U.S. markets closed

Edited Transcript of PRVB.OQ earnings conference call or presentation 12-Mar-20 12:30pm GMT

Q4 2019 Provention Bio Inc Earnings Call

Apr 3, 2020 (Thomson StreetEvents) -- Edited Transcript of Provention Bio Inc earnings conference call or presentation Thursday, March 12, 2020 at 12:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Andrew T. Drechsler

Provention Bio, Inc. - CFO

* Ashleigh W. Palmer

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

* Francisco Leon

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

* Jason Hoitt

Provention Bio, Inc. - Chief Commercial Officer

================================================================================

Conference Call Participants

================================================================================

* Alethia Rene Young

Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research

* David Timothy Hoang

SMBC Nikko Securities America, Inc., Research Division - Research Analyst

* Robert John Burns

H.C. Wainwright & Co, LLC, Research Division - Associate

* Thomas Jonathan Smith

SVB Leerink LLC, Research Division - Director of Immunology and Metabolism & Senior Research Analyst

* Samuel Martin

Argot Partners, LLC - MD

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning. My name is Andrea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Provention Bio call. (Operator Instructions) Please be advised that this call is being recorded at the company's request.

I would now like to turn the call over to Mr. Sam Martin from Argot Partners.

--------------------------------------------------------------------------------

Samuel Martin, Argot Partners, LLC - MD [2]

--------------------------------------------------------------------------------

Thank you, Andrea, and thank you all for joining us on Provention Bio's Fourth Quarter and Full Year 2019 Financial Results Conference Call. Joining today's call from the Provention Bio team are Ashleigh Palmer, Chief Executive Officer and Co-Founder; Andy Drechsler, Chief Financial Officer; Jason Hoitt, Chief Commercial Officer; and Dr. Francisco Leon, Chief Scientific Officer and Co-Founder.

On today's call, Ashley will provide a corporate update with a focus on PRV-031 or teplizumab. Jason will then provide a review of the commercial landscape for teplizumab. Francisco will then review the recent positive data for PRV-3279 and discuss next steps with the program. Andy will then review financials. And we will then open up the call for questions.

First, let me remind you that the various remarks we will make today constitute forward-looking statements for the 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 these 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 Ashleigh Palmer, Chief Executive Officer and Co-Founder, who will provide an update on Provention's corporate, clinical and business development achievements. Ashleigh?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Thank you, Sam, and thank you all for joining us today to review the remarkable progress we have made and our compelling plans going forward. At Provention, we are fundamentally shifting the paradigm for patients with autoimmune diseases, and pioneering a new era in the development and potential commercialization of the therapeutic options available to them. By preventing or intercepting autoimmunity prior to a reversible tissue damage and end-stage organ failure or dysfunction, we have the potential to significantly improve the lives of hundreds of thousands of patients around the world who would otherwise endure a lifetime of chronic treatment and organ support or transplantation. We are making excellent progress advancing our diversified portfolio of clinical stage immunomodulatory agents, targeting a broad spectrum of life-threatening and life-impacting immune-mediated diseases, including type 1 diabetes, lupus and Celiac disease.

We are on track to complete the rolling submission of our first BLA for our lead program, PRV-031 or teplizumab in quarter 4 of this year, and diligently laying the groundwork for its potential commercialization in T1D. This extraordinary flagship program with its potential to transform the treatment landscape of T1D validates our strategic intent focused on the prevention or interception of immune-mediated diseases. Today, we also reported exciting data for PRV-3279, our state-of-the-art bispecific scaffold, targeting CD32B and CD79B, which Francisco will detail later in our call. Like teplizumab, this Phase II-ready candidate has transformative potential in this case for the treatment of a wide variety of B cell-mediated diseases.

Let me focus my comments today on teplizumab. There is no better example of an autoimmune disease that is unacceptably diagnosed and treated too late than type 1 diabetes or T1D. In fact, more than 50% of T1D patients first present with diabetic ketoacidosis, or DKA, a life-threatening condition. In total, DKA is responsible for more than 160,000 hospitalizations every year in the United States, creating a medical emergency and placing a significant and unnecessary cost burden on our health care system.

