Progenity, Inc. (PROG) Q2 2021 Earnings Call Transcript

Progenity, Inc. (PROG 3.40%)
Q2 2021 Earnings Call
Aug 12, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the Progenity second-quarter 2021 earnings call. [Operator instructions] I will now turn the call over to Robert Uhl, managing director with Westwicke ICR, Progenity's Investor Relations firm. Thank you. Please go ahead.

Robert Uhl -- Managing Director, ICR

Thank you, operator. Good afternoon and welcome to Progenity's second-quarter 2021 financial results conference call. Joining me on the call are Dr. Harry Stylli, chairman and chief executive officer; and Eric d'Esparbes, chief financial officer.

Before I turn the call over to Dr. Stylli, I would like to remind you that today's call will include forward-looking statements within the meaning of the federal securities laws, including but not limited to the types of statements identified as forward-looking in our quarterly report on Form 10-Q that we will file later today and our subsequent periodic reports filed with the SEC, which will all be available on our website in the investor section. These forward-looking statements represent our views only as of the date of this call and involve substantial risks and uncertainties, including many that are beyond our control. Please note that the actual results could differ materially from those projected in any forward-looking statement.

For a further description of the risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, as well as risks related to our business, please see our periodic reports filed with the SEC. A slide deck with some supplemental information is also now on the website, but it will not be directly referenced by the speakers on the call today. With that, I will now turn the call over to Dr. Harry Stylli, chairman and CEO of Progenity.

Harry Stylli -- Chairman and Chief Executive Officer

Thank you, Robert, and thank you all for joining us this afternoon. In the second quarter, the company initiated a transformation directed at materially reducing its burn rate, was accelerating the transition to an innovation-led biotech company focused on its own delivery of biomolecules and STI IVD platforms. Progenity also successfully completed the PRO-104 validation study for its Preecludia RSA. In parallel, advanced dose single-molecule detection platform and is committed to making technical-commercial progress with these programs, including with partners.

We also continue to explore various financing options including generating nondilutive capital. Eric, our CFO will shortly elaborate on our financial operating performance. First, we recently announced the successful completion of the validation study PRO-104 for our Preecludia rule-out test for preeclampsia, as noted previously Preecludia achieved the primary hazard ratio endpoint of the study protocol and demonstrated strong performance. The results of our validation study are currently being drafted by the independent principal investigators for submission to a peer-reviewed journal, their results -- as a result, we are limited in our ability to provide more detail regarding specific results here.

However, I can assure you that we are really pleased that the test performance as intended to be used clinically was consistent with what we observed in a PRO-129 verification and pre-validation set. The performance gives Preecludia the potential to transform Patient Management globally by enabling physicians to rule out preeclampsia in women with signs and symptoms of preeclampsia. Further, Progenity just recently received an important panel allowance for one of the key essays in our novel Preecludia test. This constitutes further strengthening of our growing Preecludia IP portfolio.

The Preecludia test is a multianalyte immunodiagnostic laboratory-developed test that is operationally ready for commercialization. As a reminder, preeclampsia is the second most common cause of maternal mortality in the US, with more than 700,000 women presenting each year with signs and symptoms of possible preeclampsia. The most effective treatment for preeclampsia is typically delivery that is most often premature. Preeclampsia is a global challenge and an effective operator-independent test that aids in the management of this complex disorder is simply not currently available.

Preecludia also has potential as an IBD immunodiagnostic kit, which can better serve the global community. Our preference is to identify commercial partners that can facilitate physician-patient access and reimbursement in partnership with us in the US market and do the same for the CEE IBD for the global markets. I could not be more excited about the potential for this test to positively change clinical practice in the management of preeclampsia and to generate economic benefit to the health system. I want to take this opportunity to congratulate the team and our other stakeholders for a successful Preecludia validation study.

