Sera Prognostics, a diagnostics company based in Salt Lake City, Utah, offers a test called PreTRM that helps assess the risk of premature delivery in pregnant women. By analyzing certain proteins in the blood along with clinical variables, the test provides physicians with an individualized risk assessment, enabling them to take proactive measures and monitor high-risk pregnancies more closely.
The company conducted several clinical studies to validate the accuracy and effectiveness of the PreTRM test. The Proteomic Assessment of Preterm Risk (PAPR) study, involving serum samples from over 5,500 patients, provided the initial algorithm output. Another study called TREETOP enrolled 5,011 pregnant women from 18 different sites across the United States.
One important intervention study, called PREVENT-PTB, focused on assessing the impact of risk stratification and interventions based on the PreTRM test. Although the study was not powered to analyze a decrease in preterm births, it showed a significant reduction in the number of days preterm infants spent in the neonatal intensive care unit (NICU). This outcome generated substantial investor interest and additional capital for Sera Prognostics.
The company formed a partnership with Elevance Health, an investor and healthcare analytics subsidiary, to conduct the PRIME study, a 6,500-patient post-marketing study. The PRIME study aims to further validate the PreTRM test and assess its economic benefits. Interim data from this study is expected to be released by the end of 2023.
On a recent earnings call, Sera Prognostics reported revenue below expectations and issued guidance that was below analyst consensus. This suggests that the company is facing challenges in commercializing its test. The delayed interim data readout from the PRIME study, now expected by the end of 2023, has also contributed to the uncertainty surrounding the company’s commercial success.
Despite the challenges, the company has significant potential if the PRIME study confirms the effectiveness of the PreTRM test. The test addresses a critical need in reducing the risk of preterm birth, which affects a significant number of pregnancies in the United States. The potential market for the test is estimated to be around $1.5 billion in the US alone.
Various valuation scenarios have been modeled to assess the potential stock price of Sera Prognostics based on different outcomes of the PRIME study. In a “Win” scenario where the study provides statistically significant data and the test becomes the standard of care, the estimated stock price could be around $5 per share by the end of 2024. Conversely, a “Lose” scenario where the study fails to provide compelling results would likely result in the company winding down its operations.
It is important to note that the outcome of the PRIME study will determine the future success of Sera Prognostics. If the study validates the PreTRM test and demonstrates its cost-saving benefits, it has the potential to become a new standard of care. However, if the study fails to show a significant difference between screened and non-screened patients, the test may be deemed ineffective.
Investors should consider the risks associated with the study outcomes and the company’s ability to commercialize the test. The current stock price reflects the market’s assessment of the probability of success for the PRIME study.
