Updated: Nov 4
Edited (11/4/21 - made additions regarding Novonordisk and Natera, also relevant updated info) (cash chart update coming soon) 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.
Progenity | $3.61
Below I will be talking to you about the potential buyout partners how they relate to Progenity. Please feel free to reach out to me and add to this list as we will see more companies most likely enter the competition.
Below is the cash on hand equivalents for the few companies that I believe have a privy interest in buying out Progenity. I am looking at cash on hand to see if they have the funding available to purchase. I will discuss the top 3 choices in detail and briefly go over the existing partnerships and ideas relevant to some of the other biopharmas who should, and could be directly involved with Progenity at the moment.
This Abbvie relates to Progenity due to an existing partnership by allowing Progenity to use Abbvie's proprietary drug Humira for treatment of Chrons Disease (~18 Billion yearly) . So far they have shown success in animal studies. Humira is currently taken by injection which is indirect. With Progenity's tech pill, they will be able to get more effectivity and at the same time have a better safety profile for the drug. This connection may allow Abbvie to consider purchasing or further pursuing relationships to use Progenity's product. From the above chart you can see the current cash on hand for ABBV is 8 billion. I think they would be wise to beef up their pipeline and also control an asset that can be used in many more future drug combinations. Abbvie's recent price spiking was speculated to be because of the acquisition possibility but I think it was due ABBV raising the dividend yield to investors.
Amgen is known to be a leader in the colorectal cancer space (9.4 Billion annually)
They have a drug called Lumakras that helps cancer patients. The current objective response rate is 36%. I believe Progenity could propel these percentages much higher beyond 70% if Amgen used Progenity's precision medicine technology. Also there would be much more safety profile which would help the overall health of patients. Amgen currently holds around $8 billion in cash.
Last but not least if Pfizer. Another drug that they have been also studying within their pill is tofacitinib. It is a JAK inhibitor that is used in treating ulcerative colitis (6.8 billion). Progenity has shown results showing that they showed up to 25 times the amount of the drug in the colon tissue than just injection. They also showed less of the drug was in the body therefore less toxic. Pfizer has currently around 23 billion in Cash. Representatives from Pfizer were at the recent PODD conference at which Progenity presented at. Recently Progenity released that Ms. Jill Howe will be apart of the audit committee for Progenity. She has served on other boards and has been in a company that has been acquired by PFE before. This is a loose connection. This was a good move from management as she is a probable high value asset to their team.
Novonordisk (NVO) GLP-1 has alot of clinical interest due to some of its effects in the digestive tract. It helps with diabetes type 2 and also increases number of beta cells in pancreas which is extremely useful to help control A1Cs in diabetes. GLP-1 has shown to help reduce weight as well because of its properties that reduce uptake. NVO currently has its own pill form of the drug, however Progenity could optimize the potential for the drug due to precision that is currently not easily attained. Novo also did attend the PODD conference as well. NVOs has a 195 billion market cap & current cash on hand is: $4.555 billion . Definitely in the race to buy Progenity, or atleast partner with them.
Others, related partners:
Ionis pharmaceuticals (IONS) - To small to buyout Progenity and take on the risk. Recently have a partnership, no details have been disclosed over how this will impact Progenity's cash, however, it is a good sign that This anti-sense genetics short strand DNA company is involving themselves. Keep in mind that ARK Invest is currently holding Ionis Pharmaceuticals in their ARKG ETF. Cathie Woods and her team are most likely aware of the relationship of Progenity. I reached out to their team with some of my past research to ask what their thoughts are on Progenity. I will update you if I get a response.
Penumbra (PEN) - Surbhi Sarnha, A board member currently at Penumbra. Talented person to have on Progenity's team.
Illumina (ILMN) - Worked with Progenity with their genetics lab testing in the past. Not enough interrelations for me to think that Illumina does want to purchase or would want to use Progenity's tech pill. However, Progenity does have Avero, which is their genetics testing lab that I believe Illumina may be interested in purchasing. It would be another 60-80 million of cash if ILMN bought Progenity's old business.
Natera (NTRA) - Partnered with Progenity on partial development of Preecludia. Natera had two lawsuits against PROG however they were settled before going through the long legal process. NTRA claimed Progenity used their IP to create a working product and Progenity rebuttled saying that they did differently. Regardless, the outcome of the settlement is Progenity is enjoined (not able to) in commercialization of Preecludia without Natera's consent. This I assume is most likely will be an agreement between the two for Natera to collect royalties from Progenity. The bullish part here shows that Preecludia is a highly valuable asset where companies want every piece they can get of Preecludia. I also think NTRA could have interest in the AVERO genetic testing labs. They could possibly trade there as well instead of royalty agreement. We should expect to watch this as Preecludia launches.
(Credit to the idea of the Avero lab connection goes to Yony Sabo below in comments, a member of Opti)
Current Price: $3.61
3 Month Price Forecast: $10+
If Progenity's popularity continues to grow and if the potential short squeeze commences, we will see double digits. Here's an article discussing their value and why we think this will trade at 10-17 within a year.
Final thought on PROG: I think Progenity will be acquired for about 3+ billion or $20+ a share by a larger biopharma. I think that as more scrutiny is bestowed upon their technology, I think they will be valued at a much higher price. Their execution of data and preliminary successes have relinquished the uncertainties about their legitimacy. The future seems to look bright for Progenity.
Disclosure: We do 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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and the Optifinancial Team
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