Plus we continue to support the Preecludia development at this stage of our transformation. We are prioritizing our capital allocation to advancing our complimentary Oral Biotherapeutics Drug System or OBDS, followed by a Drug Delivery System or DDS platforms. We expect this year to generate key preclinical and clinical feasibility data, especially for our drug pipeline primarily with our prototype autonomous devices, and to further advance our platform technology. As a reminder, we have effectively contracted the manufacturer of APIs, including adalumimab.

Let's start with our Oral Biotherapeutics program. The goal of this program is to achieve oral delivery and to maximize systemic distribution of Biotherapeutics especially monoclonal antibodies, but also other proteins, peptides, nucleic acids, and potentially vaccines, as the GI tract is the host to the majority of the immune system. In toto, we are targeting a vast $250 billion market that is primed for these oral delivery solutions. During the second-quarter 2021, we initiated preclinical studies of our lead candidates PGN-OB1 adalumimab and monoclonal which is subject to the BLA pathway and PGN-OB2, they are glutide, peptide, likely the fiber 5B2 pathway utilizing for the first time our prototype autonomous OBDS in a swine model of our own design.

The goal of these studies is to demonstrate bioavailability of our leads and utilize drug candidates within our autonomous OBDS and define its operating parameters and that of the preclinical models. Initial data with the prototype OBDS is very promising and supports the potential for the OBDS to achieve industry-leading bioavailability for proteins, peptides, and other biomolecules. Despite expected normal performance variability at this early stage of development, we recently demonstrated in a swine model, a significant drug was detected and approximately half the animals in a test group achieving an average bioavailability of approximately 15% to a maximum of 44% of IV for adalumimab following a single dose, highlighting the vast potential for this program. This is an unprecedented performance for a monoclonal antibody.

We continue to make rapid progress in tweaking the prototype delivery platform, including formulations, refining our animal models, and developing our understanding of likely performance in humans. We believe that an average bioavailability of around 10% to 15% of IV with repeat dosing will prove satisfactory for a large number of biomolecules. We anticipate that we will meet almost slightly exceed this range. We believe the OBDS platform can number one help improve patient compliance and lower IV infusion costs.

Two, help expand the market for GOP agonists and other drugs across a range of chronic use indications. Three, held by therapeutic such monoclonal has become more competitive with small molecule substitutes. And finally, we have the potential to target and treat a range of pathologies, especially liver diseases. Now strategies to advance around pipeline while continuing to partner with third parties leveraging their drug candidates and resources to meet the OBDS a leader in new oral delivery of Biotherapeutics.

As we are using no drugs but establish safety and efficacy profiles. We believe we should be able to generate compelling bioavailability data in animal models and provide clinical proof of concept with first in man studies. In parallel, our first two OBDS partnerships with major pharma are advancing as expected. While the OBDS is designed to achieve oral delivery and to maximize systemic distribution of Biotherapeutics.

The DDS is designed to treat GI localized disease with minimal systemic breakthrough. The goal of this program is to deliver and utilize high-dose pharmaceuticals to specific locations along the GI tract, initially to treat inflammatory bowel disease, or IBD. We are developing drug-device combination products that deliver proprietary solubilized formulations of drugs directly to the site of disease in the GI tract, thereby maximizing the available dose in tissue and achieving pan colonic distribution. We are first targeting the estimated $15 billion IBD market with our two new drugs, PGN-001 adalumimab, a monoclonal antibody, and PGN-600 tofacitinib, a small molecule normally absorbed in the stomach and the upper GI tract.

With our initial focus being ulcerative colitis or UC. Whilst the novel route of administration by the adalumimab is through the BLA regulatory pathway, we believe that tofacitinib device combination can exploit the 505-B2 pathway and allow us to take advantage of the primaries data and potentially benefit from a relatively short path to a commercial asset. We continue to believe we have the potential with this platform to achieve rapid induction, superior clinical remission rates, and reduce safety events for the treatment of IBD and colitis. As a reminder, during the first quarter, we completed our first clinical study with the prototype autonomous DDS successfully evaluated capsule safety, clogging, and tolerability in the gastrointestinal tract of 12 normal healthy volunteers.

