Provention: Ability To Expand T1D Market Presence With 2nd Half 2023 Data (NASDAQ:PRVB)

Provention Bio (NASDAQ:PRVB) is a great speculative biotech play to look into. The reason why I state that is because it received FDA approval of TZIELD for stage 2 Type 1 Diabetes (T1D) patients. The goal of this medicine is to delay the onset of stage 3 T1D by 2 years. While this was a good FDA approval for this biotech, it’s also important to note that it can possibly expand upon the T1D market. That is, targeting another patient population in this space. Thus, it is advancing TZIELD in the ongoing phase 3 PROTECT study, which is going after stage 3 newly diagnosed T1D patients. Results from this late-stage study are expected to be released in the 2nd half of 2023. If the results are positive, then it would provide it the ability to expand its market potential in this T1D space.

Besides this major catalyst, there is another one expected at the end of this year. Provention is exploring the use of PRV-015 for the treatment of patients with Celiac Disease. The biotech has already been able to establish a partnership for this program with Amgen (AMGN). Results from this phase 2b study, using PRV-015 for the treatment of patients with this disease, are expected by the end of 2023. While both catalysts are expected to take place in the latter part of this year, there is an opportunity to buy the stock while it remains at this lower price range. A possible near-term catalyst would be an earnings update on sales of TZIELD by end of February of 2023. With a few catalysts on the way in 2023, plus additional opportunities for market expansions, these are the reasons why I believe it is a great speculative biotech play to look into.

FDA Approval Of TZIELD For Stage 2 Type 1 Diabetes Patients

The first update to go over involves one dealing with the FDA approval of TZIELD for Stage 2 Type 1 Diabetes (T1D) patients. That is, this drug has been approved to delay on the onset of Stage 3 T1D patients by about 2 years. Type 1 Diabetes occurs when your pancreas doesn’t make enough insulin or makes very little insulin. What’s so important about insulin? Insulin is important for your body because it is responsible for allowing blood sugar to enter your cells and then used for energy. If a person lacks insulin, then this doesn’t happen, which in turn causes the blood sugar to build up in the bloodstream. Having high blood sugar in the bloodstream, as you can imagine, is a terrible disaster. That’s because it causes many symptoms and problems in the patient’s body. Symptoms associated with T1D are:

• Blurred vision
• Fatigue
• Hunger
• Frequent urination
• An increase in thirst

Some natural ways to improve upon T1D are to exercise and change the diet around. However, these other methods have to be accompanied by some form of insulin treatment. There are roughly about 200,000 cases of T1D in the United States each year. It is still a large global market that Provention Bio is going after. It estimated that the global market opportunity for Type 1 Diabetes will be $9.6 billion by 2030. There are many competitors in this field so it won’t be easy. Plus, Provention is different in that it currently has TZIELD approved to delay Stage 2 T1D patients to Stage 3 T1D. At least it is looking to expand the market opportunity by going after newly diagnosed Stage 3 T1D patients. While other competitors actually treat T1D by providing insulin or other treatment options.

This drug was approved by the FDA because of positive results which were obtained in a randomized, double-blind phase 3 study. This trial recruited a total of 76 patients with Stage 2 T1D. Patients randomly received either TZIELD or placebo once daily via intravenous infusion for a total of 14 days. The primary endpoint of this study was time from randomization to develop Stage 3 T1D. It was shown that after an average follow up of about 51 months, 45% of the 44 patients who received TZIELD were later diagnosed with Stage 3 T1D. On the other hand, 72% of the 32 patients who received placebo were later on diagnosed with Stage 3 T1D. This right here shows you that the drug was able to help many Stage 2 T1D patients delay progression of moving on towards Stage 3 T1D. Then, there is another measure to consider with respect to the positive results that were released at that time. That is, the average time that patients moved on to develop Stage 3 T1D, which is as follows:

• 50 months of time passed before these patients went on to develop Stage 3 T1D
• versus 25 months passing for patients who received placebo

This is another measure, as you can see, in which patients who received Provention Bio’s TZIELD were able to prevent advancement in their disease. With respect to safety, there weren’t that many adverse events. Common side effects observed in the trial were lower levels of white blood cells, rash formation and headaches. The side effects are not bad considering that these patients have to receive 1,100 + insulin injections and 1,000+ poke pricks for blood testing when they have Stage 3 T1D. Even though TZIELD delays the need for these events by about 2 years, that’s still a good amount of time to avoid all this mess.

A few other catalysts to consider would be the application response expected from HCPCS. That is, Provention Bio is seeking a J code from this agency to classify TZIELD for this patient population. The first of such catalysts would be the completed review for this code which is expected in April of 2023. If all goes well, then the “J” code classification is going to be given out July of 2023. What is a “J” code and why is it important? It is used by Medicare and other managed care organizations to identify injectable drugs that cannot be self administered, chemotherapy drugs and even some orally administered drugs. The bottom-line is that such a classification will only serve to help Provention Bio. Another catalyst would be sales of Provention Bio’s drug TZIELD, which are expected in late February of 2022. This will give an indication of how well sales start to lift off.

