UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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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:
Securities registered pursuant to Section 12(b) of the Act:
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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.
Item 2.02 Results of Operations and Financial Condition.
On August 12, 2021, Progenity, Inc. issued a press release and earnings presentation announcing its financial results for the quarter ended June 30, 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.
(d) Exhibits.
99.1 |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded with the Inline XBRL document) |
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 thereunto duly authorized.
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Progenity, Inc. |
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Date: |
August 12, 2021 |
By: |
/s/ Harry Stylli, Ph.D. |
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Harry Stylli, Ph.D. |
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Exhibit 99.1 |
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Progenity Provides Corporate Update and Reports
Second Quarter 2021 Financial Results
Announced successful completion of the validation study PRO-104 for the PreecludiaTM rule out test for preeclampsia and achievement of the primary endpoint of the study protocol
Recently achieved promising results with the prototype autonomous Oral Biotherapeutics Delivery System in a single oral dose study in a porcine model for lead candidate PGN-OB1
Implemented cost-cutting measures expected to result in approximately $97 million of cost savings on an annual run-rate basis
Management will host conference call and webcast today at 4:30 p.m. ET/1:30 p.m. PT
SAN DIEGO, August 12, 2021 – Progenity, Inc. (Nasdaq: PROG), a biotechnology company innovating in the fields of gastrointestinal health and oral biotherapeutics, today provided a corporate update and reported financial results for the second quarter ended June 30, 2021.
In the second quarter Progenity initiated a strategic transformation directed at significantly reducing its cash burn rate whilst accelerating its transition to an innovation-led biotech company focused on its oral delivery of biomolecules and its GI-IBD platforms. The company has implemented cost-cutting measures that are expected to result in cost savings of approximately $97 million on an annual run-rate basis, and it plans to continue to evaluate and implement further cost-saving measures.
The company also recently announced the successful completion of the validation study, PRO-104, for its PreecludiaTM rule out test for preeclampsia. Importantly, PreecludiaTM achieved the primary endpoint of the study protocol and demonstrated strong performance consistent with what was achieved in the PRO-129 verification study and pre-validation set.
Separately, during the second quarter the company initiated preclinical studies of its lead candidates PGN-OB1 (adalimumab a monoclonal) and PGN-OB2 (liraglutide, a GLP 1 agonist) utilizing for the first time its prototype autonomous Oral Biotherapeutics Delivery System (OBDS) in a swine model. Data from a recent study demonstrated that, in animals with significant drug detected, average bioavailability levels were approximately 15% with maximum levels up to 44% of IV for adalimumab following a single dose, highlighting the vast potential for this program.
“Our GI innovation pipeline is progressing with both the Oral Biotherapeutics Delivery System and the Drug Delivery System now available as fully autonomous prototype devices that will enable key studies to be performed to advance our programs and provide potential partnership opportunities. I’m also excited by the successful outcome for the PreecludiaTM PRO-104 validation study results, which we expect the independent PIs to publish soon, and we are making good progress with our single molecule platform. I’m also pleased with the implementation and execution of our company transformation with substantial costs savings already being achieved and with more anticipated in the coming months. We are projecting multiple key catalysts in the next quarter and beyond, and we look forward to sharing those results in the near future,” said Harry Stylli, PhD, CEO, chairman of the board, and co-founder of Progenity.
Second Quarter 2021 Results and Other Corporate Highlights
Second Quarter 2021 Financial Results
Comparison of Three Months Ended June 30, 2021 and March 31, 2021
Operating expenses were $36.1 million for the three months ended June 30, 2021, compared to $31.6 million for the three months ended March 31, 2021.
Net loss was $78.5 million for the three months ended June 30, 2021 and net loss per share was $1.23, compared to a net loss of $32.3 million and a net loss per share of $0.56 for the three months ended March 31, 2021.
Net loss from discontinued operations was $37.1 million for the three months ended June 30, 2021 and net loss per share for discontinued operations was $0.58, compared to a net loss from discontinued operations of $14.8 million and a net loss per share of $0.26 for the three months ended March 31, 2021.
Comparison of Three Months Ended June 30, 2021 and 2020
Operating expenses were $36.1 million for the three months ended June 30, 2021, compared to $26.5 million for the three months ended June 30, 2020.