No safety issues were reported. By specifically targeting the segment of the GI tract with disease burden, we have the potential to maximize drug exposure at the disease sites that minimize systemic exposure and off-target organ effects. We also completed during that period, a preclinical study evaluating the safety, tolerability, and PKPD effects of a seven-day administration in dogs of PGN-600 solubilized tofacitinib delivered by DDS at doses of 25 mg or 10 mg per day with direct comparison to a standard orally administered tofacitinib tablet at 10 mg day over a week. We were able to show that DDS can function as intended in the majority of cases and achieve tissue tofacitinib levels and tissue to plasma ratios of tofacitinib along the length of the colon.

And these were at least 25 to 50 times higher respectively with PGN-600 at 10 mg daily compared to the standard oral tablet formulation at the same dose. These results demonstrate that PGN-600 proprietary liquid formulation and targeted delivery can achieve pan colonial distribution and facilitate mucosal penetration. We made further progress during the second quarter in an ongoing clinical feasibility study in patients with ulcerative colitis, using the monoclonal BioTherapeutics Humira delivered by enema, which are both proxies for our PGN-001 adalumimab and our DDS platform. The first four subjects have completed the dosage regimen, and initial results are quite promising.

Next month, we expect to finalize the design of the first human feasibility studies delivering Humira tomorrow with the DDS, as well as the design of first human feasibility study with PGN-600. With both clinical feasibility studies anticipated to initiate in first half and 2022 pending IRB approval. You'll hear more about this study likely in the September time frame. The Crohn's & Colitis Foundation is also helping fund the development of the DDS for the treatment of IBD.

And we recently published a peer-reviewed article regarding the DDS. We believe that DDS platform momentarily advanced the treatment of GI disease initially for IBD and UC. Our strategy begins by transforming established drugs with known efficacy and safety profiles but has the potential to materially enhance any compatible drug directed at treating GI-localized disease, and in this instance, enables new effective IBD treatment regimens such as rapid induction and extending to drug combination therapies. While we focus on a broad pipeline of delivery platforms, we have moved the RSS and PIL Dx to primarily engineering development of second-generation pills to support larger-scale manufacturing.

And with this focus, we have limited preclinical studies at this time. We have discussed the SEBA application for PIL Dx in the past and continue to be excited by its vast potential. We also are evaluating the utility of the RSS and PIL Dx in IBD. Data from our studies and from existing literature illustrate that TNF levels in the lumen and mucosa of IBD patients may vary tremendously from patient to patient, and over time.

Further, new pathways for inflammation could supersede, for example, TNF as a mediator. We believe that we can measure TNF and other cytokines in situ using the RSS or PIL Dx, we can optimize as a consequence, we can optimize patient selection for clinical studies establish a more precise dosing regimen, and help with patient monitoring for disease progression. We believe that such a capability may further contribute to superior response rate for our drugs and the ability for physicians to most closely monitor the patient for disease progression. Completing innovation pipeline update with our single-molecule detection platform, we recently established its coefficient of variation using genomic DNA has approximately 0.5% which is supportive of a NIPTSA performance equivalent to next-generation sequencing.

We soon in terms of report on performance for detecting T2118 to 13 aneuploid and successful and preference today is the partner the platform, especially within NIPT test providers, we continue to believe a single molecule detection platform has the potential to reduce NIPT direct codes by up to 50% and achieve equivalent performance to traditional next-generation sequencing. Should also be noted that this platform is expected to be capable of detecting and counting specific DNA, RNA, epigenetic as well as protein targets with high sensitivity and low costs. As such, the platform may prove ideal for liquid biopsy applications in oncology. And now we'll discuss our progress with the operational performance of our business transformation.

