PROG | Who is the large pharma?

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 | $1.27


  • Takeda: PGN-300 mentioned in last 10-Q, not on website relates to Takeda

  • Can patients flush the pill after use? Yes!

  • 2 ECCO abstracts coming out soon, over human efficacy in patients (tofacitinib & Anti TNF)


Takeda a possible large pharma partnership?


Progenity mentioned PGN-300 in their last 10Q (page 64)

The credit goes to GW, @gwgator05 on twitter. I have left a link to his twitter thread here for you to read through his thought process on the Takeda connection. I believe he has a good point that PGN-300 or Vedolizumab could be used in treatment of Ulcerative colitis.

The most useful way in my opinion to use Vedolizumab is with their DDS pill platform which lines the drug in the colon. Remember Progenity only has partnerships with the OBDS platform. So I could see this being a valid connection to Takeda as another possible large pharma.

They have mentioned use with OBDS before (2020 June 22, Page 8):

 

ECCO Abstracts, when they become available, I believe they will be populated in this place on the ECCO website


These 2 abstracts are important as they could give us more insight on the efficacy of these pills which relate to Progenity's future chances of success.

My definition of success would mean 4+ billion of income every year. I have calculated the revenue, but would have better estimates based off of the efficacy profiles.

 

What happens after the patient takes the DDS or OBDS pill?


This is a question that keeps popping up and I thought I’d try to answer it as it could be one of the commercial viabilities aspects that would limit Progenity in the future.

After speaking with a civil engineer who actively works in sewage/waste treatment, they told me that this is a non-issue. They said that filtration is already done to pick out plastic products.


A long time ago there was a battle between the sewage treatment plants and companies that made wet wipes. The sewage treatment plants were always clogging due to the nature of these wipes. The solution was made to more easily filter products through the sewage lines. Our current infrastructure is well suited for filtering out plastic products out of the sewage lines.


Final Thought:

Progenity has depreciated quite rapidly due to macromarket factors and also uncertainty about Progenity’s financial future. If they can secure funding until 2025-2026, they will most likely be able to survive and flourish. The market seems to be pricing in more dilution and risk of bankruptcy, I do believe they have some paths that they can take, milestone payments, sale of Preecludia assets & IP and further partnerships. The market seems to be unattracted to this idea at the moment. Excellent buying opportunity in my opinion.



Current Price: $1.27

2 Month Price Forecast: $8-12

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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