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Edited Transcript of PRVB.OQ earnings conference call or presentation 5-Nov-19 9:30pm GMT

Q3 2019 Provention Bio Inc Earnings Call

Nov 22, 2019 (Thomson StreetEvents) -- Edited Transcript of Provention Bio Inc earnings conference call or presentation Tuesday, November 5, 2019 at 9:30:00pm GMT

TEXT version of Transcript


Corporate Participants


* Andrew T. Drechsler

Provention Bio, Inc. - CFO

* Ashleigh Palmer

Provention Bio, Inc. - Co-Founder, President, CEO & Director

* Eleanor L. Ramos

Provention Bio, Inc. - Chief Medical Officer & COO

* Francisco Leon

Provention Bio, Inc. - Co-Founder & Chief Scientific Officer


Conference Call Participants


* Dylan Edward Dupuis

SVB Leerink LLC, Research Division - Associate

* Samuel Martin;Argot Partners




Operator [1]


Hello. And welcome to the Provention Third Quarter 2019 Financial Results Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to your host today, Sam Martin. Please go ahead.


Samuel Martin;Argot Partners, [2]


Thank you, Keith. And thank you all for joining us on Provention Bio's Third Quarter 2019 Financial Results Conference Call. Joining today's call from the Provention team are Ashleigh Palmer, Chief Executive Officer and Co-Founder; Andy Drechsler, Chief Financial Officer; Dr. Francisco Leon, Chief Scientific Officer and Co-Founder; and Dr. Leni Ramos, Chief Medical Officer and Chief Operating Officer.

On today's call, Andy will summarize Provention's third quarter financials, and Ashleigh will then provide you with a corporate update, including a review of the progress being made with the company's PRV-031 program. We will then open up the call for questions.

First, let me remind you that the various remarks we'll make today constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory matters and time lines, the potential success of our product candidates, financial projections and our plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and in other filings that we may make with the SEC in the future.

Any forward-looking statements represent our views as of today only. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. There is more complete information regarding forward-looking statements, risks and uncertainties in the reports Provention files with the SEC. These documents are available on Provention's website at www.proventionbio.com, under the Investors section, and we encourage you to review these documents carefully.

I will now turn the call over to Andy Drechsler, Provention Bio's Chief Financial Officer.


Andrew T. Drechsler, Provention Bio, Inc. - CFO [3]


Thank you, Sam. Good afternoon, everyone. Before I begin, I would encourage you to read our 10-Q that was filed today. The 10-Q includes our financial statements as well as management's discussion and analysis of our financial condition. I would also like to call your attention to the earnings press release, which was issued prior to this call.

Let me start with our current cash position and cash projection. Our cash balance was $95.1 million as of September 30, 2019. This balance reflects the underwritten public follow-on offering of 5.75 million shares and a concurrent private placement with Amgen of 2.5 million shares of our common stock in September 2019. These shares were issued at a price of $8 per share, resulting in aggregate net proceeds of $62.7 million after deducting underwriting discounts and offering expenses.

Our cash-based operating expenses for the 9 months ended September 30, 2019, was $31.9 million. We will continue to fund operations for our 4 active programs, PRV-031, PRV-3279, PRV-015 and PRV-101. We expect our fourth quarter cash operating expenses to be in the range of $10 million to $12 million. Ultimately, we expect our current cash and cash equivalents will be sufficient to fund projected operations into the second half of 2021.

From a P&L perspective, we generated a net loss for the third quarter of 2019 of $9.8 million or $0.24 per basic and diluted share. The increase in net loss of $4.4 million compared to the third quarter of 2018 resulted from an increase in research and development costs of $3.2 million, primarily associated with the clinical development expenses for PRV-031, PRV-101 and PRV-3279, as well as an increase in general and administrative costs of $1.4 million.

During the 9 months ended September 30, 2019, we generated a net loss of $32.7 million or $0.85 per basic and diluted share. The increase in net loss compared to the prior year is related to an increase in research and development cost of $10.2 million, primarily associated with the clinical development expenses for PRV-031, PRV-101 and PRV-3279. Also contributing to the increase in net loss was an increase in general and administrative costs of $2.7 million, resulting from an increase in personnel costs, including stock-based compensation as well as increased legal and professional fees.

I will now turn the call over to Ashleigh Palmer, our CEO and Co-Founder, who will provide an update on Provention's corporate, clinical and business development achievements. Ashleigh?


Ashleigh Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [4]


Thank you, Andy, and thank you all for joining us today to review the considerable progress we have made and our exciting prospects going forward.