We know very well from the close collaborations and partnerships we are forging with patient advocacy groups like the JDRF and Beyond Type 1 that once diagnosed, the lives of T1D patients and their families are forever changed. Despite rigorous glucose monitoring and intensive daily insulin therapy, 75% of T1D patients will continue throughout life with their disease poorly controlled, leading to serious complications in both the short and long term. One of the most sobering statistics is that children diagnosed with T1D under the age of 10 will have on average a 16-year reduction in their life expectancy.

2019 was a transformational year for Provention Bio and the T1D community. Data from the TrialNet TN10 study, also known as the At-Risk Study, in presymptomatic patients, published in the New England Journal of Medicine and presented at the American Diabetes Association Conference in June of last year, highlighted the landscape-changing potential of teplizumab to treat T1D autoimmunity and prevent or delay the onset of clinical stage disease. By binding to the CD3 co-receptor, teplizumab has the potential to reset the immune system of presymptomatic T1D patients identified by having 2 or more autoantibodies.

To be clear, these patients have type 1 diabetes but have not yet progressed to clinical stage symptomatic disease. Teplizumab works by eliminating the pathogenic autoreactive T cells, which are responsible for the disruption of precious insulin-producing beta cells, which ultimately leads to clinically relevant organ dysfunction and the diagnosis of insulin-dependent T1D.

The TN10 study showed that a single 14-day course of teplizumab therapy can delay the onset of insulin-dependent type 1 diabetes in autoimmune T1D patients at risk of clinical disease by a median of at least 2 years. The results from this study are highly statistically significant and highly clinically relevant. The breakthrough therapeutic importance of this data cannot be understated. Any parent or family who cares for a child or loved ones with T1D is well aware of the challenges and the importance of insulin therapy; the corresponding fear of hypoglycemic events and diabetic ketoacidosis; and the longer-term complications of kidney, eye, heart and nerve damage resulting from chronic poor blood glucose control.

Now for the first time, we have the potential with teplizumab therapy to intercept or with timely redosing indefinitely delay or prevent the progression of presymptomatic T1D to end-stage insulin-dependent disease. As you would expect, the potential for this first-ever modifying therapy is generating tremendous enthusiasm and excitement within the T1D community, and we remain laser-focused on bringing teplizumab to market as rapidly and responsibly as possible.

Regulatory agencies on both sides of the Atlantic have recognized and validated teplizumab's transformative therapeutic potential. The FDA has granted breakthrough therapy designation in the United States, and the EMA has awarded teplizumab PRIME designation in Europe.

In November of 2019, we began taking full advantage of the enhanced dialogue we were granted as a breakthrough therapy designee by conducting a type B FDA meeting to discuss our regulatory path forward for teplizumab. This meeting emphasized the alignment of Provention and the FDA regarding the requirement of a successful rolling BLA submission, including confirmation that the TN10 study data in conjunction with our existing teplizumab clinical data set from over 800 newly diagnosed patients, represents sufficient basis for our clinical module submission. We will, therefore, proceed with our rolling submission by filing our nonclinical module in quarter 2 of this year, followed by our clinical module in quarter 3.

As we have stated previously, the critical path to completion of our rolling submission will be the filing of our chemistry, manufacturing and controls, or CMC module. Previously, Eli Lilly partnered with MacroGenics have completed manufacturing process development and commercial scale -- at commercial scale, and we now have successfully transferred that process from Lilly's manufacturing site in Ireland to our contract manufacturing partner AGC Biologics in Seattle.

At the end of 2019, we completed a successful engineering run. And this quarter, we will complete our first GMP run. And the FDA has asked us to submit analytical data from both brands to our teplizumab IND with the purposes of a comparability assessment against our analytical data set from prior Lilly runs. Assuming favorable feedback from the FDA, we will then proceed this summer with 3 commercial scale process, performance, qualification, or PPQ batches. These PPQ runs will be used for process validation, qualification and stability, enabling us to complete our rolling BLA submission by filing our CMC module in quarter 4 of this year. Following a customary 2-month acceptance period and assuming we file for priority review and the breakthrough therapy designation, we could reasonably expect an FDA decision in mid-2021.

In parallel with our U.S. regulatory efforts, we are engaging with the EMA as part of our PRIME designation to bring teplizumab forward in Europe. We recently met with the EMA for our PRIME kickoff meeting, a procedural meeting with the rapporteur, their assessment team and a multidisciplinary group of EMA experts and relevant committee representatives. This kickoff meeting will be followed by scientific advice meetings to discuss the potential submission of teplizumab's marketing authorization application or MAA. We currently expect our MAA for the at-risk indication will follow the U.S. BLA submission by approximately 9 to 12 months. So we are targeting the second half of 2021 for that submission.

