PRVB - Provention Bio: Good Prospects In Type 1 Diabetes But Patent Protection Is A Worry

Summary

• PRVB got its teplizumab approved last year.
• The molecule is a wonderful new addition to T1D therapy; however, it has been in development for decades.
• Thus, the patent angle worries me.

I covered Provention Bio ( PRVB ) in June 2021, when I said that despite a 10-7 vote adcomm, I wasn’t feeling too sanguine about the chances of approval of their type 1 diabetes drug teplizumab at that time. In about 2 weeks, the FDA wrote them a CRL, tanking the stock. 6 months later, they resubmitted the BLA, and then there were a few hiccups and surges of hope, and then finally, in miv-November, teplizumab got approved as the first drug approved to delay the onset of stage 3 type 1 diabetes in adults and pediatric patients 8 years and older who currently have stage 2 type 1 diabetes.

In that 18-month old article, I listed the pros and cons of teplizumab, putting its excellent trial data in the pro column, and the various questions raised by the briefing doc went into the con column. In their CRL, here’s what the FDA said:

• In the CRL, the FDA stated that a single, low-dose pharmacokinetic/pharmacodynamic (PK/PD) bridging study in healthy volunteers to compare planned commercial product with product originating from drug substance had failed to show PK comparability.

• The Company expects relevant additional PK/PD data being, or to be, collected from a substudy in patients receiving 12-days of therapy in the ongoing Phase 3 PROTECT trial in newly diagnosed T1D patients later this quarter.

• In the CRL, the FDA cited several additional considerations related to product quality, which the Company believes have either been addressed or can be addressed in the short-term.

These are among the issues cited in the briefing doc, and the company was able to successfully resolve them all.

In the approval press release , the FDA stated:

“Today’s approval of a first-in-class therapy adds an important new treatment option for certain at-risk patients,” said John Sharretts, M.D., director of the Division of Diabetes, Lipid Disorders, and Obesity in the FDA’s Center for Drug Evaluation and Research. “The drug’s potential to delay clinical diagnosis of type 1 diabetes may provide patients with months to years without the burdens of disease.”

Tzield (teplizumab) is given as an intravenous injection for 14 days. Teplizumab binds to immune cells that attack insulin-producing cells, deactivating them while increasing other cells that can control an immune response. In a randomized trial, after 51 months of follow up, 45% of patients receiving teplizumab progressed to stage 3 T1D, while 72% of placebo patients progressed to stage 3 T1D. The trial, though, had only 76 patients.

Just before the approval, Sanofi signed a $20mn upfront, nonrefundable deal with PRVB for an exclusive right of first negotiation to license teplizumab globally for type 1 diabetes. The deal also involved a co-promotion agreement in the US and Sanofi will also buy $35mn worth of PRVB stock. Provention retains all commercial rights to teplizumab, and will determine commercialisation strategy. Note that Provention licensed teplizumab from MacroGenics in 2018, and paid the latter $60mn on approval.

The Sanofi deal could be a game changer for Provention. Sanofi is a world leader in type 1 diabetes management and treatment. They have an established network for commercializing diabetes medicines across the world, including in the US. Although the deal entails that Provention will reimburse Sanofi for “field force-related expenses,” Provention getting access to that huge field force is a very good thing. Many emerging biopharma flounder at first commercialization because they lack expertise and a network. While it is true that not all big-small pharma commercial partnerships work out, Sanofi’s special expertise in the insulin therapy space will help launch Tzield quickly. As Jason Hoitt, Chief Commercial Officer, Provention Bio, noted :

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.

Also important are the revenue figure estimates. Here’s some data :

In an investor call on Friday, the biotech revealed that it’s set the wholesale acquisition cost for Tzield at $13,850 per vial. As most patients will need 14 vials (some might need more), that translates to $193,900 for the whole course of treatment. That’s slightly higher than what analysts expected — for instance, SVB Securities analyst Thomas Smith estimated net pricing of $115,000 and, based on that price, forecasted sales of around $40 million in 2023.

Thus the 2023 forecast should go up to $70mn according to these numbers. Initial target population is approximately ~30k people who are familial direct relatives of T1D patients and thus at high risk of the disease. Patients can be diagnosed through simple tests, so the company - and its marketing partner - has their work cut out for them. What is important to understand is that since the discovery of insulin almost 100 years ago, there has been no other disease-modifying therapy until teplizumab, which works by delaying “the progression to T1D for people whose immune system has begun attacking their insulin-producing cells, but who don’t yet need insulin to survive.”

According to Dr. Robert Gabbay, Chief Scientific and Medical Officer at the American Diabetes Association:

People with T1D require life-long insulin replacement therapy, so to be able to provide an individual with a 2-year delay from the symptoms and burden of T1D is a tremendous accomplishment as we look towards finding a cure. There will likely be long-term benefits for blood glucose management and the reduction or delay of acute and long-term complications. The immeasurable benefits of improved quality of life will be felt not only by those diagnosed with T1D, but also by their families.

Teplizumab has a long history - it has been worked with since 1986 - so I was a little worried about patents, and here’s what I found :

Through our agreement with MacroGenics, we have acquired a patent portfolio that includes seven issued patents, including two United States patents and five ex-United States patents in Australia, Israel, Mexico and Singapore. The issued patents are set to expire no earlier than dates ranging from 2026 and 2028, subject to any disclaimers, patent term adjustments or extensions available under the law. These issued patents cover use of certain humanized antibodies that bind to CD3 in the treatment of autoimmune disorders, including T1D and RA.

This is, obviously, not good. PRVB has to work harder at non-patent methods to protect their market, perhaps through some sort of FDA provided exclusivity. I have not yet researched that aspect.

Financials

PRVB has a market cap of $868mn and a cash balance of $186mn. It has a $125mn term loan facility from Hercules Capital, and also received the $20mn from Sanofi. R&D expenses were $16.3 million for the third quarter of 2022, while G&A expenses were $13.5 million. The company believes that it has sufficient cash to fund itself for the next 4 quarters starting from October.

Bottomline

PRVB is doing great medicine, bringing an important molecule through a difficult pathway to the market. The company is going to make good money from the molecule - for the next 5 years at least. I am still going to pass because, first, I do not like to invest in just-approved molecules, and two, the patent thing worries me.

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