Progenity (NASDAQ:PROG) stock is a small biotech company that drew a lot of investor excitement last year, largely thanks to short squeezes.
What’s left are 96 sets of patents, along with 220 patent applications, which it wants partners to help exploit.
Our Louis Navellier calls the new Progenity a patent-rich and capital-rich research outfit, one that could be worth a speculative flyer from a risk-taking investor.
But has it burned through too much goodwill to deserve that chance?
Progenity, which is based in San Diego, came public in June of 2020 at $15/share. PROG stock began falling almost immediately, but repeated short squeezes brought bulls some hope. These turned out to be value traps.
Investors sell stocks short for various reasons. They may be overvalued. There may be rumors of negative news. Or they could be junk. Progenity was junk. Progenity generated wildly inconsistent revenue, but consistent losses. There seemed to be progress in limiting those losses in the March quarter, but losses ballooned again by June.
That’s when the company decided to dump the lab business. The repositioning brought in more shorts, and another short squeeze, in October. PROG stock rose to over $4/share before falling back. Through 2021 it lost about 55% of its value, however, and opened January 6 at $2.09/share. That’s a market capitalization of $358 million on September quarter revenue of $182,000.
Progenity, in other words, is starting over.
What You Got
It’s starting over with patents, cash, and hope.
The most important patent may be U.S. Patent No. 11,186,863, “Methods, Systems, and Compositions for Counting Nucleic Acid Molecules.” The idea is that target disease molecules can be imaged and counted, without the need for gene sequencing. This can reduce the cost of biopsies, making them non-invasive. The company also hopes the system can be tweaked to detect individual proteins.
Proteomics today is an expensive proposition, with weeks required to analyze samples using mass spectrometers. If a patient can just swallow a pill and have detection done on the other side, the potential benefits are huge.
Under new CEO Adi Mohanty, a veteran of these kinds of companies, Progenity is developing a test for preeclampsia called Preecludia. Preeclampsia, a complication of pregnancy featuring high blood pressure and possible damage to the liver and kidneys, could be ruled out through biomarkers by the test, simplifying treatment.
But Preecludia is still in development. Progenity will need help in turning its patents into tests and treatments. It may have as much as $70 million in cash on the books when it next reports results in March. But it will take more than that to get anything worthwhile through the regulatory gauntlet. The company needs partners and probably needs to be bought by a larger player.
The Bottom Line
Small biotech companies like Progenity can be difficult to analyze, even confusing. Translating between science and a business case is hard. Translating that business case into an investor’s language is harder.
This is not the kind of game I like to play. It’s hard enough dealing with multinational drug companies trying to get paid for cures. It’s even harder to deal with what small drug wildcatters like Progenity may have, or not have.
What you’re left with are rumors and stock charts, short squeezes and rebuilds. The moves in such stocks have little to do with the science. Unless you like obsessing over stock charts, I’d give Progenity a miss, pending real news.
On the date of publication, Dana Blankenhorn held no positions in any company mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at firstname.lastname@example.org, tweet him at @danablankenhorn, or subscribe to his Substack https://danafblankenhorn.substack.com/.