Provention Bio, Inc. (PRVB) on Q1 2022 Results - Earnings Call Transcript
Operator: Good morning. My name is Kate, and I will be your conference Operator today. At this time, I would like to welcome everyone to the Provention Bio call. There will be a question-and-answer session to follow. 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. Robert Doody, Vice President of Investor Relations for Provention Bio.
Robert Doody: Thank you, Operator, and thank you all for joining us on Provention Bio's First Quarter 2022 financial results conference call. Joining today's call to review our 2022 progress to date and share some insights into what to expect going forward will be Ashleigh Palmer, Chief Executive Officer, and Co-Founder; Thierry Chauche, our Chief Financial Officer, will also be joining us to provide an update on our Q1 financial results and financing options, along with additional members of our leadership team available to address your questions. Before we begin, let me remind you that the various remarks we will make today constitute forward-looking statements. These include statements about our future plans and expectations, clinical results, regulatory, and other developments, and time lines related to our product candidates, including our plans to continue working with the FDA as they review our BLA resubmission, and continuing efforts towards securing a potential FDA approval for and commercialization of teplizumab for an at-risk indication, as well as the planned delivery of significant catalysts over the next 24 months. The potential safety, efficacy, and commercial success of teplizumab and our other product candidates. The potential COVID-19 impact on our clinical studies and business plans. Financial projections, including our anticipated use of cash and our cash runway, and our business plans and prospects and projected timing for the same. 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 quarterly report on Form 10 Q, which we filed with the SEC this morning 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 except as required by law. 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 Prevention's website at www.proventionbio.com under the Investors section. We encourage you to review these documents carefully. With that, I will now turn the call over to Ashley.
Ashleigh Palmer: Thank you, Bob. And thank you to everyone joining us on this morning's call. We are very excited to speak with you today, not only about the progress made throughout the first quarter, but where that progress on the catalytic potential of our pre -commercial assets, teplizumab, to now take prevention and the patients, investors, and other stakeholders we serve. In January we participated in a successful Type B meeting with the FDA to review our pharmacokinetic data and modeling, as well as the pharmacodynamic results from a PK/PD sub study conducted under our protect Phase III trial in newly diagnosed type 1 diabetic patients. The FDA did not request further clinical data, but instead proposed the use of additional modeling to potentially address the PK comparability consideration set out in the agency's complete response letter issued last July. We immediately accepted the FDA's recommendation, deploying a population PK model developed in close collaboration with the agency. to demonstrate how modest adjustments to teplizumab dosing used in the at-risk T1D 14-day regimen could match the exposure of Provention's planned commercial product with that of clinical trial material manufactured 11 years ago. Three weeks following the January Type B meeting, our team was able to complete the re-submission of a Biologics License Application or BLA for the delay of clinical type 1 diabetes in at-risk individuals. And 30 days later, in mid March, we were delighted to report that the FDA have accepted our re-submission for review, assigning a user fee goal date of August 17th. During the first quarter, we also reported significant progress across our other pipeline programs, focused on the prevention or interception of serious autoimmune diseases. In January, we announced the initiation of the PREVAIL-2 trial for PRV -3279. Our investigational humanized, bispecific therapeutic scaffold targeting the CD32B and CD79B surface proteins on B-cells. PRV-3279 has the potential to intercept the underlying patho physiology of B-cell mediated auto-immune diseases, such as systemic lupus erythematosus, or SLE. The PREVAIL-2 trial, which we are conducting in conjunction with our PRV-3279 Greater China licensee and partner, Pudong medicine is a Phase 2A proof-of-concept study, enrolling patients with moderate to severe SLE, in both the United States and Hong Kong. The trial is targeting enrollment of approximately 100 patients who will receive monthly infusions of active or placebo drug product over a 20-week period, with the primary efficacy readout at 24 weeks. We expect top-line results from this trial in 2024. Additionally, this past quarter, we continue to screen and enroll patients with diet non-responsive celiac