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 | $1.93
Introduction into Progenity and their Oral tech
Data validates the light detection algorithm and legitimacy of the company
Light Detection Algorithm | Fasted vs Fed States
Questions I have about their tech
Final thought on vibration if they’d want to push the bounds of drug uptake
Introduction in regards to where they came from (early stage photos below)
They are in the R&D stage of their technology that has been in development since the early 2000’s. The oral delivery technology started with Medimetrics Gmbh in Germany. Medimetrics created the pill called the Intellicap. If you try to look up Medimetrics on the internet you can’t find them as they have been bought out by Progenity.
After Progenity bought them out (by buying the intellectual property of the intellicap in September 2019) , They decided to further develop intellicap and integrate their photo-location or auto-detection using LEDs by creating the PIL Dx which could be used in detection and diagnosis of disease. They also used this same mechanical geometry to make a drug delivery and photo-location tech called the DDS. This combined the precision with the drug delivery using the body’s anatomy. At this point no company had done this
The great part about the acquisition of Medimetrics GMBH, is that they already had the underlying infrastructure built to support the pills in use in the medical field. They already used a 900 Mhz radio wave to transmit data and information from the intellicap to the transceiver which then could send the processed data to the phone (or the cloud). I believe the transceiver shown in the patents has a function for processing the data and that’s why it is necessary to have it around. The pills that are being taken by the patients do not (most likely) have the ability to process the data that they are collecting and to make a decision they need more computational power. So they most likely offload the data being created by the pill to a transceiver which has a chip which is able to process the data using it’s preloaded firmware to judge where the pill is inside the GI tract. This data can be looked at in real time by doctors as well just in case they need to tune it and also the company can get the data and continually upload the new firmwares over the air as the pill becomes further commercialized. Another thought on why they are using a transceiver instead of integrating all of the processing on the pill is that it would be much more expensive to sacrifice a processing chip everytime a patient uses a pill. It would be much more cost friendly to keep the expensive processing on a known working transceiver “wearable device”.
My one request to Progenity about this wearable transceiver is that it is made to be a part of an apple watch. I am sure the data could be sent to an app and allow the processors on the Iphone or google samsung to do the analyzing. This way you could cut out some of the cost and increase consumer attractiveness of the technology.
The light detection algorithm is legitimized by their PIL Dx data in the poster presentation
Currently Progenity is working on the DDS and this is the most like the intellicap but with a significant difference in how it detects location.
Ok so Brad, how does this thing really detect a location in the GI tract? Like how do we know that this is feasible and they are not scamming me or investors? What makes this photo-location technology so spectacular to the normal ph sensing methods such as enteric coatings?
How does this thing locate? What makes it tick? And how in the world does it know if it got to the colon (the last part of the intestines and where the DDS plans on delivering the drug)
Here is Progenity's poster presentation on the DDS.
The location works by the pill flashing the LED light and then measuring the intensity of reflected light back onto a sensor. Progenity has decided to use the 3 LED approach using Blue, Red and Green. By using this array, the detectors will be able to help pinpoint when they are receiving the most light. When they receive the most light, they are most likely in a tighter diameter place. This can be seen from their PIL Dx study showing how the jejunum gave them the most reflected light. It also makes sense that the light was less prevalent in the colon as the diameter is larger and therefore less light made it back to the photosensors.
PIL Dx data in beagle dogs shown above
Fascinating to see the temperature measurement as well. Especially through the stomach.
FED vs Fasted - My thoughts on the chances of success here using their technology.
This year Progenity will start their study which will show how the DDS works in patients that have eaten. I am sure they have a method to or expectation on how they will resolve this. Essentially this will help make their pill more robust in variable environments.
Here’s a video showing the digestive process from IBD clinic university of Alberta.
I expect the data to be much more variable in the jejunum as the food is still solid in the stomach and is starting the breakdown process. I also expect the data to be more uniform and less variable towards the end of the GI tract where the faeces are more similar in the color and disposition.
Another key advantage they have is that they also have a temperature reading which will give them more clues and insights on how to handle this variable data.
