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Can Provention Bio Breathe Life Into Failed Eli Lilly Molecule?

In the biopharma space, innovation can come in unexpected ways. It is not unusual for a once discarded candidate to be given life again and find success in a new indication. The most famous example is Viagra, a doomed anti-hypertension treatment that found tremendous commercial success as a therapy for erectile dysfunction.

Provention Bio (PRVB) hopes lightning will strike as it attempts to breathe life into Teplizumab. Teplizumab is a monoclonal antibody that Provention is testing for the prevention/delay of Type 1 Diabetes, an autoimmune disease that is estimated to affect 25 million people in the US.

Checkered History

Eli Lilly (LLY), through a partnership with MacroGenics (MGNX), attempted to commercialize Teplizumab in 2010, but the Phase 3 trial failed to meet its endpoint of lowering the patient's daily insulin usage and HbA1c levels (a marker of the level of sugar in the bloodstream). LLY abandoned the project, where it languished until PRVB acquired the rights to Teplizumab in 2018 from MacroGenics.

PRVB viewed the asset as worthy of further exploration, with it taking a unique approach to gathering the data to present to the FDA. PRVB ran its trials with Teplizumab manufactured by AGC Biologics. However, when the candidate was manufactured by AGC, it exhibited a different pharmacokinetic and pharmacodynamic profile from the data generated by LLY. The discrepancy complicated matters as the FDA found deficiencies in the data presented.

In an attempt to address the issue, PRVB stated the two versions of Teplizumab are not biosimilars but rather, equivalent antibodies produced from the same cell lines.

Next Move

The regulatory setback has placed PRVB in a difficult position. PRVB will need to move forward with what will likely become costly additional trials to validate the compound, lengthening the time before Teplizumab can, if ever, enter the marketplace.

Implications For Investors

PRVB investors are now facing a difficult choice considering this development. With Teplizumab’s future in doubt, how will the company proceed?

As of December 31, 2020, PRVB held $121.8 million in cash and equivalents on its balance sheet. Additionally, in January, the company announced a public offering of over 6 million shares, pricing the offering at $16 a share. PRVB was able to sell over 6.8 million shares at $16 per share, which should provide a lifeline and quell any liquidity concerns.

So, the critical issue is whether Teplizumab will ultimately gain approval.

Analysts Weigh In

Turning to the analyst community, 5 Buys and 1 Hold have been issued in the last three months. As such, the consensus rating is a Strong Buy. At $19.75, the average analyst price target suggests 153% upside potential. (See Provention Bio stock analysis on TipRanks)

Disclosure: On the date of publication, Alexander Poulos did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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