Biora Therapeutics Inc (BIOR) 2021 Q2 法說會逐字稿

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.

Thank you, operator. Good afternoon and welcome to Progenity's Second Quarter 2021 Financial Results conference call. Joining 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 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 involves 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, will now turn the call over to Dr. Harry Stylli, Chairman and CEO of Progenity.

Thank you, Robert, and thank you all for joining us this afternoon. In second quarter, the company initiated a transformation directed at materially reducing its burn rate whilst accelerating the transition to an innovation-led biotech company focused on its oral delivery of biomolecules and its GI-IBD platforms.

Progenity also successfully completed the PRO-104 validation study for its Preecludia assay. In parallel, advanced our single-molecule detection platform and is committed to making technical-commercial progress with these programs including with partners.

We've also continued to explore various financing options including generating [non-value] to 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.

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 are as intended to be used clinically was consistent with what we observed in our 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 informed panel allowance for one of the key assays in our novel Preecludia tests. This constitutes further strengthening of our growing Preecludia IP portfolio.

The Preecludia test is a multi-analyte 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 U.S. 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 effective operator independent test that aids in the management of this complex disorder is simply not currently available.

Preecludia also has potential as an IVD 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 U.S. market and do the same for the CE IVD 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.

Whilst we continue to support the Preecludia test development at this stage of our transformation, we are prioritizing our capital allocation to advancing our complementary 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 (inaudible) including adalimumab.

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 total, we're targeting a vast $250 billion market that is prime for these oral delivery solutions.

During the second quarter 2021, we initiated preclinical studies of our lead candidates, PGN-OB1, adalimumab and monoclonal which are subject to the BLA pathway and PGN-OB2, liraglutide, a peptide, likely the 505(b)(2) 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 lead [utilized] drug candidates with 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 viability for proteins, peptides, and other biomolecules.

Despite expected normal performance variability at this early stage of development. We recently demonstrated in our swine model a significant drug was detected in approximately half the animals in a test group, achieving an average viability or approximately 15% to a maximum of 44% of IV for adalimumab following a single dose highlighting the vast potential for this program. This is 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 probability of around 10% to 15% of IV with repeat dosing will prove satisfactory for a large number of biomolecules. We anticipate that will meet -- that we will meet or most likely 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 GLP agonists and other drugs across a range of chronic use indications; three, help biotherapeutics assess monoclonals, become more competitive, small molecule substitutes; and finally, we have the potential to target and treat a range of pathologies especially liver diseases.

Our strategy is to advance our own pipeline while continuing to partner with third parties leveraging their drug candidates and resources to make the OBDS a leader in the oral delivery of biotherapeutics. As we are using known drugs for the safety and efficacy profiles, we believe we should be able to generate compelling bioavailability data in animal models and provide clinical proof of concept, be 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 solubilize, 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 solubilize 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 lead drugs. PGN-001, adalimumab, our monoclonal antibody, and PGN-600, tofacitinib, a small molecule normally absorbed in the stomach and the upper GI tract with our initial focus in ulcerative colitis or UC.

Whilst the novel route of administration for adalimumab is through the BLA regulatory pathway, we believe that our tofacitinib device combination can exploit the 505(b)(2) pathway and allow us to take advantage of the primary data that potentially benefit, form a relatively short path to a commercial asset. We continue to believe we have the potential with this platform to achieve record 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 evaluating [capsule] safety targeting and tolerability in the gastrointestinal track of 12 normal healthy volunteers. No safety issues were reported.

While specifically targeting the segment of the GI tract with disease burden, we have the potential to maximize drug exposure at the disease site and minimize systemic exposure and off-target organ effects.

We also completed during that period a preclinical study evaluating the safety, tolerability, and PKPD of a seven-day administration in dogs of PGN-600 solubilize tofacitinib delivered by DDS at doses of 25 mgs or 10 mgs per day with direct comparison to a standard, orally administrated tofacitinib tablet at 10 milligrams per day over a week. We were able to show that the 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 milligrams daily compared to the standard oral tablet formulation at the same dose. These results demonstrate that PGN's 600 proprietary liquid formulation and targeted delivery can achieve pan-colonic distribution and facilitate mucosal proliferation.