Net loss was $78.5 million for the three months ended June 30, 2021 and net loss per share was $1.23, compared to a net loss of $53.1 million and a net loss per share of $6.11 for the three months ended June 30, 2020.
Net loss from discontinued operations was $37.1 million for the three months ended June 30, 2021 and net loss per share for discontinued operations was $0.58, compared to a net loss from discontinued operations of $20.1 million and a net loss per share of $2.31 for the three months ended June 30, 2020.
Webcast and Conference Call Information
Progenity will host a webcast and conference call to discuss the second quarter financial results and answer investment community questions today, Thursday, August 12, 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: 8635609. 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 innovating in the fields of women's health, gastrointestinal health and oral biotherapeutics. Progenity 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.
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 progress and future expectations 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
Progenity, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share amounts)
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Three Months Ended |
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June 30, |
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March 31, 2021 |
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Revenues |
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$ |
463 |
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$ |
167 |
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Cost of sales |
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— |
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— |
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Gross profit |
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463 |
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167 |
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Operating expenses: |
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Research and development |
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13,401 |
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11,673 |
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Selling and marketing |
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2,006 |
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1,858 |
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General and administrative |
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20,709 |
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18,100 |
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Total operating expenses |
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36,116 |
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31,631 |
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Loss from operations |
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(35,653 |
) |
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(31,464 |
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Interest expense |
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(3,502 |
) |
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(3,520 |
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(Loss) gain on warrant liability |
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(5,146 |
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2,650 |
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Interest and other income, net |
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2,901 |
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14,873 |
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Loss from continuing operations |
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(41,400 |
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(17,461 |
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Loss from discontinued operations |
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(37,131 |
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(14,803 |
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Net loss |
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$ |
(78,531 |
) |
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$ |
(32,264 |
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Net loss per share from continuing operations, basic and diluted |
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$ |
(0.65 |
) |
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$ |
(0.30 |
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Net loss per share from discontinued operations, basic and diluted |
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$ |
(0.58 |
) |
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$ |
(0.26 |
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Net loss per share, basic and diluted |
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$ |
(1.23 |
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$ |
(0.56 |
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Weighted average number of shares outstanding used in calculating net loss per share, basic and diluted |
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63,942,298 |
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57,493,800 |
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Progenity, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share amounts)
Progenity, Inc.
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Three Months Ended |
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2021 |
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2020 |
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Revenues |
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$ |
463 |
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$ |
— |
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Cost of Sales |
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— |
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— |
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Gross profit |
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463 |
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— |
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Operating Expenses: |
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Research and development |
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13,401 |
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12,234 |
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Selling and marketing |
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2,006 |
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1,547 |
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General and administrative |
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20,709 |
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12,702 |
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Total operating expenses |
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36,116 |
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26,483 |
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Loss from operations |
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(35,653 |
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(26,483 |
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Interest expense |
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(3,502 |
) |
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(2,489 |