As we mentioned in our corporate update in June, we officially closed out another commercial laboratory and refocused our resources toward our innovation pipeline. Whilst business closures are difficult on a number of levels, the changes we implemented have already achieved a $97 million reduction in our annual operating expenses run rate and support improved control of our burn rate. And we will provide more details later on this call. As I mentioned earlier, we prioritize our capital allocation toward our drug-device platform progress of secondarily toward a refinement of our Preecludia tests and single-molecule detection platforms.

As you can see, we are on track to significantly moderate our cash burn requirements, gain considerable more control over a cash burn rate. And we will continue to pursue partnerships and asset divestitures that have the potential to strengthen our balance sheet or result in risk sharing. These goals when fully realized will extend our runway materially and reduce our dependency on the capital markets. In parallel, Avero affiliate laboratory operations continue to perform while we explore potential divestiture of that operation to generate non-dilutive capital.

Avero's business is performing well in terms of volume demand, and we will update you when we have new developments. We may also choose to continue to operate the Avero business and explore its OB-GYN channel for Preecludia and nonsequencing NIPT if that proves to be optimal. I am pleased to share that we settled our lawsuit with Natera through a cashless agreement, we are pleased to have resolved the dispute amicably, and that we are able to avoid further legal costs and diversion of resources. In summary, our GI innovation pipeline is progressing well both the OBDS and the DDS now available as prototype autonomous devices that are enabling key studies to be performed and advance our programs and partnership opportunities.

I'm also very excited about the successful outcome from the Preecludia PRO-104 validation study and results, which we expect to be published as soon as practicable. We are also advancing our single-molecule platform and expect to have additional updates soon. In addition to the material reduction in operating expenses and tighter control of capital utilization, we anticipate multiple key catalysts this year and beyond. With that, I'll now turn the call over to Eric d'Esparbes for a discussion of our financial results for the second quarter of 2021.

Eric d'Esparbes -- Chief Financial Officer

Thank you, Harry, and good afternoon, everyone. I'll provide a brief overview of our financial results and also invite you to review our second-quarter financial release. And our 10-Q for a more detailed description. As we progress in a company's transition, the shift away from molecular testing operations will change our revenues profile, and as a result, our financial picture.

Consequently, we are also shifting our focus from revenues to concentrate on managing cash burn, and more precisely ensuring that we completed our company's transformation and optimize capital allocation toward our innovation pipeline. I'm happy to confirm that we've now secured a reduction of $97 million in net operating expenses annual run rate to be realized in the second half of the year. And I've also line of sight on an additional $50 million reduction between now and the end of Q4 2021. When the remaining lab activities that are currently still required to support the operations of our Avero affiliate, are expected to be eliminated, assuming that we can successfully monetize the asset.

In the interim, we are aiming to maximize Avero's revenue performance. While we reported $18.7 million in revenue in the second quarter of 2021 from discontinued operations, $8.6 million of which came from Avero, our focus is now shifting to our operating and SG&A cost management activities. Total operating expenses were $46 million in a second quarter of 2021. And as we gradually reduce spend associated with our lab operations during the second half, we expect total operating expenses before stock-based compensation expenses to reach less than $25 million by the fourth quarter.

More importantly, our monthly run-rate operating expenses before stock-based compensation expenses are expected to reduce from a $15 million level during the first half of 2021 to reach less than $7 million by the end of the fourth quarter. The majority of which to be allocated to R&D, illustrating the benefit of the company's focus on our innovation pipeline. Of the spend profile sales and marketing expenses, mostly presented in discontinued operations are expected to go from approximately $28 million in the first half of 2021 to approximately $8 million in the second half as we continue to support our Avero commercial operations, and will eliminate if we completed the divestiture of our lab operations. G&A expenses in the second quarter were $20.7 million.

And before stock-based compensation expenses are expected to be approximately $25 million in Q3 as we have absorbed the company transition costs during that quarter, and reduced to $11 million in Q4 in line with our overall cost reduction profile. R&D expenses were $13.4 million in the second quarter and are expected to remain generally at current levels, but gradually shift toward our precision medicine drug programs in the later part of 2021 and into '22 as they become the central focus of our capital allocation. But we also expect to maintain a stage gated data-driven approach to new capital commitments. In parallel, we expect to gradually reduce and shift our women's health program R&D spending from the completion of existing studies and development toward partnership support activities including reimbursement.