Certainly, this past quarter witnessed substantial and transformative momentum generated by the landmark results published in June from TrialNet's At-Risk Study funded by the NIDDK and the JDRF. There is no better example of a serious autoimmune disease with long-standing need that our industry has failed to address than type 1 diabetes or T1D.

At Provention, our vision is to challenge that status quo and improve the lives of patients by preventing and intercepting autoimmunity before irreversible tissue damage occurs and symptoms require lifelong chronic treatment. The At-Risk Study delivered compelling results that are propelling Provention and the T1D community forward together towards the realization of our common goal: to prevent or delay disease progression in at-risk individuals. Our progress with the PRV-031 or teplizumab program validates our strategic intent and represents a landscape-changing therapeutic option for T1D and the near-term, commercially attractive and highly realizable opportunity for Provention Bio.

Our mission going forward is twofold: firstly, to expeditiously and responsibly deliver teplizumab into the hands of doctors and patients in need of innovative advancements to overcome the challenges of this devastating disease; and secondly, in doing so, to drive value for our shareholders.

Let's make no mistake, our teplizumab program and the At-Risk Study in particular validates Provention's founding investment hypothesis, demonstrating for the first time how an immunotherapy can be successfully used to intervene in the autoimmune process underlying the tissue damage and the symptoms associated with end-stage disease. As a result, we believe teplizumab will become a leading therapy in an emerging new industry sector of immunoendocrinology. By binding to the CD3 co-receptor, teplizumab eliminates the autoreactive T cells responsible for the destruction of precious insulin-producing beta cells. Ultimately, it is the autoimmune destruction of these beta cells that results in the clinical diagnosis of T1D. The At-Risk Study demonstrates how a single 14-day course of teplizumab delays the onset of T1D in individuals at risk of developing the disease by a median of at least 2 years as compared to placebo. These results are both highly statistically significant and highly, highly clinically relevant.

Based on FDA feedback earlier this year, we believe the At-Risk Study results reinforced by teplizumab's large safety and clinical efficacy database supports a BLA filing to prevent or delay T1D in subjects with 2 or more autoantibodies and dysglycemia or abnormal blood sugars. This presymptomatic stage occurs prior to the clinical diagnosis of T1D and represents a prevalence of 120,000 to 200,000 individuals in the United States with a similar number estimated in Europe. Consequently, we have been moving forward with an urgent sense of purpose in our regulatory efforts targeting teplizumab for this high-priority indication.

Regulatory authorities on both sides of the Atlantic have acknowledged this need and accepted this prioritization. In August, we received Breakthrough Therapy Designation from the FDA, followed last month by receipt of PRIME designation from the EMA. These designations grant Provention enhanced interactions and dialogue with their respective agencies as well as afford us opportunities for expedited review and approval.

In the case of our FDA Breakthrough Therapy Designation, we intend to take advantage of a rolling BLA submission. And this quarter, we will have a multifunction type B meeting with the FDA to discuss and plan next steps. We expect to provide you with an update from this meeting before year-end.

The critical path for our BLA submission is the chemistry, manufacturing and controls or CMC module, and we plan to have this ready to file in quarter 4 of 2020. Our contract manufacturer, AGC Biologics, remains on schedule and plans to complete an engineering run this quarter in preparation for starting the production of commercial-scale comparability batches in the first half of next year. We are confident in AGC's experience and expertise as well as their alignment with Provention's sense of urgency and their commitment to product quality, regulatory compliance and agency cooperation.

With our CMC module filed and our BLA submission completed in late 2020, we could reasonably expect FDA approval for the at-risk indication to occur in mid-2021, assuming a priority review. Approval in Europe could be expected roughly 1 year later.

In parallel with these priority regulatory efforts for the at-risk indication, we are also progressing our pivotal Phase III PROTECT study in newly diagnosed patients. Our goal for PROTECT is the enrollment of 300 insulin-dependent patients, aged 8 to 17 within 6 weeks of initial diagnosis. Patients will receive 2 12-day courses of active or placebo therapy administered 6 months apart. We anticipate enrollment will be completed by the end of 2020.

As we advance our clinical and regulatory efforts, we are also planning and preparing our commercialization strategy. We know that 40,000 type 1 diabetic patients are newly diagnosed each year in the United States and about the same number in Europe. These patients are relatively easy to find due to the criticality of their condition and their immediate referral to pediatric endocrinologists for life-saving insulin therapy. Unfortunately, 40% to 50% of them will present with life-threatening diabetic ketoacidosis. DKA is responsible for over 160,000 hospitalizations each year in the United States, creating a medical emergency and placing significant cost burden on our health care system.

Once diagnosed with T1D, the lives of these patients and their families will be forever changed. Despite rigorous glucose monitoring and intensive daily insulin therapy, 75% of patients continue through life with their disease poorly controlled, leading to serious complications, both short term and long term. One of the most sobering statistics is that kids diagnosed under the age of 10 will have, on average, a 16-year reduction in their life expectancy.