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, adalimumab, 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 our first human feasibility studies delivering Humira with the DDS as well as the design of our first human feasibility study with PGM-600 with both clinical feasibility studies anticipated through initiating first half in 2022 pending IRP approvals. You'll hear more about this study likely in the September timeframe.

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 our DDS platform will materially advance the treatment of GI disease initially for IBD and UC.

Our strategy begins with transforming established drugs with known efficacy and safety profiles that has a potential to materially enhance any compatible drug directed at treating GI localized disease, and in this instance, enable new effective IBD treatment regimens such as rapid induction and extending to drug combination therapies.

While we're focus on a drug pipeline and delivery platforms, we have moved the RSS and PIL DX to primarily engineering development for second generation builds to support largest scale manufacturing. And with this focus, we have limited preclinical-clinical studies at this time.

We have discussed [application] for PIL DX in the past. We continue to be excited by its vast potential. We are also 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 of inflammation could supersede, for example, TNF as a mediator.

We believe that we can [manage] 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 a superior response rate for our drugs and the ability for physicians to most closely monitor the patients for disease progression.

Completing our innovation pipeline update with our single molecule detection platform, we recently established its coefficient of variation using genomic DNA at approximately 0.5% which is supportive of an NIPT assay performance equivalent to next-generation sequencing. We soon intend to report our performance for detecting T21, 18, and 13 and employ this and is success at preference to date is to [partner] the platform especially with an NIPT test providers.

We continue to believe our single molecule detection platform has a potential to reduce NIPT direct [COGS] by up to 50% and achieve equivalent performance to traditional, next-generation sequencing.

It should also be noted that this platform is expected to be capable of detecting and counting specific DNA, RNA, epigenetic as well as protein [surrogates] 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 our Ann Arbor commercial laboratory and refocused our resources towards our innovation pipeline. Whilst business closure is 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 supports improved control of our burn rate. Eric will provide more details later on this call.

As I mentioned earlier, we prioritize our capital allocation towards our drug device platform programs secondarily towards a refinement of our Preecludia test and single molecule detection platforms. As you can see, we are on track to significantly moderate our cash burn requirements and gain considerable more control over our cash burn rate and we will continue to pursue partnerships and/or asset divestiture 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 our operation to generate non-diluted 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 exploit its OB-GYN channel for Preecludia and non-sequencing 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 with 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 for 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 [try] to control our 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.

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 and the company's transition to shift away from molecular testing operations will change our revenue's 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 complete the company's transformation and optimize capital allocation towards 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 have 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 not shifting to our operating and SGA cost management activities.

Total operating expenses were $46 million in the 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 that spend profile, sales and marketing expenses mostly presented in this continued 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 be eliminated if we completed 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 absorb the company transition cost 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 towards our precision medicine drug programs in the later part of 2021 and in to '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 completion of existing studies and development towards 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.

Thank you, Eric. Our transformation is advancing as expected at this juncture and we have already realized the $97 million reduction in operating expenses run rate with more on the way soon. We our sharpening our focus on disrupting the biomolecule market through oral delivery by the OBDS and potentially achieve rapid inductions, super response rates, and [for your] safety issues with the DDS platform and the treatment of IBD and colitis.

We recently received funding from the Crohn's & Colitis Foundation to advance the DDS and have published in the platform's potential. We have two complementary disruptive drug platforms that will power and differentiate our clinical (inaudible) and which we believe will provide sufficient optionality for new partnerships with pharma especially as we generate key data.

I'm also especially proud of our collective efforts in successfully advancing Preecludia through the PRO-104 validation study. Test-approved for preeclampsia have proven elusive until the development of Preecludia which promises to be a powerful tool in helping physicians manage patient with signs and symptoms of preeclampsia and as a consequence potentially generate a multibillion dollar market in the U.S. alone and disrupt the reproductive health channel. We now have the opportunity to optimize this commercialization in the U.S. and global markets daily through partnerships.