As a result, our R&D expenses before stock-based compensation expenses are expected to be approximately $12 million in Q3, and $10 million in Q4. During the second quarter, we raised $40 million in gross proceeds through a private placement and had a cash balance of $67 million at the end of the second quarter. With that, I will now turn the call back over to Harry.

Harry Stylli -- Chairman and Chief Executive Officer

Thank you, Eric. Our transformation is advancing as expected at this juncture and we have already realized that $97 million reduction in operating expenses run rate with more on the way soon. We are sharpening up focus on disrupting the biomolecules market through oral delivery via the OBDS and potentially achieve rapid induction and superior response rates and clear safety issues with the DDS platform and the treatment of IBD colitis. We recently received funding from the Crohn's & Colitis foundation to advance the DDS and have published on the platform's potential.

We have two complementary, disruptive, broad platforms that will power and differentiate our clinical power environment, and which we believe will provide sufficient optionality for new partnerships with pharma, especially as we generate key data. I am also especially proud of our collective efforts and successfully advancing Preecludia through the PRO-104 validation study. Test for preeclampsia had proven elusive until development of Preecludia which promises to be a powerful tool in helping physicians manages patients with signs and symptoms of preeclampsia. And, as a consequence, potentially generate a multi-billion dollar market in the US alone and disrupt the reproductive health channel.

We now have the opportunity to optimize this commercialization in the US and global markets, ideally through partnerships. Future milestones as we discussed today, and as presented in our supporting materials are expected to enhance value as we make progress with our innovation pipeline. A number of our innovations address past markets and in certain instances have the potential to be commercially transformative. We're excited by the continued reduction of our cash burn rate near some potential and the new focus and optionality we provide for future value creation.

So with that operator, we are now ready for questions.

Questions & Answers:

Operator

Understood. [Operator instructions] Your first question comes from the line of Steven Mah from Piper Sandler. Your line is open.

Steven Mah -- Piper Sandler -- Analyst

Great. Thanks, operator, and thanks for taking the questions.

Harry Stylli -- Chairman and Chief Executive Officer

Thanks, Steven.

Eric d'Esparbes -- Chief Financial Officer

Hey, Steven.

Steven Mah -- Piper Sandler -- Analyst

Hey. How are you doing? Yes. So just a few questions on Preecludia. Can you give us a sense of the stature of the journal that your principal investigator intends to submit the Preecludia data to?

Harry Stylli -- Chairman and Chief Executive Officer

I believe they're vying for a very top journal clinical journal, or a very top OB-GYN MSM journal. I can't be specific, as you know, you are actually not permitted to name any journals.

Steven Mah -- Piper Sandler -- Analyst

Yes. No. I'm just sort of getting and trying a sense for the different tier. So it sounds like it's one of the top-tier journals.

Harry Stylli -- Chairman and Chief Executive Officer

Yes.

Steven Mah -- Piper Sandler -- Analyst

OK. And yes, just continuing on Preecludia, Eric, does the opex guidance that you just gave does that include the any sort of scaling up for the Preecludia launch?

Eric d'Esparbes -- Chief Financial Officer

So what it includes is the support work that we would do with commercial partners to get the test ready for commercialization, including work on reagents and supporting basically the clinical utility study that we would need to do in part and partnership.

Steven Mah -- Piper Sandler -- Analyst

OK. And so the opex does include expenses for the clinical utility studies?

Eric d'Esparbes -- Chief Financial Officer

Our share, our part of the clinical utility study. Correct.

Steven Mah -- Piper Sandler -- Analyst

OK. Got it. But just to be clear, you don't have any partners yet, right?