Following closely behind the at-risk indication, we are advancing our PROTECT study in newly diagnosed T1D patients. We remain on track to complete enrollment in this study by the end of 2020. To date, we have not seen any impact from the COVID-19 pandemic. However, we will continue to monitor the situation closely.

To complement our clinical and regulatory efforts, we are also preparing our commercial strategy to support the potential launch of teplizumab as the first disease-modifying drug approved for T1D since life-saving insulin therapy was introduced nearly 100 years ago.

Our recent appointment of Jason Hoitt as Chief Commercial Officer demonstrates our commitment to building a competent and experienced commercial leadership team. Jason has had proven success in the planning, preparation and execution of specialty biologics launches in rare diseases and nascent markets, including previous positions at Dova, Insmed, Sarepta, Vertex and Gilead Sciences. In a relatively short period of time, he has already made significant progress advancing our commercial planning and preparation.

We also recently expanded our team with the addition of Dr. Jessica Blumstein, who will lead our market access and our distribution efforts, 2 critical components of our commercial strategy going forward. Jessica has had nearly 20 years of experience in the biotechnology sector. And we are thrilled to have both her and Jason join our experienced team as we work diligently to bring teplizumab to patients at-risk of progressing to clinical stage insulin-dependent T1D and subsequently to patients with newly diagnosed disease.

With this, let me turn the call over to Jason to discuss the commercial landscape in more detail. Jason?

--------------------------------------------------------------------------------

Jason Hoitt, Provention Bio, Inc. - Chief Commercial Officer [4]

--------------------------------------------------------------------------------

Thanks, Ashleigh. Let me begin by saying how thrilled I am to be a part of this amazing team at Provention Bio. Since joining in early January, I can say that it has been both exciting and incredibly productive given the critical juncture we're at as an organization. With teplizumab, Provention has the unique opportunity to bring forward a novel product with transformative potential. We're beginning to execute our commercial strategy, and recent publications have reinforced our confidence in our approach.

Last month, the JDRF T1D Fund published a white paper that provided insight on the current T1D landscape and help lay the groundwork for our commercial discussion. According to that paper, the global cost of T1D reached approximately $90 billion, with an estimated $30 billion in the U.S. alone. Their research also reinforced our own estimates on the size of the U.S. market. There are currently 300,000 at-risk patients in the U.S., defined as asymptomatic patients who screen positive for 2 or more autoantibodies using a simple, inexpensive and commercially available blood tests. These patients will ultimately progress to end-stage insulin-dependent T1D without intervention.

Within this group, we believe there are 200,000 individuals in the U.S. that have 2 or more autoantibodies and test positive for dysglycemia by way of an oral glucose tolerance test. We also believe, based on a paper published by the JDRF, Endocrine Society and American Diabetes Association, that without intervention stage-2 patients have a 75% chance of progressing to stage-3 insulin-dependent T1D over a 5-year period.

At Provention, our initial commercialization effort will focus on a subset of these stage-2 patients. Specifically, the 15% of at-risk individuals that are direct familial relatives of known type 1 diabetics. This amounts to roughly 30,000 patients who have 2 autoantibodies and dysglycemia, and up to 45,000 patients with 2 autoantibodies alone.

For a company of our size, we believe this represents an ideal initial focus for our marketing effort. Existing screening initiatives are already underway in various countries looking for patients suspected of developing type 1 diabetes, as early stage diagnosis is known to help reduce disease morbidity, particularly diabetic ketoacidosis.

There are standard T1D blood tests already available and over 1.5 million people globally have been screened to date. By focusing on the highly motivated family members of T1D patients who are already familiar with the life-changing impact of T1D and targeting the roughly 900 pediatric endocrinologists caring for these patients, we believe we can easily tap into this readily accessible market immediately upon approval and with a modest commercial infrastructure.

As a reminder, we believe that this initial market alone could represent $1 billion opportunity. In the coming months, we intend to launch an awareness and screening initiative, ideally in collaboration with advocacy partners, to encourage those at risk to be screened. We also intend to roll out an HCP-targeted awareness and screening campaign, intended to encourage them to proactively offer this screening to family members of T1D patients.