Future milestones we discussed today and is presented in our supporting materials are expected to enhance to value as we make progress with our innovation pipeline. A number of our innovations address vast markets and in some instances have the potential to be commercially transformative.

We're excited by the continued reduction of our cash burn rate, near-term potential, and the new focus on optionality we provide for future value creation.

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

Understood. (Operator Instructions). Your first question comes from the line of Steven Mah from Piper Sandler. Your line is open.

Great. Thanks, operator, and thanks for taking the questions. Hey, how are you doing? Yes. So, just a few questions on Preecludia, can you give us a sense for the stature of the journal that you're principal investigator intend to submit the Preecludia data to?

I believe they're vying for a -- either a very top general clinical journal or a very top OB-GYN MSN journal. I can't be specific because you're actually not permitted to name any journals.

Yes, I know. I'm just sort of getting -- trying to sense for the difference here. So, sounds like it's one of the top-tier journals.

Yes.

Okay. And yes, just continuing on Preecludia, Eric, does OpEx guidance that you just gave does that include the -- and you're sort of scaling up for the Preecludia launch?

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 technical utility that we would do in partnership.

Okay. And so the OpEx does include expenses for the clinical utility studies?

For our share, our part of the clinical utility study, correct.

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

Not yet, but the team is obviously progressing very well and we have 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 conversations 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.

Okay. 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 will not launch it on your own, am I understanding that correctly?

We'll not likely to launch our own, so it's predicated on a partner.

Okay. Got it. All right. And then my last question and then I'll hop back in the queue, so looking at the half million in revenue it looks like the Avero revenue was put into discontinued ops, do I have that correctly?

That is correct. So, all the lab-generated revenues are showed in discontinued operations, because technically, yes, that's right, either discontinued or held for sale, and the half million you see there are the cost reimbursement that we are benefitting from the pharma partnerships when we run the feasibility studies.

Okay. Got it. So, Avero has actually moved into the held-for-sale status now from an accounting perspective.

That is correct.

Okay. Got it.

And you'll see this in the filing when the Q is filed shortly. Yes.

Okay. All right. Thank you.

Yes, no worries. Thanks for the questions.

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

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

That's going to be some time next year likely.

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

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

Okay. And then moving to precision medicine, just how the Rani Therapeutic IPO, I guess, how far ahead are they in terms of timing and development? And just from a technical perspective, how does your platform different itself versus the RaniPill 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?

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

The other, of course, is that the 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, is what we've already demonstrated in our ability to deliver monoclonal antibodies. And as far as we're aware of, no other entity has shown that capability and that's just the beginning for us, okay?

Okay. Thank you.

So there's variety of ways that we believe we're going to be very well differentiated, of course, at Rani and others and we believe our technology is going to become, as a consequence, more versatile and will be able to address a broader range of biotherapeutics in a much more [feasible] way, okay?

Okay. Thank you.

You're welcome.

(Operator Instructions). Your next question comes from the line of Mayank Mamtani from B. Riley Securities. Your line is open.

Well, thank you for taking our questions. This is (Inaudible) on for Mayank. Many congrats on the progress on multiple front. So, on a high level, we would like to (inaudible) why did you focus on your (inaudible) versus the (inaudible) what other disease indications would be the next step for your OBDS and the DDS platform? And I have another follow-up question. Thank you.

