For folks who like to take a chance on biotechnology businesses, California-headquartered Progenity (NASDAQ:PROG) offers upside potential at an affordable price point. Indeed, PROG stock’s appeal is that it’s cheap and could possibly double or more.
As for the company itself, Progenity specializes in addressing high-need conditions, including those involving gastrointestinal health, while also advancing the science of oral drug delivery.
To be honest, 2021 wasn’t an easy year for Progenity’s investors. The share-price peaks were high, but the drawdowns were steep, and the only consistent theme was volatility.
However, that volatility can be your friend as PROG stock is capable of making swift moves for traders with good timing. Besides, Progenity recently made some changes to its business which could provide substantial value to faithful shareholders.
PROG Stock at a Glance
Going back to the beginning, in June 2020, Progenity priced its initial public offering (IPO) at $15 per share. Unfortunately, Progenity’s shares lost 12.5% of its value on the first day of public trading.
Over the next year and a half, PROG stock declined but there were sizable rallies along the way. In fact, there were three 50%-or-greater run-ups in 2021.
In late December, the Progenity share price was slightly below $2. Today’s traders must be realistic, and not expect the stock to jump back to the IPO price tomorrow or next week.
Instead, a good strategy could be to accumulate shares when the price is depressed, which it was in 2021’s final trading sessions.
At the same time, it’s not recommended to “load the boat” on PROG stock. There’s risk involved in low-priced health-care stocks, so caution is always advised.
Smaller Can Be Better
Can a company actually improve by slimming down its operations? It’s definitely possible, and Progenity is proving it.
Without a doubt, Progenity prioritized firming up its capital position in 2021. As evidence of this, the company reported around $44 million in warrant exercises (as of Nov. 23) during the fourth quarter of 2021.
Furthermore, through an exchange transaction in Q4 2021, Progenity reduced by 38% the principal amount of its convertible senior notes due 2025 held by non-affiliates.
Progenity CFO Eric d’Esparbes observed his company’s great strides in optimizing its capital structure and bolstering its liquidity position. As a result, d’Esparbes assured that Progenity’s liquidity position will provide “sufficient runway to support achievement of our critical R&D milestones for at least the next twelve months.”
Boosting the company’s balance sheet even further is Progenity’s recent divestiture of its affiliate, Avero Diagnostics.
In fact, d’Esparbes declared that the Avero divestiture resulted in a further annual operating expense reduction of approximately $28 million. That, in turn, would bring Progenity’s total reduction in annual operating expenses to approximately $145 million compared to 2021’s second quarter.
Another Patent for the Portfolio
Even while Progenity slims down its business and reduces its expenses, the company continues to announce new patents.
Not too long ago, Progenity’s patent portfolio comprised a total of 96 patent families. These included 180 issued patents, as well as over 220 pending applications.
Now, we can add yet another patent to the running total. This one involves Progenity’s single-molecule detection platform under development.
In particular, the U.S. patent is titled, “Methods, Systems, and Compositions for Counting Nucleic Acid Molecules.” It covers methods for capturing, amplifying and imaging single copies of target nucleic acid molecules.
Matthew Cooper, General Manager, Diagnostics, further clarified that the new patent patent covers “critical methods for counting target molecules, obviating the need for sequencing.”
It’s more than just another patent, though. Really, it’s an indication of a new direction for Progenity. “As Progenity migrates away from the commercial diagnostics business, we are actively seeking partners to further develop this promising asset,” Cooper clarified.
As we’ve discovered, Progenity isn’t just patent-rich. The company is also capital-rich.
Or at least, it’s firmer in its finances now that Progenity has divested Avero Diagnostics. Moreover, Progenity seems to be heading in a new direction with its recent patent addition.
All in all, Progenity’s stakeholders should appreciate the potential of this leaner, better capitalized company. Hopefully, 2022 will offer a fresh start and, possibly, higher price points for PROG stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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