Update On Use Of TZIELD For Newly Diagnosed Stage 3 T1D Patients

The next Update to go over involves the use of TZIELD for newly diagnosed Stage 3 Type 1 Diabetes (T1D) patients. The thing is that Provention Bio has been able to obtain FDA approval of TZIELD for the treatment of patients with Stage 2 T1D. That is, to prevent them from progressing on towards Stage 3 T1D. Well, it holds potential to expand upon the T1D market by advancing a phase 3 study to treat newly diagnosed Stage 3 T1D patients. In essence, patients who are already at Stage 3. This phase 3 trial is known as PROTECT and it is recruiting a total of 300 patients who are between the ages of 8 to 17 with recent onset of T1D. Patients are to be randomized 2:1 to either two 12-day cycles, six months apart, of intravenous PRV-031 or placebo. The primary endpoint of this study is going to look at C-peptide change. Low levels of C-peptide mean that the patient’s body is producing low levels of insulin. Thus, the goal here would be to see if the drug can significantly increase such levels over placebo. The secondary endpoint is going to look at other diabetes measures such as how much insulin is still used, HbA1c (blood sugar glucose levels), hypoglycemia (low blood sugar) and safety of PRV-031.

While Provention has been able to show the ability of PRV-031 to prevent advancement of Stage 2 T1D patients to Stage 3, it remains to be seen if it can achieve success for those who are already newly diagnosed with Stage 3 T1D. This late-stage study is going to prove this fact one way or another. The good news is that investors will not have to wait a long time to see clinical results from this study either. It is expected that final results from this phase 3 PROTECT study are going to be released in the 2nd half of 2023. Data from this study could have been out earlier, but the Covid-19 pandemic, when it happened, put a huge damper on enrollment. Matter of fact, Provention Bio had to pause enrollment during that period. This is a huge catalyst, because again it means that the company can target even more of the T1D patient population. In my opinion, I would consider this expansion a bonus. If it is able to expand to this particular Stage 3 T1D patient population great, if not it won’t be the end of the world either. That’s because as was shown above, it has already received FDA approval for another portion of the T1D patient population.

Financials

According to the 10-Q SEC Filing, Provention Bio had cash, cash equivalents and marketable securities of $186.5 million as of September 30, 2022. The thing is that this biotech is in great shape with respect to its cash position. I will admit that in 2022 it did enact a lot of cash raising activities, however, it may need to raise additional funds this year. I state this, because it has had the need to continue to use multiple financial instruments to raise cash. For starters, in July of 2022 is received about $57.2 million in net proceeds upon completion of the Private Placement agreement it had made. It also enacted a Loan and Security Agreement with Hercules Capital, Inc. for up to $125 million in aggregate term loans in can draw upon. However, it is important to note that there are stipulations in place, which will only allow 5 tranches as milestones are met. Upon closing of this Loan and Security Agreement, Provention Bio took in $23.7 million. The second tranche of $40 million came at closing of FDA approval of TZIELD. The 3rd and 4th tranches of an aggregate $35 million will be tied to other milestones. Lastly, the 5th tranche is $25 million and will be up to the lenders on whether or not it receives this amount. In order to have a good commercial launch for TZIELD, Provention entered into a co-promotion agreement with Sanofi (SNY). It received $20 million in payment in October 2022 for this agreement. In addition, Sanofi has agreed to purchase $35 million worth of its stock no later than February 16, 2023. Based on all these events, it believes it has enough cash until September 30, 2024. Having said that, I expect it to raise cash by all the means noted above, but I believe that it may have to raise cash by at least March/April of 2023.

Risks To Business

There are several risks that traders/investors should be aware of before investing in this biotech. The first risk to consider would be with respect to sales of TZIELD coming up at the end of February of 2023. The belief is that the biotech will do well on initial sales, but there is no guarantee that it will do so. Having said that, it may have a few quarters to redeem itself in terms of building up commercial sales of the drug. Even if it doesn’t, there might be a way to give itself a boost in the T1D space. This all has to do with the ongoing phase 3 PROTECT study targeting stage 3 newly diagnosed T1D patients. Results from this study are expected to be released in the 2nd half of 2023 and there is no guarantee that the primary endpoint will end up being met. The final risk to consider would be with respect to the financial position that this biotech is in. It is highly likely that it may need to raise cash in the coming months. As such, investors could end up being diluted.

Conclusion

Provention Bio is a great speculative biotech play to look into. I think it offers an opportunity based on receiving FDA approval for the T1D market. It remains to be seen how well initial commercial sales are for TZIELD, but the speculative opportunity here remains high. Not only that, but as I mentioned above, it may have the ability to be able to expand its presence in the T1D market space. This will be with the use of the ongoing phase 3 PROTECT study, which is using TZIELD for newly diagnosed stage 3 T1D patients. With results from this study expected in the 2nd half of 2023, it could be a major inflection point for the company. It is not heavily relying on TZIELD for its future either, which is nice to see. It is also advancing the use of PRV-015 for the treatment of patients with Celiac Disease in an ongoing phase 2 study. Results from this mid-stage study are expected to be released by the end of 2023. This is another catalyst during this year that traders/investors can look forward to. Then, it has another program in its pipeline, which is the use of PRV-3279 for the treatment of patients with lupus in an ongoing phase 2b study. However, results from this study are not expected to be released until the second half of 2024. With so many catalysts in the next few years, plus it having already received approval of TZIELD for a specific T1D patient population, these are the reasons why I believe it is a great speculative biotech to look into.

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