In parallel, but in no way at the expense of this effort, we will be working to further expand screening into a broader population of patients. The importance of general population screening is already gaining momentum as is evidenced by a recent study published in the Journal of the American Medical Association, highlighting the value of screening for T1D and suggesting that public health screening for T1D in presymptomatic stages may reduce disease burden and severity as well as enable disease interception strategies with novel agent, such as teplizumab.

In addition, as is the case with many rare diseases, the potential availability of a first-ever therapeutic to address an unmet need is likely to drive expanded surveillance and screening effort. We will also continue to work closely with advocacy organization, such as JDRF, Beyond Type 1, and the Helmsley Foundation to support more broad-based population screening for children.

Over time, we believe this will allow us to identify a greater proportion of those 300,000 stage 1 and 2 patients, who are not direct familial relatives of known type 1 diabetic, thus increasing the market size dramatically. Beyond the at-risk population, our ongoing PROTECT trial, if successful in resulting in regulatory approval, will allow us to expand into the newly diagnosed or stage-3 patient population.

From a T1D exchange clinical registry, we know that approximately 64,000 T1D patients are diagnosed each year in the United States. Because of the severity of the patient's conditions and their immediate referral to pediatric endocrinologists for lifesaving insulin therapy, these patients are unfortunately easily found. Our initial focus will be on patients ages 8 to 17, consistent with the profile in the PROTECT study.

Longer term, through life cycle management, we will seek to broaden the market potential by exploring repeat dosing, expanding the age groups and eventually looking at subcutaneous formulations and combining teplizumab with other therapeutics.

We're excited about the many opportunities ahead for teplizumab, for Provention and for the T1D community. I look forward to updating you on our commercial progress, planning and insights throughout the remainder of the year.

Let me now turn the call over to Francisco to discuss our recently disclosed and exciting data from our PRV-3279 program. Francisco?

--------------------------------------------------------------------------------

Francisco Leon, Provention Bio, Inc. - Co-Founder & Chief Scientific Officer [5]

--------------------------------------------------------------------------------

Thank you, Jason. Today, we've reported positive results from the Phase Ib portion of the PREVAIL study, evaluating PRV-3279 a bispecific scaffold, targeting both CD32B and CD79B in healthy volunteers. We believe that PRV-3279 has the potential to intercept B cell-mediated autoimmune diseases, such as systemic lupus erythematosus, also known as lupus; as well as immunogenicity associated with gene therapies and therapeutic protein.

The results of the study demonstrated that PRV-3279 was well tolerated upon multiple administrations and it inhibited the function of B cell durably and without depletion. These data support our forthcoming lupus study and our gene therapy efforts. The Phase Ib portion of the PREVAIL study was a double-blind placebo-controlled, multiple ascending dose study. PRV-3279 was well tolerated with no serious adverse events.

Pharmacokinetic parameters were generally dose proportional and high receptor binding resulted in durable pharmacodynamic responses. As expected, PRV-3279 did not deplete B cell and demonstrated extensive and sustained binding to circulating B lymphocytes with prolonged pharmacodynamic effect. This was reflected in the reduction of circulating immunoglobulin M levels.

While anti-drug antibody production was observed at both dose levels tested, immunogenicity was determined not to affect exposure, safety or pharmacodynamic parameters. These results in conjunction with prior PRV-3279 clinical data, including MacroGenics hepatitis A vaccine result and existing evidence of the role of CD32B in lupus further increased our enthusiasm for PRV-3279. We believe these innovative molecule can rapidly and durably inhibit activated B cell without depletion.

PRV-3279 has a similar effect to that, which of our drug, teplizumab, has on B cell, modulation without depletion, potentially striking a balance between safety and efficacy in lupus and other B cell-mediated autoimmune disorders. PRV-3279 has the potential to address a wide variety of autoimmune conditions where B cells play a role. From large indications, such as rheumatoid arthritis and multiple sclerosis to orphan diseases, such as idiopathic thrombocytopenic purpura, neuromyelitis optica, pemphigus or myasthenia gravis.

We have prioritized lupus as our lead immune indication given the unmet need and established proof of mechanism for CD32B agonism in this disease. Lupus is a chronic autoimmune disorder that can affect nearly every major organ system, both in inflammation, tissue injury, organ damage and, in some patients, organ failure.

