Progenity Inc. (NASDAQ: PROG) stock declined by 3.65% at last close whereas PROG stock price gained by 14.69% in the after-hours trading session. PROG is a biotechnology firm that specializes in gastrointestinal health and oral biotherapeutics.
What is happening?
PROG has unveiled a transformation strategy that would place a greater emphasis on PROG’s strong R&D pipeline and better position it for future development. PROG will attempt to reallocate resources to R&D and dramatically cut operational costs by about 70% to realize this ambition, simplify its business model, and unleash shareholder value.
Progenity will stop offering its Preparent® Carrier Test, Innatal® Prenatal Screen, Riscover® Hereditary Cancer Test, and Resura® Prenatal Test, as well as other genetic laboratory-developed tests, through its CLIA-certified laboratory in Ann Arbor, Michigan. This strategic transition will take around 60 days to complete and will result in the layoff of about 374 individuals across Progenity and Avero, or around 56 percent of PROG’s entire employment. Annualized SG&A cost savings of over $130 million are also envisaged as a result of the transition. Before any non-dilutive inflows, PROG’s capital requirements after accounting for the transformation expenditures are projected to be about $4-5 million per month.
Avero Diagnostics, Progenity’s in-network affiliate lab, is reaching profitability, with estimated sales of $35-40 million for 2021 from anatomic pathology, genetic testing, and infectious illnesses. Progenity is looking into strategic options for Avero to raise non-dilutive financing to help support the firm.
PROG hopes to better manage money, decrease spending, and unleash the value of its highly distinctive R&D pipeline by narrowing its business strategy. The innovation pipeline at Progenity has the ability to target markets worth more than $200 billion. Progenity expects to generate considerable value for shareholders and enhance patient outcomes by focusing resources on the PreecludiaTM test, GI health, and oral biopharmaceuticals potential.