Provention Bio: Undervalued And Overlooked Biotech Company - Diabetes Is Not Going Away Anytime Soon

Aug. 04, 2020 10:10 AM ETProvention Bio, Inc. (PRVB)20 Comments
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Summary

  • Teplizumab's At-Risk PHASE II trial showed promising results in significantly delaying the onset of T1D in pre-symptomatic patients by a median of three years relative to placebo.
  • PRVB offers an attractive buying opportunity and a modest valuation at these oversold levels. With Teplizumab alone, I believe the fair value of the stock should be in the US$14-49.
  • Due to COVID-19, PRVB’s Phase 3 PROTECT trial has been delayed. However, investors have no reason to worry since data from the PROTECT trial is not required for the BLA.
  • Provention Bio will require further financing during 2020-2022. As such, PRVB may further dilute shareholder value through an imminent public offering that is on the horizon.

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Introduction

Provention Bio (NASDAQ:PRVB) is a US biotechnology company developing biologics that target immune-mediated diseases. PRVB's therapeutic initiatives target endocrine diseases, infectious diseases, and respiratory diseases. This report will serve as a thorough overview of PRVB's late-stage clinical asset, Teplizumab (PRV-031), as I strongly believe the company’s valuation is tied to its success.

Teplizumab's At-Risk PHASE II trial showed impressive results in delaying and preventing Type 1 Diabetes (T1D) by a median of three years. Based on this result, PRVB submitted a rolling NDA/BLA submission on April 16, 2020, for the "at-risk" population. Furthermore, Provention submitted a non-clinical module and expects to submit the clinical module in Q3/20, and the CMC module in Q4/20. Once the final module of the BLA has been completed, the FDA will make a filing decision and set a PDUFA goal date.

Earlier on in 2020, Provention commenced its Phase III PROTECT Study in patients with "newly diagnosed" clinical-stage T1D. However, due to the COVID-19 pandemic, the Phase 3 PROTECT trial has been temporarily suspended. However, data from the PROTECT trial is not required for Teplizumab’s BLA in 2020. If there is no delay in the review process, PRV-031 (Teplizumab) will be able to receive FDA approval by Q4/20.

To guide investors’ due diligence processes, I will focus on the following areas as they have not been covered in much detail by other SA authors.

  1. The attractiveness of the Diabetes Market: Market Size, Growth, Competitive Landscape, and Unmet Need.
  2. The attractiveness of "Teplizumab" compared to Insulin and other clinical candidates; how prescribing behavior will change as we look 5-10 years ahead.
  3. The potential likelihood, as well as the risks and hurdles associated with the approval of Teplizumab’s BLA, Phase 1, and Phase 3 trial
  4. Risk-adjusted NPV (rNPV) valuation for Teplizumab and the target price

This article was written by

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We publish unbiased long/short trade ideas. We focus on small and mid-cap healthcare and technology companies. If you have exciting investment ideas, please message us.Disclaimer: Biotechvalley Insights (BTVI) is not a FINRA-licensed investment advisor, and articles are not targeted toward retail investors. BTVI explicitly denies that his opinions are expert in any way. The reader is encouraged to review publicly available information and perform other research before determining whether they agree with the opinions of the author. The content is for informational purposes only; you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in our articles or comments constitutes a solicitation, recommendation, endorsement, or offer by Biotechvalley Insights or any third-party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

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