Eric d'Esparbes -- Chief Financial Officer

Not yet. But the team is obviously progressing very well. And we had to wait until we have the actual validation study results in order to have a real conversation with the partners that we've already had either conversation or we've been approached by. And the other thing that is actually conducive, there is the increase in our IP portfolio strength.

So Harry talked about this as well. So all this basically triangulates to being in a good position to have those conversations.

Steven Mah -- Piper Sandler -- Analyst

OK. Got it. And do you guys have any sense for when Preecludia will launch or is that predicated with getting a partner, commercial partner, so there's no, well, you guys would not launch it on your own. Do I understand that correctly?

Harry Stylli -- Chairman and Chief Executive Officer

We're not likely to launch on our own. So it's predicated on a partner.

Steven Mah -- Piper Sandler -- Analyst

OK. Got it. All right. And then my last question and then I'll hop back in the queue.

So looking at the $0.5 million in revenue, it looks like the Avero revenue was put into discontinued ops. Do I have that correctly?

Eric d'Esparbes -- Chief Financial Officer

That is correct. So all the lab-generated revenues are showed in discontinued operations because technically, the assets are either discontinued or held for sale. And it happened and you see there is the cost reimbursement that we are benefiting from the pharma partnerships when we run the feasibility studies.

Steven Mah -- Piper Sandler -- Analyst

OK. Got it. OK. So Avero has actually moved into a held for sale status now, from an accounting perspective.

Eric d'Esparbes -- Chief Financial Officer

That is correct. And you'll see this in the filing when the Q is filed shortly, yes.

Steven Mah -- Piper Sandler -- Analyst

OK. All right. All right. Thank you.

Eric d'Esparbes -- Chief Financial Officer

Yes. No worries. Thanks for the questions.

Operator

Your next question comes from the line of Catherine Schulte from Baird. Your line is open.

Catherine Schulte -- Baird -- Analyst

Hey, guys. First just staying on the topic of Preecludia, you mentioned conversations with potential partners, I guess, when do you think we can hear a potential announcement around that?

Harry Stylli -- Chairman and Chief Executive Officer

That's going to be sometime next year probably.

Catherine Schulte -- Baird -- Analyst

OK. And then on exploring strategic alternatives for the Avero business, I guess, how are those conversations progressing? And when could we hear an update there?

Harry Stylli -- Chairman and Chief Executive Officer

We choose to transact, it should be this year, if we decide to do to retain the business and you'll hear it this year as well.

Catherine Schulte -- Baird -- Analyst

OK. And then moving to precision medicine. We just had the Rani Therapeutics IPO. I guess how far ahead they are in terms of timing and development? And just from a technical perspective, how does your platform differentiate itself versus the Rani Pill capsule? And I believe they talked about bioavailability in the range of 40% to 78%.

So just wondering why you think that 10% to 15% would be sufficient?

Harry Stylli -- Chairman and Chief Executive Officer

Well, that's for a specific drug, which is highly bioavailable. The Rani technology is actually very limited; you have to co-crystallize your drug in glucose oxidase formulation, which is unique and idiosyncratic. We have the ability to use a variety of formulations in solution. So that's a very promising and distinct advantage.

The other, of course, is that 15% bioavailability is what we believe you need to achieve in order to be able to deliver a large number of drugs using our platform. However, we expect to be superior to that level of performance. The other of course, we've already demonstrated an ability to deliver monoclonal antibodies. And as far as we're aware, no other entity has shown that capability.

And that's just the beginning for us. OK. So there's a variety of ways that we believe we're going to be very well differentiated for folks like Rani and others. And we believe that technology is going to become as a consequence more versatile, and we'll be able to address a broader range of Biotherapeutics in a much more face our way.

Catherine Schulte -- Baird -- Analyst

Great. Thank you.

Harry Stylli -- Chairman and Chief Executive Officer

You're welcome.

Operator

[Operator instructions] Your next question comes from the line of Mayank Mamtani from B. Riley Securities. Your line is open.