At least 1.5 million Americans are afflicted with lupus. The pathogenesis of lupus is characterized by an abnormal overactivation of B cell and subsequent pathologic production of autoantibody. Mutations in the CD32B gene in humans are associated with an increased likelihood of lupus, and reduced expression of CD32B is apparent in B cells from lupus patients. We plan to commence the Phase IIa portion of the PREVAIL study in lupus patients in the first half of 2021. In addition, PRV-3279 has the exciting potential to serve as the backbone for the prevention of immunogenicity associated with gene therapy and other biotherapeutics. We are currently conducting animal studies in support of this new approach.

Let me now turn the call over to Andy for a review of our financials.

--------------------------------------------------------------------------------

Andrew T. Drechsler, Provention Bio, Inc. - CFO [6]

--------------------------------------------------------------------------------

Thank you, Francisco. Good morning, everyone. Before I begin, I'd like to encourage you to read our 10-K that was filed today. The 10-K includes our financial statements, risk factors 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 projections. As of December 31, 2019, our cash balance was $85.4 million. We expect our current cash, cash equivalents and marketable securities will be sufficient to fund projected operating requirements to the middle of 2021. We will continue to fund operations for our 4 active programs, teplizumab, PRV-3279, PRV-015 and PRV-101. Our net cash used in operations for the full year ended December 31, 2019, were $41.5 million. We currently expect to use approximately $24 million to $29 million in operations for the first 6 months of 2020.

From a P&L perspective, we generated a net loss for the fourth quarter 2019 of $10.5 million or $0.22 per basic and diluted share. The increase in net loss compared to the same period in 2018 is attributable to increases in research and development expenses of $3.5 million as well as an increase in general and administrative costs of $1.2 million.

Net loss for the full year of 2019 was $43.3 million or $1.06 per basic and diluted share compared to a net loss of $26.5 million (sic) [$26.8 million] or $1.19 per basic and diluted share for the full year of 2018. The increase in net loss year-over-year is primarily due to an increase in research and development costs of $13.7 million. Research and development cost expenses were driven by the PROTECT study, development costs for PRV-101 and internal personnel costs. In addition, G&A expenses increased by $3.8 million year-over-year.

With that overview, let me turn the call back over to Ashleigh.

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [7]

--------------------------------------------------------------------------------

Thank you, Andy. As we approach the end of this first quarter, 2020 is shaping up to be a very exciting year for Provention. We recognize that we are the standard bearers of a paradigm shift in the development and commercialization of innovative disease-modifying therapies for type 1 diabetes and other life-threatening and life-impacting autoimmune diseases. Our teplizumab program has provided validation for our strategic intent focused on preventing or intercepting immune-mediated disease before it is too late, before a reversible tissue damage and end-stage organ failure occurred. Following closely behind teplizumab, we are advancing candidates like PRV-3279 that further advanced our strategic intent by targeting other pathways in autoimmunity.

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

Operator, we're now ready to take questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question will come from Alethia Young of Cantor.

--------------------------------------------------------------------------------

Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [2]

--------------------------------------------------------------------------------

And congrats on a lot of the progress over the past couple of months. So maybe a couple for me. One, it seems like we kind of got an interesting update from the EMA recently. So I guess -- I wanted to just talk a little bit more in detail about what the next steps are, along with the additional meetings? And it sounds like it's pretty parallel to the U.S., perhaps. But just if you can compare and contrast that and then talk a little bit about the manufacturing process that they're looking for there?

The next question would be on the lupus data, which came out in the HealthEZ this morning. I just wanted to get your perspective on the fact that there were anti-drug antibodies, but no immunogenicity, would you consider kind of pursuing potentially new doses? And then the last part of the question is when you think about starting the first half of 2021 for the Phase IIa portion, what other things do you have to do between now and like maybe the next 8, 9 months to get that IIa underway?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

So with regards to EMA, the first kickoff meeting was a procedural one. And we won't get much more additional information until we have the scientific advice meetings, which we haven't yet scheduled. So we don't have the information that you're looking for in that regard. But as we get it throughout the year, we will definitely be updating.

Perhaps I'll turn this now over to Francisco, if he could address Alethia's question regarding antigenicity.

