NEW YORK, April 23, 2024 (GLOBE NEWSWIRE) -- Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has released an Update Note on ProPhase Labs Inc. (NASDAQ: PRPH). The update note includes information on the ProPhase’s business model, services, industry, financial results, valuation, and risks.
The update note is available here. Highlights from the note include:
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ProPhase Labs Advances Cancer Treatment with Project ZenQ-AI - ProPhase Labs has introduced Project ZenQ-AI, a groundbreaking initiative in cancer treatment research. This new initiative marks a significant advancement in cancer treatment, combining ProPhase’s sophisticated AI technology with an extensive genomics database and patented insights into esophageal cancer to innovate Antibody Drug Conjugates (ADCs) development. This approach not only redefines the development of ADCs but also establishes the groundwork for a series of transformative advancements, highlighting the company’s strategic utilization of AI and genomics in combating cancer:
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Integration of Comprehensive Genomics and AI: Project ZenQ-AI utilizes ProPhase’s AI platform, developed using cutting-edge AI technology and systems, in conjunction with a vast genomic database amassed over six years from whole genome sequencing (WGS) tests conducted in more than 130 countries. This database, roughly equivalent to 150 million ancestry SNP-based tests, allows for a detailed genetic analysis at a scale significantly broader (examining all 3 billion base pairs of the human genome) than traditional SNP tests, which only analyze specific genetic variations at known locations.
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Advancement in ADCs through ZenQ-AI: The project aims to create highly targeted ADCs, which connect chemotherapy agents to monoclonal antibodies specifically binding to cancer cell markers. This method reduces damage to healthy cells, combining the precision of antibodies with the potency of cytotoxics. Leveraging both genomic and proteomic data through ZenQ-AI enhances the rapid identification and design of ADCs targeting specific biomarkers and mutations driving cancer.
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Strategic Technological Deployment: To handle the substantial computational demands, ProPhase Labs employs a hybrid technological approach, integrating AI and machine learning capabilities from major cloud providers with robust on-premises NVIDIA hardware. This setup ensures optimal data processing capabilities while maintaining high standards of data security and compliance.
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BE-Smart Initiative for Early EAC Detection: The BE-Smart initiative, now part of Project ZenQ-AI, focuses on the early detection and understanding of esophageal adenocarcinoma (EAC), a notably deadly cancer lacking effective targeted treatments. Utilizing a detailed proteomic database, initial tests have shown high accuracy in detecting early-stage EAC, with plans for commercialization of the diagnostic test in the second half of 2024.
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Global Data Diversity via Nebula Genomics: The project benefits from the global diversity of the Nebula Genomics database, which enhances the development of algorithms for identifying unique genetic markers and therapeutic targets across different populations, thereby improving the potential effectiveness of ADC treatments.
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Broad Implications for Oncology: Project ZenQ-AI is positioned to influence the broader field of oncology, targeting more effective and less toxic treatments for various cancer types. The integration of comprehensive development and expertise from subsidiaries like Nebula Genomics and ProPhase BioPharma highlights the initiative’s potential to lead breakthroughs in precision oncology.
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Open Invitation for Collaboration: The company remains open to collaboration across the scientific and medical communities to join this transformative initiative, aiming to leverage AI and genomic insights to revolutionize cancer treatment methodologies.
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ProPhase Labs Anticipates H2 2024 Launch of BE-Smart Test for Esophageal Cancer - ProPhase Labs announced significant advancements in its BE-Smart test for esophageal cancer, aiming for a commercial launch in the second half of 2024. The company highlights the test's potential to provide early, cost-effective detection of esophageal cancer, significantly improving patient outcomes. The BE-Smart test, a patented method for identifying esophageal cancer markers, is positioned as a major innovation in the management of esophageal adenocarcinoma (EAC), targeting a substantial market opportunity within the $7 to $14 billion range, estimated from the annual demand for endoscopies in the United States.
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Validation and Partnerships: ProPhase is collaborating with mProbe Inc. and institutions like the Mayo Clinic and Genesis Clinical to finalize rigorous validation studies, ensuring the test's accuracy and reliability. The validation process is complemented by extensive partnerships with research hospitals across the U.S. and Europe, enhancing the test's database with diverse esophageal tissue samples. This broad data collection aims to refine the test’s sensitivity and specificity continuously.
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Regulatory Preparation and Clinical Impact: The company is preparing to submit the necessary documentation for the Advanced Diagnostic Laboratory Test (ADLT) application under the CPT coding system, which is essential for billing and insurance reimbursement. The anticipated reimbursement rates for the BE-Smart test range between $1,000 and $2,000 per test, based on the complexity of similar tests. The BE-Smart test utilizes advanced proteomics to detect EAC, addressing the dire need for effective diagnostics in one of the deadliest cancers, which currently lacks targeted treatments. By accurately stratifying patients into low or high-risk categories, the test promises to transform patient management in EAC, facilitating timely interventions and potentially reducing the need for frequent invasive procedures for low-risk individuals. This strategic approach aligns with ProPhase’s commitment to enhancing patient care through innovative, targeted diagnostics and personalized treatment strategies.
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Valuation - We reiterate our valuation of ProPhase Labs, which has been actively pursuing growth through strategic expansions and innovative product introductions across its subsidiaries. Our updated valuation model incorporates the latest financial outcomes and refined estimates reflecting newly disclosed segment information. Furthermore, we have revisited our SOTP (Sum of the Parts) methodology, resulting in an adjusted valuation to $21.00 per share, up from the previous $20.00, contingent on the company's successful execution.
About ProPhase Labs Inc.
ProPhase Labs, Inc. (Nasdaq: PRPH) is a diversified diagnostic, genomics, and biotech company seeking to leverage its CLIA lab services to provide whole genome sequencing and research directly to consumers and build a genomics database to be used for further research. The company also operates a contract manufacturing subsidiary and offers the TK Supplements line of dietary supplements, which are distributed in food, drug, and retailer stores. For more information, visit https://www.prophaselabs.com/
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms.
For more information, visit https://www.diamondequityresearch.com.
Disclosures:
Diamond Equity Research LLC is being compensated by Prophase Labs Inc. for producing research materials regarding Prophase Labs Inc. and its securities, which is meant to subsidize the high cost of creating the report and monitoring the security, however the views in the report reflect that of Diamond Equity Research. All payments are received upfront and are billed for research engagement. As of 04/23/24 the issuer had paid us $95,000 for our research services which commenced 03/21/23, and is billed annually upfront, consisting of $35,000 for the annual subscription in the first year and $35,000 in the second year (in two $17,500 installments for six month periods paid upfront) and $2,500 for additional one-time research work for the first year coverage and $20,000 for a research report on a subsidiary of Prophase Labs Inc. and $20,000 for another research report on a subsidiary of Prophase Labs Inc. The issuer has paid us for non-research-related services consisting of $2,500 for attending a virtual conference. Issuers are not required to engage us for these services. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities including the complete potential loss of their investment. Investors can find various risk factors in the initiation report and in the respective financial filings for ProPhase Labs Inc.
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