Using machine learning will help solve some of these issues as machines can perceive the data in a manner which we cannot. The good part about the DDS is that it is aiming to deliver at the very end of the GI tract where the nutrients are mostly uptaken. The colon functions to absorb the rest of the water as needed to provide hydration. It also is a microbial diverse area which most likely help the body in some way normally. (Except if you have UC, body might have a immune response to harmless bacteria and that’s what may cause the disease (speculation on my part))
I think the chances of success of the DDS in the fed studies are low in the first tests, but after an iteration and some training the detection algorithm, they will have control of when their pill releases regardless of what the patient eats.
This is a study which is helping make their product a more consumer friendly product. I see this as a necessary step in understanding their current limits and prescribing guidelines. For example if the study shows that they do not have the capability to take pills while eating food, then they will be able to guide doctors to give the pill in the mornings when the patient wakes up before eating.
Also another point I’d like to make is that any data they collect, they can leverage across platforms for their other product lines. I think this is key as for further products, they will not have to continue to perform the feasibility study steps since they have already proven the LED and sensor auto-location algorithm.
Thoughts on the upcoming Abstracts:
Progenity's press release link here
We recently just got a press release revealing that there are two presentations for February 18th. These doctors will present over human clinical efficacy data.
I spoke about them in this twitter recording.
ECCO Website here Mid January - 2 poster presentations over Tofacitinib & cytokine
Plenty of detailed thought has been done on the abstracts, I would suggest reading from these two folks:
Our Local Detective Mister Khan - consistent in getting to the truth of important matters including catalyst timelines
Our Friend from France (Val-Ou76) with experience with large molecules, pharma scientist
Questions I am working on answering:
1. Does the OBDS use the same LED (light emitting diode) technology as the DDS and the PIL DX?
Out of the 4 variants that Progenity has. I have to say that the most important variant (in regards to total addressable market) has the least out there in terms of poster presentations and information underpinning the tech. I know it has a pressure system to spray drugs out of a hole, but do they use the same detection methods as the PIL Dx, DDS & RSS? The commercial photo (not real) seems to delete out the sensing, unless they have a proprietary plastic/transmittance material.
However, in their prototype, you can see possible areas where the LEDs,sensors, and circuit boards go.
I’d just like a bit more clarity on this aspect. Especially as their competition is using enteric coating that dissolves and then the drug explodes out. I think Progenity has a more controlled method but still want to verify.
2. How will the consumers/prescribers receive feedback from the drug delivery pill vs the diagnostic pill?
For example: The PIL Dx requires the user to wear a Wrist band receiver that most likely collects the measurements and does the processing.
For the DDS and OBDS variants I have repeatedly seen use of the on board microprocessor which means that patients using those platforms will not need to use a large receiver and instead can just use a phone on their app. The pills transmit this information via an encrypted signal at around 900 Mhz. This signal is transparent to human tissue, and all phones today accept the 900 Mhz signal. So this indicates that this is their future plan, but I’d just like to hear more on how it would work with consumers in general.
3. Is it ok to dispose of pills through normal methods? Is it ok to flush the pill?
I’d like to explore more here. What are the guidelines and does the company have a plan if consumers cannot flush the normal way? Or do they have patents regarding biodegradability? Maybe we need to get a civil engineer or someone who understands these types of issues in more depth. Maybe it's a non-issue.
Preecludia - Test Legitimacy | I have had some others say it is legit, however I haven't done my own independent analysis on it. Due to Harry Stylli (Ex-CEO's past) I have some reservations on this test. However, I can't say much on it since my research is lacking in this area. I think my next article may cover this completely, unless we hear more on this Monday at the HC wainwright's conference
Smart Tab - Another possible competitor, not very far in development
Final thought on PROG’s tech (vibration): Another way to further uptake of Humira/Xeljanz for the DDS is that they could possibly use a vibration in the pill to increase uptake with the DDS to further reduce the amount of drug needed. It could possibly increase the interactions. Just a thought but a solution if they are desiring to get even more past the mucosal layer. They’d need even less drug with this method. Essentially more therapeutic effect with even less drug. I will stop my thoughts there, but it could possibly be used in alot of other ways too.
Current Price: $1.93
2 Month Price Forecast: $10-17
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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