PROG | Catalyst Details

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 | $1.06

  • Thoughts

  • P2a - Phase 2 Topline Results for their DDS coming May?

  • Leverage

 

Thoughts:


First of all. Happy Easter!


After the share price has been melted away, I think we need to relook at what there is to look forward to. I think many people in the community have been strong and have continued to hold true to the reasons why Progenity is a large Potential company that is unlocking 1 piece at a time to become a multibillion dollar a year revenue company.


The CEO Adi Mohanti has guided us that they have pretty much halted all of the programs and research regarding the extraneous products, Preecludia and the single molecule detection system platform. They are trying to sell these products off by using an advisory consultant firm that they have hired.

 

P2a:

What is P2a exactly?

In short, it is a step in clinical trials which are used to evaluate requirements and abilities of drugs/medical devices in human patients.

In clinical drug trials, there are normally 3 total trials that companies must pass through the FDA (Food & Drug Administration). For normal Biotechs, After the 3rd trial, they must go through a submission of their work to the FDA. The FDA then reviews their data and trials and determines if the drug has enough safety and effectiveness vs the standard of care.



For Progenity, they have a very unique scenario. Because they are working with a medical device, they must get approval for their DDS pill (which is a short and less stringent process) .

They are also using FDA approved drugs which have already been through the rigors of the clinical trials.

In this scenario, Progenity has a possibility to expedite the process due to the data leveraging. The exact legal process they can use is the 505(B)2 process.

Here is another source on the 505(b)2 .


If you read through those sources. I believe they have the right ingredients for what I believe to be approved by the FDA in the Q3 for this process. Adi Mohanti was careful to say this, but he also believes they have what they need to get approved for this rapid process in the Q3. If this is the case, they will be able to possibly commercialize their DDS technology by Mid 2024 and possibly earlier.


The phase 2a data is what I believe the last piece of information that Progenity needs to get this 505(b)2 expedited process with their technology.

 

What are we looking for in the Phase 2a:

If they can show that they have superior safety with the tofacitinib and show increased efficacy with their methods. I believe that they will have exactly what is needed to do a final large run with their DDS technology.


In this phase 2 trial, they are looking to overdose their patients with tofacitinib. They will be trying to see if they can increase efficacy alongside this. They have already found that they have standard levels of efficacy. And 0 toxicity in patients using low dosages or the same amount required normally for injections. Progenity is using their pill to release the drug at the disease site. They have successfully shown that they can achieve the location/delivery. This Phase 2a trial will test the volumes and quantities to properly treat patients.


We are hoping to get news of this P2a data in May during the gastroenterology conference.

Then depending on the news, we should expect to hear from the FDA in Q3 on the accelerated path.


Once they get to the accelerated path, they will combine the drug and medical device to achieve the full FDA approval.


One thing I know for sure is that Pfizer has their eyes on Progenity. They would benefit greatly off of this technology potentially make 4-5 billion a year just of Tofacitinib. (Tofacitinib is Pfizer’s drug which has received warnings from the FDA)

 

Technology leverage:

The company will explode in share price rapidly after good news on their DDS product. One thing that is misunderstood is the variety of drugs that Progenity can deliver. They can start multiple funnels using the same product with little work comparatively. I believe that their product will quickly show the potential and put Progenity’s market cap over 1.5 billion after a successful approval by the FDA. I could see progenity Trending to 5 billion to 7 billion market cap in over a 5-7 year span.


Thanks for reading!


Final thoughts:

Have a great Easter and stay strong!

 

10-12 Year Price Forecast (2030-2032):

Bear case: $390 a share or $64 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: $1,170 a share or $196 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,

Brad Mitchell

and the Optifinancial Team

 

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