NEW YORK – Women's health diagnostic firm Progenity announced on Wednesday that it will close its genetics laboratory as part of a strategic transformation that will place more of an emphasis on its drug delivery technologies and therapeutics.
Closing the lab, along with other "operational improvements," will allow the San Diego, California-based company to reduce the annual capital required for operations by approximately 70 percent, from more than $180 million to about $50 million in 2022, the firm said in a statement.
Progenity will now focus primarily on its research and development pipeline and will stop offering its Preparent Carrier Test, Innatal Prenatal Screen, Riscover Hereditary Cancer Test, and Resura Prenatal Test. The strategic transformation is expected to be finished over the next two months and will include a 56 percent reduction of its total workforce, trimming 374 employees from its staff, it said. The change is also expected to result in annualized cost savings of about $130 million in sales, general, and administrative costs.
The company's capital requirements after accounting for the costs of the change are expected to be about $4 million to $5 million per month.
Progenity's affiliate laboratory, Avero Diagnostics, has projected revenues for 2021 of $35 million to $40 million, and the company said it is "evaluating strategic opportunities" for Avero to generate capital.
On a conference call to discuss the change, Progenity CFO Eric d'Esparbes said the firm was withdrawing its full-year 2021 guidance.
Progenity will still develop its Preecludia preeclampsia rule-out test, Drug Delivery System platform, and Oral Biopharmaceutical Delivery System, along with gastrointestinal-targeted therapeutics and monoclonal biotherapeutics. It will also continue developing PIL Dx, its ingestible lab-in-a-capsule technology, as well as its single-molecule detection platform.
“Our innovative R&D pipeline has always been core to our future growth plan and has the potential to transform and address significant markets by improving patient outcomes,” Harry Stylli, CEO and chairman of Progenity, said in the firm’s statement. “We believe that we can deploy capital more efficiently by focusing on the differentiated innovation assets in our portfolio that have the greatest potential to drive shareholder value and generate non-dilutive dollars through scalable partnerships.”
In Wednesday morning trade on the Nasdaq, shares of Progenity were down 11 percent to $2.55.