UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 13, 2021

 

Progenity, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Registrant’s Telephone Number, Including Area Code: (855) 293-2639

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Securities registered pursuant to Section 12(b) of the Act:

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On May 13, 2021, Progenity, Inc. issued a press release and earnings presentation announcing its financial results for the first quarter ended March 31, 2021. The press release and earnings presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K.

As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibits 99.1 and 99.2 incorporated herein shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall such information or Exhibits 99.1 and 99.2 be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

 

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

Progenity Provides Corporate Update and Reports

First Quarter 2021 Financial Results

 

Reports revenues of $24.5 million in the first quarter of 2021, up 72% from prior quarter

 

Announced pre-validation data for its Preecludia™ test showed strong performance consistent with verification study and demonstrated commercial laboratory systems readiness

 

Announced funding from the Crohn’s and Colitis Foundation’s IBD Ventures program to further develop Progenity’s first-in-class oral DDS for delivery of targeted therapeutics for IBD

 

Management will host conference call and webcast today at 4:30 p.m. ET/1:30 p.m. PT

 

SAN DIEGO, May 13, 2021 – Progenity, Inc. (Nasdaq: PROG), a biotechnology company with an established track record of success in developing and commercializing molecular testing products, today provided a corporate update and reported financial results for the first quarter ended March 31, 2021.

 

Progenity made significant progress during the first quarter, both with its core molecular testing business and notably with its innovation pipeline programs. The Company recently announced another key update regarding its Preecludia™ preeclampsia rule-out test, reporting that new data from a pre-validation cohort of samples tested to demonstrate commercial laboratory readiness showed test performance in the intended use population consistent with its verification study results that were presented on April 30th at the 2021 ACOG Annual Meeting. This new data showed sensitivity greater than 87% and a negative predictive value (NPV) greater than 97%. The Company continued to transition its core molecular testing business towards growth, increased its in-network position by adding regional contracts, and saw additional commercial and government payors covering average risk NIPT.

 

“We continue to make strong progress in our innovation pipeline as we establish a strong foundation and stabilize our core molecular testing business. We anticipate these efforts will translate into improved operating performance and revenue growth for the rest of 2021. We are on track to meet our Preecludia™ test’s validation milestone by mid-year and continue to target commercial launch in the second half of 2021 for the $2-3 billion US market, the Innatal 4 platform is advancing; and we are especially excited by the accelerating progress of our GI Precision Medicine programs,” said Harry Stylli, PhD, CEO, chairman of the board, and co-founder of Progenity.

 

First Quarter 2021 Results and Other Corporate Highlights

 

 

 

 

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First Quarter 2020 Financial Results

 

Comparison of Three Months Ended March 31, 2021 and December 31, 2020

 

Revenue was $24.5 million in the three months ended March 31, 2021, a 72% increase compared to $14.3 million in the three months ended December 31, 2020.

 

Total accessioned tests volume, which includes the company’s core molecular testing and COVID-19 testing, was 78,915 in the first quarter of 2021, a decrease of 3.3% compared to accessioned tests volume in the fourth quarter of 2020, which was 81,640 tests.

 

Gross margin was positive 9.4% for the three months ended March 31, 2021, compared to negative 50.1% for the three months ended December 31, 2020.

 

Operating expenses were $48.5 million for the three months ended March 31, 2021, compared to $44.2 million for the three months ended December 31, 2020.

 

Net loss was $32.3 million for the three months ended March 31, 2021 and basic and diluted net loss per share was $0.56, compared to a net loss of $75.5 million and a net loss per share of $1.53 for the three months ended December 31, 2020.

 

 

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Comparison of Three Months Ended March 31, 2021 and 2020

 

Revenue was $24.5 million in the three months ended March 31, 2021, a 46% increase compared to $16.8 million in the three months ended March 31, 2020.

 

Gross margin was positive 9.4% for the three months ended March 31, 2021, compared to negative 57.9% for the three months ended March 31, 2020.

 

Operating expenses were $48.5 million for the three months ended March 31, 2021, compared to $42.8 million in the three months ended March 31, 2020.

 

Net loss was $32.3 million for the three months ended March 31, 2021 and basic and diluted net loss per share was $0.56, compared to a net loss of $17.2 million and a net loss per share of $3.43 for the three months ended March 31, 2020.

 

COVID-19 Update

 

Public health measures related to the novel coronavirus are greatly impacting healthcare practices. We have responded to the COVID-19 pandemic by implementing and maintaining robust response plans, seamlessly continuing laboratory operations and maintaining pre-pandemic turnaround times. We enhanced our digital sales and support capabilities, increased proactive test reporting and remote genetic counseling capabilities, and expanded our mobile phlebotomy services, assisting our customers to continue serving their patients with the same quality care.