We anticipate our first approval to be in the at-risk population for the prevention or delay of T1D. This indication targets asymptomatic subjects that screen positive for 2 or more autoantibodies using a simple and inexpensive blood test. These patients will also be tested for dysglycemia by way of an oral glucose tolerance test. Initially, we intend to focus our attention on the highly accessible familial opportunity, screening those individuals who have a close relative with clinical-stage T1D. This target segment represents some 15% of the 120,000 to 200,000 individuals who at any one time in the United States will screen positive for 2 or more autoantibodies and dysglycemia. Taking a conservative base case of 15% of the lower 120,000 end of this prevalence range represents 18,000 subjects. If we then assume only 60% fall within the 8 to 45 age range studied in the At-Risk trial, we still have over 10,000 highly accessible at-risk subjects in the United States alone, identifiable exclusively by screening patient relatives.

At typical orphan or rare disease pricing assumptions, this U.S. market potential translates into a corresponding U.S. market value in the order of $1 billion. We believe this to be a very accessible market opportunity for the orphan or rare disease type commercial organization a company like Provention can build. In this instance, our commercial operations and in-market infrastructure would be focused on endocrinologists and related professionals such as certified diabetes educators.

In addition, the extensive global infrastructure and dominant patient advocacy of the JDRF will contribute substantially to awareness and drive the need for screening patients' relatives. In September, we announced the appointment of Sean Doherty to our Board of Directors. As the Executive Chairman of JDRF T1D Fund, Sean brings a unique skill set with extensive financial experience, deep knowledge of the T1D therapeutics landscape and a strong network within the T1D community.

JDRF volunteers and especially the well-informed and highly motivated parents and families of T1D patients are extremely competent at mobilizing and coordinating grassroots programs and initiatives to raise funds and awareness. Together with the Helmsley Foundation, JDRF is already funding the expansion of active screening programs that will help to identify and warehouse a significant number of eligible at-risk subjects ready to receive teplizumab upon anticipated approval.

We know that the early years of a T1D diagnosis are terrifying. Just last month, the media reported about Abby, a 13-year-old girl, who had a medical emergency due to ketoacidosis on a flight with her mother from Chicago to Halifax. Ketoacidosis is a life-threatening complication of untreated diabetes, caused by extremely high levels of toxic metabolites in the blood. Fortunately, Abby survived and was quickly diagnosed with type 1 diabetes soon after landing. This is why screening, preventing or delaying T1D is so important and why we are so convinced teplizumab therapy will be embraced by medical professionals, payers, patient advocacy groups and especially those families already touched by T1D.

Preventing or delaying onset not only means the potential avoidance of diabetic ketoacidosis, it means avoiding the daily worry of low or high blood sugars. It means allowing parents to sleep through the night without the constant fear of dangerous hypoglycemic events. And it means giving people a compelling reason to screen other family members and relatives for T1D autoantibodies, a step that will have profound and positive consequences for our entire health care system and the lives and wellbeing of hundreds of thousands of individuals.

Beyond the familial market, we will explore potential partnership opportunities. We believe a partner with a commitment to pediatrics, diabetes and/or public health will provide the resources necessary to screen broader populations. To be clear, while we continue to evaluate potential opportunities, including partnering, launching teplizumab on a stand-alone basis in North America, is realistically realizable, given the unique and favorable aligned market dynamics. And as we consider potential partnering, we recognize that true optionality and value maximization not only depends upon having substantive options to select from, it also comes from understanding and leveraging the various trade-offs between those options as well as from optimizing the timing of our selection.

Following completion of our PROTECT study and the anticipated submission and potential approval of teplizumab for newly diagnosed patients, Provention and/or its partners will have considerable advantage from already being in the market with the at-risk indication and having cemented strong relationships with T1D patient networks, pediatric endocrinologists, certified diabetes educators, payers and health care systems. This end-market advantage will help rapidly penetrate the newly diagnosed market segment and maximize this larger opportunity.

Beyond the at-risk and newly diagnosed launches, we are already planning for label expansion, additional indications and other life cycle management opportunities. First, we plan to examine the potential of redosing teplizumab to extend the delay of T1D progression for at-risk individuals. Recall the At-Risk Study evaluated only a single 14-day course of teplizumab. We believe further delay or the prevention of clinical-stage diabetes can be realized with additional courses of therapy. We anticipate the timing of such redosing may be guided by predictive biomarkers such as exhausted T cell levels in peripheral blood, which have been shown to correlate with teplizumab response in T1D patients.

