Summary
- Provention Bio is on track to complete submission of a BLA for its T1D drug Teplizumab by the end of 2020.
- This will revolutionise treatment of at-risk T1D patients. The company received the Breakthrough Therapy Designation from FDA.
- The company is significantly undervalued on this indication alone - but has enormous potential in other indications.
- The company is de-risked, well-funded, well-backed by institutions including Perceptive Advisors, and is my highest conviction biotech stock right now.
Provention Bio (PRVB) is a small-cap biotech company focused on developing drugs to combat autoimmune diseases – in particular, Type 1 diabetes (T1D).
At the time of writing, it trades at a share price of $9.85, giving a market cap of $470m and an enterprise value of roughly $385m. I believe this market valuation greatly undervalues the true potential of the company – in fact, I’d go as far as to say it’s the best risk/reward play I have come across in my recent research - and will explain why below.
Type 1 Diabetes
The company at present is focused on its lead drug, Teplizumab, which is a humanized monoclonal antibody intended to delay the onset of T1D.
T1D is a devastating chronic autoimmune disease, generally well-known by the public, that requires lifelong medical management including daily insulin injections. PRVB pointed out that over 75% of T1D patients are poorly controlled, which leads to many complications (Cardiovascular disease, kidney disease, amongst others), and a life expectancy of roughly 16 years shorter than average if diagnosed by age 10.
Clearly, T1D is a dreadful disease – but there are currently no preventative or disease-modifying treatments, and there have been no new therapies since 1922. There is an enormous medical need.
Provention is attempting to tackle this with Teplizumab, and appears to be on the right track.
