it done through enema? The study seems to allude to injections, but regardless, is interesting to think that Progenity’s DDS may have the ability to tackle the Non-responders market as well which accounts to 30% of Ulcerative Colitis patients.
Still very excited for Progenity’s future, more updates to come about their current studies.
Current Price: $1.53
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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