--------------------------------------------------------------------------------

Francisco Leon, Provention Bio, Inc. - Co-Founder & Chief Scientific Officer [4]

--------------------------------------------------------------------------------

Yes. Alethia. So as we mentioned, we did see anti-drug antibody production, both dose levels tested, and that was expected and known from the prior Phase I trial done by MacroGenics, like with any biotherapeutics. But that immunogenicity of the drug was not affecting exposure, that's pharmacokinetics, was not affecting safety and was not affecting the ability of the drug to inhibit the B cell. In other words, did not affect pharmacodynamic parameters.

And with regards to your second question, what comes next is digesting these data, discussing with our key opinion leaders and finalizing the design of the lupus Phase IIa protocol and then all the standard preparation steps of any trial going through regulatory process, going through the site selection, gearing towards a study start in the first half of next year.

--------------------------------------------------------------------------------

Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [5]

--------------------------------------------------------------------------------

And just a commercial question. I guess -- I've seen you make some hires here, can you talk a little bit about big picture, further hires you need to make and kind of the build-out over the next kind of 2020 to get you out, ready to launch this drug in 2021?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Thanks very much. Jason, could you answer that for us, please?

--------------------------------------------------------------------------------

Jason Hoitt, Provention Bio, Inc. - Chief Commercial Officer [7]

--------------------------------------------------------------------------------

Yes, sure. Thanks, Alethia, for the question. So right now, as you can -- as I think you see with the hire of Jessica Blumstein, our real focus is on the commercial leadership team, which we would anticipate is 6 or 7 individuals that are really going to lead the charge over the course of the next couple of quarters. And then I think any expansion beyond that, we're looking at gating factors, right, like the BLA submission and ultimately the BLA acceptance before we begin more broad scale commercial hiring.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

Our next question comes from Thomas Smith of SVB Leerink.

--------------------------------------------------------------------------------

Thomas Jonathan Smith, SVB Leerink LLC, Research Division - Director of Immunology and Metabolism & Senior Research Analyst [9]

--------------------------------------------------------------------------------

Congrats on the progress and the data this morning. I just had a couple of questions around teplizumab and 3279. I guess first, on teplizumab. Maybe if you could give us just some updated thoughts on how you're thinking about pursuing Europe commercially would be helpful, given the recent regulatory interactions?

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [10]

--------------------------------------------------------------------------------

Thanks, Tom. So to be absolutely clear, we do not intend to pursue commercialization in Europe directly. That is a consideration that we have in the United States, and the planning and commercialization work that Jason is doing at the moment with his leadership team is applicable to whether we would go direct or partner in the United States. So that decision hasn't been concluded yet either. But the decision has been determined that in Europe, we would not attempt to do that and, therefore, we are actively seeking partnership for European commercialization.

--------------------------------------------------------------------------------

Thomas Jonathan Smith, SVB Leerink LLC, Research Division - Director of Immunology and Metabolism & Senior Research Analyst [11]

--------------------------------------------------------------------------------

Okay. And then on 3279, it sounds like you looked at 2 dose levels here. Can you maybe just talk about how you chose the dose levels in the Phase Ib? And what you're planning for the Phase IIa?

And then can you talk a little bit about the threshold levels of B cell suppression that you think you're going to need to show in order to translate to clinical benefit in lupus? Like do you think the doses you've looked at here captured an efficacious therapeutic window? Are you planning on expanding dose escalation in the Phase IIa?

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [12]

--------------------------------------------------------------------------------

Thanks, Tom. So obviously, Francisco is best to answer that. The dose level, Francisco and then the threshold.

--------------------------------------------------------------------------------

Francisco Leon, Provention Bio, Inc. - Co-Founder & Chief Scientific Officer [13]

--------------------------------------------------------------------------------

Yes. Tom, we chose the doses for the 1b based on the dose-escalation work done by MacroGenics in the first-in-human study. And we have already identified a dose level that is both well tolerated and highly efficacious at inhibiting B cell function. So we do not anticipate requiring any additional dose-finding work in the Phase IIa trial.

--------------------------------------------------------------------------------

Operator [14]

--------------------------------------------------------------------------------

Our next question comes from Ram Selvaraju of H.C. Wainwright.

--------------------------------------------------------------------------------

Robert John Burns, H.C. Wainwright & Co, LLC, Research Division - Associate [15]

--------------------------------------------------------------------------------

This is Rob on the call for Ram. I've got a few questions. So I was curious about how you're thinking about potential pricing for teplizumab in the U.S.? And what sort of size of a sales force do you think you need to support teplizumab within the U.S., assuming all goes well on the regulatory front?