 

Webcast and Conference Call Information

 

Progenity will host a webcast and conference call to discuss the first quarter financial results and answer investment community questions today, Thursday, May 13, 2021 at 4:30 p.m. ET / 1:30 p.m. PT. The live call may be accessed by dialing 833-519-1237 for domestic callers and 914-800-3810 for international callers and entering the conference code: 6146238. A live webcast and archive of the call will be available online from the investor relations section of the company website at www.progenity.com.

 

About Progenity

 

Progenity, Inc. is a biotechnology company with an established track record of success in developing and commercializing molecular testing products, as well as innovating in the field of precision medicine. Progenity provides in vitro molecular tests designed to improve lives by providing actionable information that helps guide patients and physicians in making medical decisions during key life stages. The company applies a multi-omics approach, combining genomics, epigenomics, proteomics, and metabolomics to its molecular testing products and to the development of a suite of investigational ingestible devices designed to provide precise diagnostic sampling and drug delivery solutions. Progenity’s vision is to transform healthcare to become more precise and personal by improving diagnoses of disease and improving patient outcomes through localized treatment with targeted therapies. For additional information about Progenity, please visit the company’s website at www.progenity.com.

 

 

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Safe Harbor Statement or Forward-Looking Statements

 

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, which statements are subject to substantial risks and uncertainties and are based on estimates and assumptions. All statements, other than statements of historical facts included in this press release, including statements concerning the impact of the COVID-19 pandemic on our business, operations, financial results, and future performance, and the progress of our research and development efforts are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan” or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements reflect our plans, estimates, and expectations, as of the date of this press release. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the forward-looking statements expressed or implied in this press release. Such risks, uncertainties, and other factors include, among others, our ability to develop and commercialize our testing products, our ability to innovate in the field of precision medicine, our ability to obtain and maintain regulatory approval or clearance of our products on expected timelines or at all, our plans to research, develop, and commercialize new products, the unpredictable relationship between preclinical study results and clinical study results, our expectations regarding future test volumes and revenues, our expectations regarding our in network position, anticipated capacity for our tests, our ability to raise sufficient capital to achieve our business objectives, the ongoing COVID-19 pandemic, and those risks described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Progenity’s Annual Report on Form 10-K for the period ended December 31, 2020 filed with the SEC and other subsequent documents, including Quarterly Reports, that we file with the SEC.

 

Progenity expressly disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

 

Investor Contact:

Robert Uhl

Managing Director, Westwicke ICR

ir@progenity.com

(619) 228-5886

 

Media Contact:

Kate Blom-Lowery

CG Life

kblomlowery@cglife.com

(858) 457-2436

 

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Progenity, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

 

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Progenity, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

 

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Progenity, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

 

 

 

First Quarter 2021 Financial Results May 13, 2021 Exhibit 99.2

Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties and are based on estimates and assumptions. All statements, other than statements of historical facts included in this presentation, including statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, plans or intentions relating to product candidates, estimates of market size, estimates of market growth, business trends, expected testing supply and demand, the anticipated timing, design and conduct of our planned clinical trials, the development of our product candidates, including the timing and likelihood of regulatory filings and approvals for our product candidates, our ability to commercialize our product candidates, if approved, the pricing and reimbursement of our product candidates, if approved, the potential to develop future product candidates, the potential benefits of strategic collaborations and our intent to enter into any strategic arrangements, the timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated product development efforts, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan” or the negative of these terms, and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the forward-looking statements expressed or implied in this presentation, including those described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and elsewhere in such filing and in other subsequent disclosure documents, including our Quarterly Reports on Form 10-Q, filed with the U.S. Securities and Exchange Commission (SEC). We cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. Forward-looking statements are not historical facts, and reflect our current views with respect to future events. Given the significant uncertainties, you should evaluate all forward-looking statements made in this presentation in the context of these risks and uncertainties and not place undue reliance on these forward-looking statements as predictions of future events. All forward-looking statements in this presentation apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this presentation. We disclaim any intent to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law. Industry and Market Data: We obtained the industry, market, and competitive position data used throughout this Presentation from our own internal estimates and research, as well as from industry and general publications, and research, surveys, and studies conducted by third parties. Internal estimates are derived from publicly available information released by industry analysts and third-party sources, our internal research and our industry experience, and are based on assumptions made by us based on such data and our knowledge of the industry and market, which we believe to be reasonable. In addition, while we believe the industry, market, and competitive position data included in this prospectus is reliable and based on reasonable assumptions, we have not independently verified any third-party information, and all such data involve risks and uncertainties and are subject to change based on various factors. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

Q1 2021 & Other Recent Corporate Highlights Continued to increase our INN position by 3.3M lives, reaching 149M total covered lives Announced pre-validation data for PREECLUDIATM test showing performance consistent with verification study Signed agreement with Ionis Pharmaceuticals to evaluate OBDS for oral systemic delivery of their antisense oligonucleotides Completed PREECLUDIA validation study sample testing/initiating analysis; planning for targeted commercial launch 2H 2021  Q1 Revenue up 72% vs. Q4 2020, with improving ASPs Announced two abstracts accepted for DDW in May 2021 related to ingestible drug delivery technology for treatment of GI disorders Announced first clinical data supporting oral DDS, its proprietary auto-location technology in the GI tract and payload delivery; and first preclinical data of PGN-600 (tofacitinib + DDS) Announced Crohn’s & Colitis Foundation IBD Ventures grant funding for DDS combination product development

