PROG | DDS Update

Updated: Mar 16

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 | $1.18


  • Press Release with DDS Update in human trial continuation

  • DDS Progress key insights

  • Steps to commercialization

 

Press release overview:

This past week we received a press release regarding Progenity’s DDS product. They re-mentioned completion of a study in healthy human patients and were able to get 10/12 pills to release accurately into the colon. They were able to achieve release all over the surface area of the colon. They verified this with radio-isotopes that they could see through an imaging device.

Below are the 2 photos they took of the human patients GI tract. It represents the fluid that the DDS distributed along the surface area of the gut. You can see the well defined path of the fluid which takes on the shape of the colon.

Source

This study was done last year. I just want to highlight that I believe that they are mentioning these items now so that way they can show investors that they are maintaining their focus on Oral ingestible therapeutics. I believe in the short term future we will have a flurry of new information and I think it was wise from their perspective to re-submit their story.


In November, during the Piper | Sandler Conference (Link here, but the link to the video is dead) , the CFO Eric D’esparbes said that they would know shortly on which two candidates that they would go forward on for the DDS. They had 2 options: Adalimumab or Tofacitinib. I believe that they have realized that even though both drugs would increase the standard of care, they have to pick the one (with their limited resources) that will best show off their product for faster market acceptance. They are going full steam ahead with Tofacitinib. I have to agree with them from the outsider's perspective. The data that they have on tofacitinib seems to outclass all other data. Also, they have an important reason to take Tofacitinib due to the recent FDA warnings over Tofacitinib’s toxicity. Progenity will be able to completely erase the toxicity, and after their recent tofacitinib study, they showed for the first time in history that humans have a response in the colon and also showed that they could give even higher dosages without affecting the users health.


Keep in mind Tofacitinib brings in for Pfizer around 2 billion a year in revenue. By using Progenity, they could possibly expand this revenue substantially in the Ulcerative market arena.

Instead of making $2 billion, they could capture $3-6 Billion extra in competition with adalimumab (Humira - Abbvie’s drug).

 

DDS Key product insights:

  • No early releases before the colon: This is great news. Because the pill looks like it has the safeguards needed to prevent the drug from being spilled in the small intestines. - A spill in the small intestine would be bad. You do not want the drug to release in an area with a higher systemic uptake (higher diffusion of drug into bloodstream)

  • No complications were reported of the pill passing through

  • 10/12 triggering in their first human trial run - This is excellent, they obviously have some more work to do to perfect the pill trigger system, however it seems that the pill releasing technology is not a fluke, they are able to meet the objective 83% of the time. I am sure they will continue to improve this as they continue their development. For successful commercialization, they should have a 95% trigger success rate or better

  • These studies will validate the platform for not just Xljanez. They will be able to accommodate many other drugs after this is complete with little R&D on the platform itself. They are leveraging these studies and multiplying their impact to the healthcare system as they complete each step

 

Current studies in flow for their DDS platform:

  1. They are testing the pill in patients with Ulcerative Colitis next. They still will not release the tofacitinib until they are confident with their device triggering at the correct spot and location every time.

  2. They have Fasted vs Fed state study on going right now. This is checking to see whether or not patients will need to fast before taking this pill or not. Being able to take this pill with food would be a plus to the consumer side of things. They may even realize that food may even work to their benefit as temperature changes of the colon will be another data point that they can utilize in understanding the location in the GI tract.

  3. Finally, after they have studied in humans the healthy gut, fast vs fed state and then the unhealthy gut, they will commence the clinical trial of releasing the tofacitinib into the GI tract. They currently have a supportive study in phase 2a (mentioned at 7:50-ish) which they will announce soon which will be substantial evidence in supporting their hypothesis that the delivery of tofacitinib in the colon is a much more effective treatment than existing products. This supportive Phase 2a study will answer the question: Will more dosage of Tofacitinib result in increased efficacy without compromising safety?

 

Final thoughts:

Preecludia partnership/licensing update is coming out soon: I strongly advise taking interest in this company now as they are about to show evidence that they are making a full 360 business turnaround and we will see the share price rapidly appreciate. The dominoes are about to start falling!


Progenity’s earnings date is on March 28th after hours. I believe we will hear more about Preecludia during this time.

 

Current Price: $1.18

1 Month Price Forecast: $3-6

I am basing this off of a positive update for their Preecludia product line.

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,

Brad Mitchell

and the Optifinancial Team

 

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