Okay. So, for the OBDS platform, we decided to use drugs that are very accomplished, that have clear evidence of efficacy and safety profiles, okay, and are off-patent within what I'll call 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 and many other disease areas. It happens to be adalimumab which is similar to Humira, which is the world's largest selling drug and has broad utility in also immune 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 patent for Humira is still projected to be a $14 billion to $15 billion global market. So, I think we're hopefully dutifully positioned to deliver an oral formulation of adalimumab which is in own right potentially very exciting but also is an exemplar 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 [Utenza]. It's one of Novo's drugs. And that could take advantage of the 505(b)(2) pathway. And what's exciting here assuming we did exploit the primary's clinical data is that it could emerge as a follow-on to Rybelsus in both the glucose management market as well as the cardiovascular indications market and potentially the obesity market that has predicated on two things that we see compelling data that we're seeing for adalimumab with that molecule and then also that the -- we're allowed to leverage fully the primary's clinical data generated today.

Now, of course, liraglutide is an example of a peptide not just as a GLP-1 agonist but insulins, for example, and many, many other peptides. So, if you see our approach is we're taking a platform approach where our lead drugs are examples of a class but at the same time have immerse commercial potential in their own way, okay?

Then behind that, we wait and see. There's a very large number of potential candidates, for example, that we can exploit and we could begin to look at treatment of hemophiliacs that injects every day, human growth hormones by the oral route. There's many other antibodies, many other peptides.

The other exiting feature is we have a partnership with our (inaudible) where we're exploring our technology to deliver antisense and there's also potential in for us if that goes well to deliver mRNA vaccines via the oral route, okay? So, that's the versatility of our platform and Catherine asked the question, a distinct advantage we have is that were able to work with liquid formulations that conventionally formulated what could take advantage of our formulation repertoire, okay?

So, that's the OBDS. And you know -- we're working towards generating 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 the space. We really are on the ground floor, okay?

Yes, that's very helpful. And maybe my follow-up is how the [general] (inaudible) when you are doing feasibility studies with our partners. So, what are the key endpoints we are looking for, like bioavailability or whether PKPD in your (inaudible) model is close to their simulation results or to do they have any preference on (inaudible) model or animals? Thank you.

So, I'll give you a general response. So, one is the general goal is about 15% average bioavailability with about 50% CV -- coefficient of variation. So, as you can see, there's a high tolerance to -- around variability. Now, that's very much drug dependent and dosing regimen dependent and PK dependent. But what I've shared with you is basically essentially one other target.

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 the technology but also helps us fine tune the parameters so that we could extrapolate to man, which is really our goal. We're not here to -- in a way, when you're at this stage of development, a preclinical stage, you have to demonstrate performance in an animal that is related and we could learn from in humans but ultimately they help inform the human case.

The other great feature of our technology is that we can tune. So, it's like a digital technology. We can tune a variety of parameters so we're not locked in in a very rigid pathway. We have the ability to tune various parameters to help optimize our delivery for a particular drug and in a particular species and that's another helpful feature that we have, okay?

Yes. Thank you very much.

You're welcome. Thanks for the questions.

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

Hi. Thanks for the question and I apologize now for any background noise in the airport. But maybe just often asked, I guess a high level one, can you just give some flavor? I think, clearly, what you talked about is a lot of optionality, a lot of different directions you can go even within a given platform, one of the four kind of precision medicine initiatives. So, help us think about the latest and greatest on just sort of what's the -- 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?

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

The second part we need show is obviously and it may not be obvious but we have liraglutide. It's a peptide. We want to show similar performance that we're already seeing and there's evidence of that with adalimumab. 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-like focused on the OBDS, adalimumab, and exploiting liraglutide and then behind that the DDS, exploiting adalimumab again. So, there's operating leverage in our programs, but they were one drug, basically, two different delivery modalities. One is very specific for our inflammatory bowel disease, the other is pan-autoimmune -- is a pan-auto -- is an suppressant and tofacitinib, which again, is a unique to treat autoimmune, where 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 monoclonals. And the list, frankly, is growing, okay? I'll stop there.

No, that's super helpful. Maybe just one more, I don't want to focus too much on things you put in to discontinue 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 may be come into play there? Just help me think about what we need to see and what we should we think whether that sells or not?

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

Okay. Thanks. I appreciate that. I'll stop there. Thanks for the questions.

You're welcome. Thank you, Andrew.

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

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.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.