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Loss on warrant liability |
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(5,146 |
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— |
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Interest and other income (expense), net |
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2,901 |
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(3,751 |
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Loss from continuing operations |
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(41,400 |
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(32,723 |
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Loss from discontinued operations |
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(37,131 |
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(20,060 |
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Net loss |
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(78,531 |
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(52,783 |
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Dividend paid to preferred shareholders |
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— |
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(268 |
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Net loss attributable to common stockholders |
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$ |
(78,531 |
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$ |
(53,051 |
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Net loss per share from continuing operations, basic and diluted |
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$ |
(0.65 |
) |
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$ |
(3.77 |
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Net loss per share from discontinued operations, basic and diluted |
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$ |
(0.58 |
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$ |
(2.31 |
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Net loss per share attributable to common stockholders, basic and diluted |
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$ |
(1.23 |
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$ |
(6.11 |
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Weighted average number of shares outstanding used in calculating net loss per share, basic and diluted |
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63,942,298 |
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8,687,250 |
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Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
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June 30, |
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December 31, |
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(1) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
65,991 |
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$ |
91,520 |
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Accounts receivable, net |
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5,047 |
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6,634 |
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Prepaid expenses and other current assets |
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13,107 |
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8,107 |
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Current assets of disposal group held for sale |
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30,181 |
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20,077 |
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Total current assets |
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114,326 |
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126,338 |
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Property and equipment, net |
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5,474 |
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8,660 |
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Other assets |
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146 |
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169 |
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Long-term assets of disposal group held for sale |
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— |
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19,273 |
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Total assets |
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$ |
119,946 |
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$ |
154,440 |
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Liabilities and Stockholders' Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
14,560 |
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$ |
12,657 |
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Accrued expenses and other current liabilities |
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58,172 |
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51,206 |
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Current portion of mortgages payable and capital lease obligations |
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202 |
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338 |
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Current liabilities of disposal group held for sale |
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12,703 |
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8,469 |
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Total current liabilities |
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85,637 |
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72,670 |
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Mortgages payable and capital lease obligations, net of current portion |
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1,238 |
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1,317 |
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Convertible notes, net |
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157,533 |
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158,886 |
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Embedded derivative liability |
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388 |
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18,370 |
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Other long-term liabilities |
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14,759 |
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8,239 |
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Long-term liabilities of disposal group held for sale |
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— |
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1,952 |
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Total liabilities |
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$ |
259,555 |
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$ |
261,434 |
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Stockholders' deficit: |
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Common stock |
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82 |
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59 |
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Additional paid-in capital |
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531,156 |
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452,992 |
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Accumulated deficit |