And then switching over to Europe. Have you been -- I know that you don't want to commercialize it to yourself in Europe. So have you begun any dialogue with potential distribution or licensing partners in Europe on teplizumab? And then I've got a few more, but I'll let you answer those 2, first.

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [16]

--------------------------------------------------------------------------------

So I'll take the last one first. And yes, we are in active discussions with potential partners for European distribution and commercialization. Jason, could you talk about pricing and sales force pricing in the United States?

--------------------------------------------------------------------------------

Jason Hoitt, Provention Bio, Inc. - Chief Commercial Officer [17]

--------------------------------------------------------------------------------

Yes, sure. Happy to, and thanks for the question. So as you know, we're 18 months or so away from a potential commercialization. So we're nowhere near finalizing the price. But the initial work is now underway around building the health economic story. And I think the addition of Jessica Blumstein to the team brings a wealth of experience in doing just that. So we're building out the health economic story and specifically what the total cost of the system is of type 1 diabetes and plan to start to engage payers as early as next quarter to start discussing budget impact models and cost effectiveness. And so the formal pricing research will come later this year, and I wouldn't expect us finalizing a price until we get much closer to launch.

Once we think about sales force sizing, again, nothing has been finalized there either. We want the data to drive us. And so we're actively looking at a claims database analysis where we'll come up with a list of targeted physicians and their relative deciling, the workload associated with them. And ultimately, our philosophy is that we want to approach this in as lean a way as we possibly can to maximize the opportunity. And so knowing that there are roughly 900 pediatric endocrinologists out there in the U.S., I would expect a sales force of 35 to 50 or so.

But again, those are ballpark numbers. If we can do it with fewer, we certainly will. But we -- our goal being committed to the patients with type 1 diabetes is to ensure that all patients have an educated physician with knowledge of what teplizumab may offer to their patients, and that's how we're going to approach the market. But I would expect ballpark to be in the 35 to 50 range.

--------------------------------------------------------------------------------

Robert John Burns, H.C. Wainwright & Co, LLC, Research Division - Associate [18]

--------------------------------------------------------------------------------

Okay. It sounds good. I've got a few more. So when can we expect to be -- when kind of we expect you to begin mid-stage testing for PRV-015? And what sort of design in the clinical trial protocol you're thinking about there?

And then for PRV-3279, in the Phase II trial that you expect to initiate in '21, when can we expect top line data from that? And any updates on PRV-300 for this year?

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [19]

--------------------------------------------------------------------------------

So was the first question about PRV-015, the Celiac anti-IL-15?

--------------------------------------------------------------------------------

Robert John Burns, H.C. Wainwright & Co, LLC, Research Division - Associate [20]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [21]

--------------------------------------------------------------------------------

Okay. Yes. So that is on schedule. Francisco, do you want to say a few words about PRV-015 Phase IIb study?

--------------------------------------------------------------------------------

Francisco Leon, Provention Bio, Inc. - Co-Founder & Chief Scientific Officer [22]

--------------------------------------------------------------------------------

We will commence the trial in the second quarter of this year, 2020, and it's on track. It's a Phase IIb trial, 4 arms, 220 patients.

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [23]

--------------------------------------------------------------------------------

And then could you also answer the question regarding 3279?

--------------------------------------------------------------------------------

Francisco Leon, Provention Bio, Inc. - Co-Founder & Chief Scientific Officer [24]

--------------------------------------------------------------------------------

The 3279 Phase IIa lupus trial will be single-dose level, as we just mentioned, placebo-controlled trial. It will be at least 12 weeks, but obviously we are now discussing with our key opinion leaders the final design, but at least 12-week study, and it will start in the first half of next year.

--------------------------------------------------------------------------------

Operator [25]

--------------------------------------------------------------------------------

Our next question comes from David Hoang of SMBC.

--------------------------------------------------------------------------------

David Timothy Hoang, SMBC Nikko Securities America, Inc., Research Division - Research Analyst [26]

--------------------------------------------------------------------------------

Congrats on the 3279 data. I had a couple. So maybe just first on teplizumab. If we think about the period where maybe you're going beyond the 30K initial patients you're targeting at launch and trying to expand out more broadly, maybe just walk us through the patient journey. What does it look like in terms of kind of getting the patient into the office and doing the screening? And is there anything else payers might kind of look for in allowing the drug to be prescribed?