Unknown speaker

Thank you for taking our question. This is [Inaudible] on for Mayank. Many congrats on the progress, and also [Inaudible]. So on a high level, we would like to hear your thoughts on why did you focus on inflammatory bowel disease first and we also want to hear what other disease indications pill to be the next step for your OBDS and DDS platform.

And I have another follow-up question. Thank you.

Harry Stylli -- Chairman and Chief Executive Officer

OK. So for the OBDS platform, we decided to use drugs that are very accomplished, have clear evidence of efficacy and safety profiles. OK and of pan within the -- for the early development cycle of our technology. So that's one, because the technology is new.

We want to isolate as much of any variation to the technology and not to the drug and technology. So initially, we're targeting an antibody, which is representative of many other antibodies in many other disease areas. It happens to be adalumimab which is similar to Humira, which is the world's largest-selling drug, and has broad utility in autoimmune disorders, where an oral delivery capability could provide profound advantages, especially over the 15 or so biosimilar companies that are going through conventional routes. The other thing is that market is still projected post expiration of AbbVie's plan for Humira is still projected to be a $14 billion to $15 billion global market.

So I think we're perfectly beautifully positioned to deliver an oral formulation of adalumimab, which is in its own right, potentially very exciting, but also is an example of other monoclonals in other diseases. Behind that, we're assessing a drug called liraglutide. Liraglutide is a GLP 1 agonist that's known as Victoza. It's one of Nova's drugs.

And that can take advantage of the 505-B2 pathway. And what's exciting here, assuming we could exploit the primary clinical data, is that it could emerge as a follow-on to RYBELSUS in both glucose management market, as well as the cardiovascular indications market, and potentially the obesity market. Now, that's predicated on two things that we see compelling data that we're seeing for adalumimab for that molecule. And then also we're allowed to leverage fully the primary clinical data generated today.

Now, of course, liraglutide is an example of a peptide, not just as GLP 1 agonists but insolence, for example, and many, many other peptides. So if you see our approach is we're taking a platform approach, where the lead drugs are exemplars of a class, but at the same time, have immense commercial potential in their own right. OK, then, behind that, we wait to see, there's a very large number of potential candidates, for example, that we can exploit. And you can begin to look at treatment of hemophiliacs you have to inject every day, human growth hormones, by the oral route.

There's many other antibodies and many other peptides. The other exciting feature is we have a partnership with our owners, where we're exploring our technology to deliver antisense. And there's also potential interest, if that goes well, to deliver mRNA vaccines by the oral route. OK.

So that's the versatility of our platform. And Catherine asked a question, a distinct advantage we have is that we're able to work with liquid formulations that are conventionally formulated or could take advantage of our formulation repertoire. OK, so that's the OBDS. And we're working toward area in the data that is of the right caliber that will lead to broader partnerships with our pharma partners and with new pharma partners.

There's plenty of opportunity for more than one entity in this space, we really are on the ground floor.

Unknown speaker

OK. Yes. That's very helpful review, and maybe my follow-up is on the general term while you are doing feasibility studies with your partners. So what are the key endpoints we are looking for like bioavailability or whether PKPD in your preclinical model is close to their simulation results or do we have any preference on preclinical model or animal? Thank you.

Harry Stylli -- Chairman and Chief Executive Officer

So I will give you a general response. So one is the general goal is about 15% by average bioavailability, with about a 50% CV, Coefficient of Variation. So as you can see, there's a high tolerance to variability. Now that's very much drug dependent, and dosing regimen dependent and PK dependent, but what I've shared with you is essentially one of the targets.

Now, we have to develop models, for example. So we are developing porcine models, as well as canine models. And that helps us not just demonstrate the potential of technology, but also helps us fine tune the parameters so that we can extrapolate command, which is really our goal, we're not here to -- in a way, when you're at this stage of development or preclinical stage you have to demonstrate performance in an animal model that is related, and we should learn from in humans, but ultimately, they help inform the human case. The other great feature about technology is that we can choose.