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(652,069 |
) |
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(541,274 |
) |
Treasury stock |
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(18,778 |
) |
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(18,771 |
) |
Total stockholders' deficit |
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(139,609 |
) |
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(106,994 |
) |
Total liabilities and stockholders' deficit |
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$ |
119,946 |
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$ |
154,440 |
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1. The condensed consolidated balance sheet data at December 31, 2020 has been derived from the audited consolidated financial statements, with adjustments to reflect the assets and liabilities held for sale.
SECOND QUARTER 2021 – FINANCIAL RESULTS August 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.
RECENT HIGHLIGHTS Successful completion of the validation study for the Preecludia™ rule-out test for preeclampsia Achieved the primary endpoint of the study protocol Demonstrated strong performance and a high NPV in line with target in a broad use population Proceeding toward publication in peer-reviewed journal Initiated preclinical studies of PGN-OB1 (adalumimab) and PGN-OB2 (GLP 1 agonist) Goal is to demonstrate bioavailability of drug candidates in comparison to parenteral administration Initial data is promising with average bioavailability of approximately 15% and reaching up to 44%1 Existing Pharma partnerships advancing as expected Completed closure of Ann Arbor laboratory; refocused resources toward innovation pipeline Opex reduction plan on track to achieve target Already achieved $97 reduction in annual operating expenses annual run rate Maintaining Avero Diagnostics while pursuing divestiture Ongoing clinical study in ulcerative colitis patients using adalimumab delivered by enema as proxy for PGN-001 (adalumimab) Designing first clinical study for PGN-600 (tofacitinib) Established IBD Clinical Advisory Board DDS article published in Crohn’s & Colitis 360 WOMEN’S HEALTH STRATEGIC TRANSFORMATION ORAL BIOTHERAPEUTICS GASTROINTESTINAL HEALTH Animals where significant drug was detected
INNOVATION PIPELINE UPDATE
PREECLUDIA™ RULE-OUT TEST FOR PREECLAMPSIA Test developed with >3,700 patient samples, targeting NPV >95% PRE-VALIDATION DATA SET N = 356 enrolled subjects** Demonstrated commercial laboratory systems readiness Performance consistent with verification study NPV >97%, sensitivity >87%, with prevalence =11% within 14 day rule-out window; specificity >65% VERIFICATION STUDY: PRO-129 Prospective, cohort study producing blinded samples from 400 patients Results support a rule-out window up to 14 days in the target population SENSITIVITY SPECIFICITY NPV 88.0% (78.2% – 94.4%) 73.3% (68.1% – 78.0%) 98.2%* (95.5% – 99.3%) *NPV calculated at a 10% prevalence representing the expected prevalence CLINICAL DEVELOPMENT STRATEGY Market education and development Initiate trials with partner to evaluate clinical utility Develop health economics data Targeted publication of key data **Performance assessed for 131 subjects from the intended use population from 17 representative sites. PREECLAMPSIA IS THE #2 CAUSE of maternal mortality1 >700,000 PATIENTS present with symptoms each year2,3,4 UP TO $3 BILLION estimated market opportunity in the United States CURRENT METHODS CANNOT DIFFERENTIATE preeclampsia from other hypertensive disorders 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. 3. https://www.sciencedirect.com/topics/medicine-and-dentistry/gestational-hypertension 4. Center for Disease Control and Prevention. Births: Final Data for 2018 (In press). https://www.cdc.gov/nchs/nvss/births.htm 5 CLINICAL VALIDATION: PRO-104 Achieved primary endpoint of validation study protocol (hazard ratio) Demonstrated strong performance and a high NPV level In line with target At high prevalence rate and in a broad use population Proceeding toward publication of results in peer reviewed journal
DRUG PROGRAMS Drug/Device Combination Products and Drug Delivery Systems ORAL SYSTEMIC DELIVERY OF BIOTHERAPEUTICS PGN-0B1: adalimumab + OBDS GMP drug substance batch produced PGN-OB2: GLP-1 agonist + OBDS LOCALIZED DRUG DELIVERY FOR GI DISORDERS PGN-600: tofacitinib + DDS PGN-001: adalimumab + DDS ORAL BIOTHERAPEUTICS TARGETED THERAPEUTICS Recently achieved preclinical avg. bioavailability levels of approx. 15% and maximum levels up to 44% of IV for adalumimab following a single dose1 Progress continues under current pharma partnerships Announced first 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 ODBS Oral biotherapeutics delivery system Ionis Pharmaceuticals Antisense therapy + OBDS Large Pharma Co Drug + OBDS Tofacitinib + DDS PGN-600 Adalimumab + DDS PGN-001 DDS Drug delivery system Animals where significant drug was detected
GASTROINTESTINAL HEALTH - DIAGNOSTICS Ingestible GI diagnostic platforms DISCOVERY AND DIAGNOSTICS IN MULTIPLE GI DISEASES Recover and preserve: Microbial and cellular samples Multi-omics opportunities LEAD INDICATION = SIBO: >100 MILLION PATIENT VISITS/YEAR No capsule recovery required Multiple fluorescent-based assays and diseases to explore RECOVERABLE SAMPLING SYSTEM PIL Dx: INGESTIBLE LAB-IN-A-CAPSULE Device development Second-generation design to achieve: Improved manufacturability Reduced cost ACG Abstract Award/Oral Presentation: Clinical study demonstrating assay accuracy compared to invasive standard of care protocol Device development Second-generation design Improved manufacturability Reduced cost Gastrointestinal Health LOCALIZE SAMPLE PRESERVE RECOVER ANALYZE LOCALIZE SAMPLE ANALYZE IN SITU TRANSMIT RESULTS PIL Dx ingestible fluorescent technology RSS sampling + preservation technology
SINGLE-MOLECULE DETECTION PLATFORM Q4 2020 Made critical advancement by finalizing probe pool design and testing Q3 2020 Achieved development milestone demonstrating potential to “quantify” fetal fraction 1H 2022 Anticipated validation exit QUALITY RESULTS Maintain premium clinical value and reliability COST EFFECTIVENESS Chemistry greatly reduces assay cost vs. NGS FASTER RESULTS Enables 3-day laboratory turnaround time 8 Q4 2021 Anticipated optimization exit Novel, single-molecule counting assay, initially for NIPT Potentially applicable to known genomic, epigenomic, and proteomic targets
PREECLUDIA publication & partnership ongoing efforts Q3 2021 PREECLUDIA validation data SINGLE-MOLECULE NIPT verification study WOMEN’S HEALTH ORAL BIOTHERAPEUTICS RSS clinical proof of concept study OBDS Initiate first clinical PK/PD studies PGN-OB2 pre-IND meeting with FDA GI/PHARMA topline clinical PK/PD for adalimumab in ulcerative colitis NEAR-TERM POTENTIAL CATALYSTS SINGLE-MOLECULE NIPT optimization Q4 2021 1H 2022 2H 2022 GI HEALTH DDS initiate first clinical PK/PD studies OBDS preclinical PK data generation OBDS ongoing preclinical studies
OPERATING EXPENSES
OPEX REDUCTIONS Secured $97 million in OPEX1 annual run rate reductions (66% of target)2 to be realized in the second half of 2021 Expecting additional $50 million in OPEX annual run rate reduction by end of Q4 20212 Monthly expense run rate reducing from $15 million in 1H’21 to <$7 million by end of 2021 Focusing stage-gated capital allocation on innovation pipeline 2021 OPEX FORECAST (millions) 1 Operating expenses before stock-based compensation accruals 2 Assumes Avero sale by end of 2021