While the incidence of juvenile type 1 diabetes peaks between the ages of 10 and 14, approximately 1/3 of all childhood diagnosed diabetes occurs before the age of 8. Therefore, we plan to evaluate a path forward for the use of teplizumab in children under the age of 8 for both at-risk and newly diagnosed indications. We also see a unique opportunity for combination therapies, with teplizumab serving as the backbone of various therapeutic regimens. For example, combination with antigens, metabolic medications, beta cell transplantation or other immunomodulatory agents.

For the latter approach, combinations with anticytokine antibodies, such as anti-TNF or anti-interleukin 6 presents exciting mechanistic opportunities as do combinations with B cell agents, including our own PRV-3279. We are currently advancing PRV-3279, a bispecific scaffold targeting both CD32B and CD79B for potential interception of B cell-mediated autoimmune diseases, such as lupus, as well as the management of clinically relevant immunogenicity associated with gene therapies and certain therapeutic proteins.

We eagerly await feedback from the Phase Ib/IIa PREVAIL trial for PRV-3279, which was launched in August. This two-part study is progressing well, and we expect top line safety results from the Phase Ib multiple ascending dose part in the first quarter of 2020, with plans to initiate the Phase IIa part of the study in lupus patients later next year.

Finally, we plan on resuming the development of a subcutaneous teplizumab formulation, an initiative MacroGenics and Lilly had previously started to explore. Such formulation could potentially provide a more convenient route of administration for teplizumab and facilitate the exploration of other serious autoimmune indications, driven by activated T cells. For example, autoimmune hepatitis, Crohn's, celiac disease and rheumatoid arthritis.

2020 is going to be a very exciting year for Provention, as we continue to drive a paradigm shift in T1D and extend our efforts more broadly to other indications. The teplizumab program has provided validation for our strategic vision focused on preventing or intercepting immune-mediated disease before it is too late.

Before we open the call for questions, I would like to thank our investors for their continued support, all the investigators and patients participating in our clinical trials and my fellow Provention executives and our amazing team of employees, partners and consultants.

Operator, we're now ready to take questions. Thank you.


Questions and Answers


Operator [1]


(Operator Instructions) And the first question comes from Pasha Sarraf with SVB Leerink.


Dylan Edward Dupuis, SVB Leerink LLC, Research Division - Associate [2]


This is Dylan Dupuis sitting in for Pasha. Two questions for you on teplizumab. The first one, can you talk a little bit about the sourcing of teplizumab being used in the PROTECT trial? How much of it is derived from product on hand from Eli Lilly? And how much is going to be needed to be produced to complete the trial? And what does that time look like relative to completion of enrollments? And then second, are the patients from the At-Risk trial still being followed? And are we anticipating any follow-up studies and data readouts from these patients longer term?


Ashleigh Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [3]


Thanks, Dylan. So I'll ask Leni to talk about the At-Risk trial's follow-up. But before that, we anticipate that about 2/3 of our PROTECT study will be enrolled with the teplizumab therapy that we have manufactured from previous Eli Lilly drug substance and about 1/3 at the end of the study will be from our new source. And this will help facilitate the demonstration of comparability between the 2 sources. Leni?


Eleanor L. Ramos, Provention Bio, Inc. - Chief Medical Officer & COO [4]


So yes, we have extreme interest in following the patients from the TN10 study. We are partnering with TrialNet to see how we can engage them to get additional data. And indeed, we're also anticipating a follow-on study to see if we can treat the patients from the TN10 study potentially if they develop type 1 diabetes. But those are still under discussion.


Dylan Edward Dupuis, SVB Leerink LLC, Research Division - Associate [5]


And then one last follow-up question. Just thinking longer term, bigger strategy about what redosing strategies in trials would look like in at-risk patients. Would these take place in real-world settings? Or would this be a more formal clinical trial randomization kind of approach?


Ashleigh Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [6]


Thank you. So I think the first thing we have to determine is what criteria we're using for redosing. Is it going to be a calendar protocol, where we administer it, say, in a year or 2 years? Or are we going to be able to identify patients whose initial therapy or prior therapy may be wearing off, so to speak, by identifying a biomarker? I think, probably Francisco would be best to answer that question.


Francisco Leon, Provention Bio, Inc. - Co-Founder & Chief Scientific Officer [7]


The company intends to generate actionable data about redosing. We will use a combination of our own sponsored trials and learning from the clinical use of the drug after approval.


Operator [8]


And this time, I would like to return the floor to Ashleigh Palmer for any closing comments.


Ashleigh Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [9]


Thank you very much. So thank you, everyone, for joining us today. We look forward to providing a regulatory update later this year. Thank you.


Operator [10]


Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.