Daily Stock Watch: PRVB Stock Buoyant Following Sanofi Deal

By Duncan Ferris


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Having just signed a major deal with a top pharma player, Provention Bio (NASDAQ: PRVB) is attracting investors' attention. But is PRCB stock a good investment?

Photo by Yassine Khalfalli on Unsplash

Provention Bio (NASDAQ: PRVB) is moving on up, rising by more than 20% this morning after it entered into a co-promotion agreement with Sanofi (NASDAQ: SNY).

The agreement, which concerns collaboration for the launch of Provention's lead investigational drug candidate teplizumab, sees Provention receive a $20m non-refundable payment granting Sanofi exclusive right of first negotiation to in-license teplizumab globally for type 1 diabetes.

Provention's Sanofi Agreement

Under the terms of the agreement, Sanofi will commit commercial resources in the United States, including diabetes field specialists, account directors, field-based reimbursement and medical science liaisons to expand the number of key healthcare professionals reached in the United States.

In exchange, Provention will reimburse field force-related expenses that Sanofi will incur in connection with commercializing teplizumab under the agreement.

Provention Bio Chief Commercial Officer, Jason Hoitt, commented:

"This collaboration with Sanofi US allows us to significantly expand our planned commercial footprint during launch to support increased screening and product awareness as we work to launch a new therapy that, if approved, will dramatically impact the lives of the patients and families we serve.

“In particular, Sanofi's long-standing relationships with key U.S. healthcare professionals will complement our focus on pediatric endocrinologists and help us address a larger patient population with greater efficiency.” 

It sounds like an exciting deal, but does it make PRVB stock a good investment?

What is Provention Bio?

Provention Bio is a clinical stage biopharmaceutical company which is focused on the development and commercialization of therapeutics and solutions to intercept and prevent immune-mediated diseases.

Its product candidates include PRV-031 teplizumab and monoclonal antibodies (mAb), which is in Phase III clinical trial for the interception of type one diabetes.

Other candidates include PRV-3279, which has completed a Phase Ib clinical trial for the treatment of lupus, as well a coxsackie virus B vaccine PRV-101 and celiac disease treatment PRV-015.

The company has a license and collaboration agreement with Amgen (NASDAQ: AMGN) for PRV-015, a novel anti-IL-15 monoclonal antibody being developed for the treatment of gluten-free diet non-responsive celiac disease.

Additionally, it has a strategic collaboration with Hangzhou Zhongmei Huadong Pharmaceutical Co to develop and commercialize PRV-3279, a bispecific antibody-based molecule targeting the B cell surface proteins CD32B and CD79B in Greater China.

The company was incorporated in 2016 and is headquartered in Red Bank, New Jersey.

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How Does Provention Bio Make Money?

While the company has yet to commercialize its own products, it has received collaborative revenue from its work with Hangzhou Zhongmei Huadong Pharmaceutical Co, with these amounting to $0.7m in the company’s second quarter, $0.5m in the first quarter and $1.4m in the company’s 2021 financial year.

PRVB Stock Financials

The company’s most recent earnings release showed it achieved revenue of $746k in its second quarter, compared with nil in the same period one year prior. This didn’t make much of a dent in Provention Bio’s operating expenses, which amounted to $30.6m for the period. This was roughly flat when viewed against expenses of $30.2m from Q2 2021.

This imbalance means the business recorded a net loss of $29.7m for the period.

Provention Bio had cash, cash equivalents and marketable securities of $96.1m as of 30 June 2022. However, the business has since secured a term loan facility of up to $125m with Hercules Capital (NYSE: HTGC), a specialist in customized financing for companies in life sciences.

The company does not distribute a dividend to its shareholders.

PRVB Growth Potential

In the near term, the company's potential seems to hinge on the success of its teplizumab treatment.

The company is nearest to commercialization with its teplizumab treatment for the purpose of delaying type 1 diabetes in at-risk patients. Some trials of the treatment have suggested that it can delay the onset of type 1 diabetes by as much as three years by altering T Cells and interrupting the condition.

The business has a user fee goal date for this treatment of 17 November 17 2022 from the US Food and Drug Administration (FDA). 

The company has additionally been informed that if no major deficiencies are identified during this ongoing review period, the FDA plans to communicate proposed labeling and, if necessary, any post-marketing requirement or commitment requests by 17 October 2022. 

Estimated US prevalence of at-risk patients amounts to as many as 200,00 people, with Provential Bio intending to initially target the 15% of this group who are relatives of type 1 diabetes patients.

The treatment is also at phase 3 for use among newly diagnosed patients.

Figures from Provential Bio suggest that there are approximately 64,000 new cases of type 1 diabetes in the US each year, with 26% of these being of the 8- to 17-year-old age group that the company is seeking to target with its market launch. In future, the company intends to target other age groups too. 

Additionally, the company believes that teplizumab has potential for broad applicability in T cell-mediated immune diseases, with potential new therapeutic indications including Crohn’s disease, autoimmune hepatitis and early rheumatoid arthritis.

PRVB Investment Risks

As with any development stage biopharma company there are implicit risks in investing in PRVB stock. Primary among these is the risk that the company may be unsuccessful in every bringing any of its product candidates to commercialization.

This could be because they fail to pass through clinical trials with successful outcomes, because they are not approved by regulators or because the company runs out of money to continue operating.

However, it is worth bearing in mind that the business appears well funded for around 18 months considering its considerable cash reserves and recently secured loan.

Additionally, the new deal with Sanofi has added additional cash to Provention Bio’s coffers and also indicates a significant degree of confidence that its primary treatment candidate will make it to the commercial stage in the near future.

Even so, there are still risks. Primarily, the treatment could not be as successful as previously hoped and could be less widely adopted than hoped. 

Is PRVB Stock a Good Investment?

Provention Bio looks like a company speeding towards commercialization with some real promise. Though revenues are not currently significant and its product candidates are not yet on the market, the business appears well-funded and has received a significant vote of confidence from both Sanofi and Hercules Capital.

That being said, there are always serious risks involved with investing in pharmaceutical companies at this stage. Backing PRVB stock could lead to attractive returns for investors, but there is no guarantee of success.

Of the eight analysts covering the stock for Wall Street Journal, seven have a Buy rating for PRVB. Additionally, the consensus price target for the stock is $13.63, compared with its current price of $5.95 per share at the time of writing.

If you enjoyed our Provention Bio coverage, you might be interested in our recent Daily Stock Watch articles or our IPO coverage.


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Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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