R&D Pipeline Update

Preeclampsia Rule-Out Test: PreecludiaTM Innovative Test to Address Unmet Need Henderson JT, et al. Preeclampsia Screening: Evidence Report and Systematic Review for the US Preventive Services Task Force. JAMA. 2017 Apr 25;317(16):1668-1683. Ananth CV, et al. Pre-eclampsia rates in the United States, 1980-2010: age-period-cohort analysis. BMJ. 2013 Nov 7;347:f6564. https://www.sciencedirect.com/topics/medicine-and-dentistry/gestational-hypertension Center for Disease Control and Prevention. Births: Final Data for 2018 (In press). https://www.cdc.gov/nchs/nvss/births.htm Preeclampsia is the #2 CAUSE OF MATERNAL MORTALITY1 CURRENT METHODS CANNOT DIFFERENTIATE preeclampsia from other hypertensive disorders. MORE THAN 700,000 PEOPLE present with symptoms each year.2,3,4 CHRONIC HYPERTENSION GESTATIONAL HYPERTENSION PREECLAMPSIA UNMET NEED CLINICAL DILEMMA DEVELOPMENT PROGRESS  ESTIMATED $2-3B US Market Opportunity Pre-validation data set showed performance consistent with verification study NPV > 97%, Sensitivity > 87%, with prevalence = 11% within 14-day rule-out window; specificity > 65% Commercial lab readiness demonstrated Validation testing in progress; performance data expected June/July Targeted commercial launch by Q4 2021 PROJECT UPDATES Verification data presented at ACOG in April Launched Preeclampsia Awareness Month Campaign to build leadership in this market Sales team training in-progress LAUNCH PREPARATION

Initiated preclinical studies for PGN-OB1 and PGN-OB2 with first fully autonomous device in Q2 2021 Progress continues under current pharma partnerships Announced 1st clinical data supporting device auto-location and payload delivery in colon Announced positive pre-clinical safety/ PK & PD data for PGN-600 (tofacitinib + DDS) Ongoing clinical pK study for adalimumab with local drug delivery for ulcerative colitis  GI Precision Medicine Programs Drug/Device Combination Products and Drug Delivery Systems Oral Biotherapeutics Targeted Therapeutics

Expected to initiate clinical proof of concept study in Q2 2021 ACG Abstract Award/Oral Presentation: Clinical study demonstrating assay accuracy compared to invasive standard of care protocol  Full function preclinical study planned for 2H 2021 Expected to initiate clinical proof of concept study in 2H 2021  GI Precision Medicine Programs Ingestible GI Diagnostic Platforms No recovery required Multiple florescent-based assays and diseases to explore LEAD INDICATION = SIBO: >100 MILLION PATIENT VISITS/YEAR LOCALIZE  SAMPLE  ANALYZE IN SITU  TRANSMIT RESULTS DISCOVERY AND DIAGNOSTICS IN MULTIPLE GI DISEASES Recoverable Sampling System Ingestible Lab-in-a-Capsule

First Quarter 2021 Financial Results

Q1 Revenues Grow 72% Q1 2021 revenues are up 72% vs. Q4 2020, consistent with prior guidance ASPs continuing to improve  Maintaining 2021 core products revenue guidance range of $115-125M Revenue ($ millions) Illustrates $10.7M revenue reserve in Q4 2020

Expanding the In-Network Footprint In-Network Lives – Progenity (millions) + + 2019 Added 3.3 million regional plan covered lives in Q1 Expanding government and commercial payer coverage for average risk NIPT Continuing discussions for INN contracts with national and other regional plans +3.3M lives

Financial Overview $ in millions ©2020 Progenity, Inc. All rights reserved.  Includes $10.7M reserve for estimated future payor settlements Included $13.8M expense related to change in fair value of derivative liability  Consists principally of $168.5M convertible notes debt 1 1 2 3 1 1 2

Near-Term Potential Catalysts Women’s Health GI & Pharmaceuticals PREECLUDIA Pre-Validation data Q2 2021 PREECLUDIA Validation data Q3 2021 Q4 2021 1H 2022 PREECLUDIA Targeted Launch WOMEN’S HEALTH In-network with additional key payors PREECLUDIA National Launch INNATAL 4 Verification & Validation GI/PHARMA Grant received from CCF/IBD Ventures GI/PHARMA Clinical data supporting DDS auto-location; positive PK/PD data for PGN-600 RSS Initiate clinical proof of concept study PIL DX Preclinical / clinical proof of concept studies GI/PHARMA Topline clinical PK/PD for adalimumab in ulcerative colitis   OBDS & DDS Initiate clinical PK/PD studies PGN-OB2 Pre-IND meeting with FDA