So it's like dish technology, we can choose a variety of parameters. So we're not locked in, in a very rigid pathway. We have the ability to choose various parameters to help optimize delivery for a particular drug and a particular species. And that's another powerful feature that we have.

OK?

Unknown speaker

Yes. Thank you very much.

Harry Stylli -- Chairman and Chief Executive Officer

You're welcome. Thanks for the questions.

Operator

Your next question comes from the line of Andrew Cooper from Raymond James. Your line is open.

Andrew Cooper -- Raymond James -- Analyst

Hey. Thanks for the question, and I apologize now for any new background noise from the airport. But maybe just often asked, I guess, the high level one, can you just give some flavor? I think clearly what you talked about is a lot of optionalities a lot of different directions; you can go even within a given platform, or one of the four kind of precision medicine initiatives. So help us think about the latest and greatest on just sort of what are the stage gating factors to where you think you can see more pharma partnership interest, or what's the first kind of domino to fall that you think can really get the ball rolling from that perspective?

Harry Stylli -- Chairman and Chief Executive Officer

Yes. So I'll be happy to address that. So if you take the year-over-year essence performance we've shared regarding a monoclonal adalumimab. I think the next step for us to show similar levels of performance, with more devices performing at that level, and we believe that's very accessible.

The second part we need to show is obviously, an amount of the obvious we have liraglutide it's a peptide, we want to show similar performance that we're already seeing, there's evidence of that where that adalumimab and finally, it would be very cool if we can deliver antisense because that's a whole new application. And this is in partnership. So I want to be very clear. We're laser-focused on the OBDS and adalumimab and exploiting liraglutide, and then behind that the DDS exploiting at adalumimab again, so there's operating leverage in our programs, but it's very well, one drug, basically, two different delivery modalities.

One is very specific for inflammatory bowel disease. The other is pan autoimmune is a panel to -- it is an immune suppressant and tofacitinib which again, is a unique drug to treat autoimmune, or in this case, IBD. So that's our focus. Our partners are also interested in peptides; they're also interested in nucleic acids.

And they're also interested in monoclonal and the list, frankly, is growing. OK. I'll stop there.

Andrew Cooper -- Raymond James -- Analyst

No. That's super helpful. Maybe just one more and I don't want to focus too much on things you've put into discontinued operations. But when we think about Avero and the decision there, what are the factors that make you swing one way or the other? Is it value you think you can recognize just purely from a sales perspective? Or are there some strategic dynamics when we think about Preecludia, when we think about some of the other pieces that maybe come into play there, just helping me think about what we need to see and what we shall make whether that sells or not.

Harry Stylli -- Chairman and Chief Executive Officer

So we have a preference to divest the business, however, as time goes on, and where we're looking at it as a potential strategic opportunity, whereby we could exploit Preecludia and 104 through their OB-GYN channel. So both are attractive, although our bias presently is to divest the business.

Andrew Cooper -- Raymond James -- Analyst

OK. Thank you. I appreciate that. I'll stop there.

Thanks for the questions.

Harry Stylli -- Chairman and Chief Executive Officer

You're welcome. Thank you, Andrew.

Operator

There are no more questions at this time, turning the call back over to Mr. Harry Stylli.

Harry Stylli -- Chairman and Chief Executive Officer

Thank you all once again for participating on the call, and thank you all for your interest in Progenity. If you have any additional questions, please feel free to contact us directly. Have a good evening, everyone, and thank you for listening.

Operator

[Operator signoff]

Duration: 47 minutes

Call participants:

Robert Uhl -- Managing Director, ICR

Harry Stylli -- Chairman and Chief Executive Officer

Eric d'Esparbes -- Chief Financial Officer

Steven Mah -- Piper Sandler -- Analyst

Catherine Schulte -- Baird -- Analyst

Unknown speaker

Andrew Cooper -- Raymond James -- Analyst

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