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [27]

--------------------------------------------------------------------------------

Thank you, David, and thank you for initiating coverage on us yesterday. Jason, would you like to talk about patient journey?

--------------------------------------------------------------------------------

Jason Hoitt, Provention Bio, Inc. - Chief Commercial Officer [28]

--------------------------------------------------------------------------------

Yes. So thanks for the question. So the 30,000 initial addressable market represent those that fall within the enrollment criteria in the TN10 study that was published in the New England Journal. So that would be patients with 2 autoantibodies and evidence of dysglycemia. The 45,000 number represents patients with 2 autoantibodies. And I think, as Ashleigh mentioned in his opening remarks, as soon as the patient has 2 autoantibodies as far as we're concerned, they have type 1 diabetes. It's just a matter of when they will progress to that end-stage, stage-3 insulin-dependent type 1 diabetes.

And so our approach, knowing that you've got a highly motivated group of family members of those known type 1 diabetics, who understand the daily struggle of insulin dependence and monitoring glucose levels, screening those relatives is an initial target through work in partnership with advocacy organizations that are highly motivated, like JDRF and Beyond Type 1, and we think we can easily reach that group of patients.

I think to go beyond that and target the other 200,000 to 300,000 patients that we know are at risk in the U.S. that happen to not be direct familial relatives of known type 1 diabetics, we'll need to explore things like broad-based population screening. We know right now that there are assays out there through Quest and LabCorp that are commercially available and reimbursed by payers for familial relative. So in working with advocacy organizations like JDRF, Helmsley, Beyond Type 1, we hope to advance more broad-based population screening, also including physician societies, like the American Diabetes Association and the Endocrine Society.

I think it will take more of a coalition to drive that broad-based population screening and potentially even the advent or approval of teplizumab so that there is a known therapeutic once they have that diagnosis of the 2 autoantibodies to drive that. But that longer-term broad-based population screening is happening in parallel, and let me be clear, in no way, at the expense of a highly concerted effort to identify those 30,000 to 45,000 direct familial relatives that we think are addressable at launch through work with families, advocacy and advocacy organization.

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [29]

--------------------------------------------------------------------------------

And I think there are ways of penetrating that general population screening with enrichment strategies, identifying genetic profiles, working with other autoimmunity, which we know has an increased risk of the type 1 diabetes that perhaps even potentially looking at the trigger of type 1 diabetes, which we believe to be coxsackievirus, these are all ways that we could identify subgroups of the general population that would have a higher probability of the risk of type 1 diabetes.

--------------------------------------------------------------------------------

David Timothy Hoang, SMBC Nikko Securities America, Inc., Research Division - Research Analyst [30]

--------------------------------------------------------------------------------

Got it. That's really helpful, all that additional color. And then I just had one other question on 3279. As you think about kind of moving forward in lupus, should we think about it as sort of an all-comer lupus population that you really want to go after? Or is it possible that maybe like some subset, maybe lupus nephritis or something like that would also be under consideration?

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [31]

--------------------------------------------------------------------------------

Thank you. Yes. So Francisco, do you want to talk about the -- segmenting the lupus population or going for the broad population?

--------------------------------------------------------------------------------

Francisco Leon, Provention Bio, Inc. - Co-Founder & Chief Scientific Officer [32]

--------------------------------------------------------------------------------

Yes, thanks for the question. In principle, the mechanism of action of PRV-3279 addresses the broad lupus population. But in the Phase IIa clinical trial, we will narrow down to 1 or 2 subsets as it is the standard to get a better signal. So what people typically do in Phase IIa is to focus on dermatitis and arthritis in lupus as manifestations which are very apparent and easy to measure. So in discussions with our KOLs. We'll refine those subsets for our proof-of-concept study.

--------------------------------------------------------------------------------

Operator [33]

--------------------------------------------------------------------------------

This concludes our question-and-answer session. I would now like to turn the conference back over to Ashleigh for any closing remarks.

--------------------------------------------------------------------------------

Ashleigh W. Palmer, Provention Bio, Inc. - Co-Founder, President, CEO & Director [34]

--------------------------------------------------------------------------------

Thank you, everyone, for joining us today. We look forward to providing additional updates on the progress of our teplizumab program and our other pipeline programs throughout 2020. Thank you.

--------------------------------------------------------------------------------

Operator [35]

--------------------------------------------------------------------------------

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