disease into the Phase 2B proactive trial of our Amgen partnered anti aisle 15 human monoclonal antibody, or the or, PRV015. Also, as per previous guidance, we reported results from the final analysis of our Phase 1 first-in-human PROVENT trial for PRV-101. A polyvalent coxsackievirus B vaccine candidate targeting the key viral strains associated with type 1 diabetes. The final results showed this trial primary endpoint was met and confirmed the tolerability observed in our previously reported interim Analysis. In particular, there were no Treatment-Emergent Serious Adverse Events, Adverse Events of special interest, or Adverse Events leading to study drug discontinuation or withdrawal. The results also showed durability of viral neutralizing antibody responses, with 100% of subjects in the high dose arm maintaining high titers to the majority of vaccine targeted serotypes. We consider these results to be extremely encouraging, enabling us to explore prospective partnerships to advance PRV-101 towards possibly becoming the first vaccine to prevent coxsackievirus B infection and its acute morbidity and mortality. As well as potentially decrease the global incidence of associated type 1 diabetes and celiac disease. Earlier, I referred to the catalytic potential of teplizumab. Since the successful filing of our U.S. breakthrough therapy designation under our prime and innovation passport designations in Europe and the UK, we have not only witnessed considerable growth in teplizumab's potential to bring about fundamental change for the patients and stakeholders we serve. We've actually begun to realize and experience that change. Nearly the prospect of an FDA approval for the first disease-modifying therapy to delay clinical type 1 diabetes in at-risk individuals has generated heightened visibility and awareness of the importance and benefits of screening for to auto antibodies. Not just for the relatives of existing insulin dependent patients, but also with respect to general population screening. Medical societies, key opinion leaders, academic consortia, patient advocacy groups and corporations are now engaged in meaningful, collaborative, multi-stakeholder dialogue. This dialogue has shifted from how screening can reduce the incidence of diabetic ketoacidosis to how the revision of screening guidelines can help to identify at-risk T1D patients in anticipation of the potential approval of immunomodulatory therapies like teplizumab. JDRF’s T1Detect program and other screening initiatives now bring disease and screening awareness, education, patient support, and affordable T1D autoantibody testing to the kitchen table of at-risk T1D patients and their families. And we are proud to be a founding sponsor of JDRF's efforts. If teplizumab is approved by the FDA in August, now only 15 weeks away, Provention will begin realizing its founding mission to change the world by providing a disease-modifying therapeutic option to a patient and clinical community that has been deeply under-served for decades, and highly frustrated and burdened for generations. We believe this fundamental shift in paradigm could have a profound impact on patients, many of whom present with T1D for the first time in life-threatening metabolic crisis. And for those diagnosed under the age of 10, a reduced life expectancy of 16 years. It also represents a major catalyst for change at Provention. On the development front, we believe it will validate our founding conceptual platform and pipeline, and our belief that life-threatening and debilitating autoimmune diseases such as type 1 diabetes and celiac can potentially have their progression intercepted and delayed. If teplizumab is approved, it will also lay the foundation for what we believe will become a meaningful therapeutic franchise. Beginning with at-risk T1D label expansion focused on children under 8 years of age, as well as redosing teplizumab to potentially extend the two - to three-year median delay in clinical T1D onset that was demonstrated in the TN-10 study and it's followup using a single 14-day course of therapy. In the second half of next year, we expect top-line results from our ongoing teplizumab Phase III trial in newly diagnosed patients. And in parallel, we anticipate the continuation or start-up of collaborative development programs using teplizumab, in combination with tolerogenic platforms like that of our existing partner, Bio, as well as pancreatic islet and B2 cell transplant patient programs targeting the growing market of $1.8 million end-stage insulin-dependent Type 1 diabetics in United States alone. It is worth noting here that in prior published studies, the addition of teplizumab to islet transplantation induction regimen has been successful in extending the durability of favorable post-transplant patients results with 75% of transplanted patients remaining free from the burden of insulin dependency for more than five years. Outside of T1D, we plan to explore the potential use of teplizumab across other autoimmune-related disorders, especially celiac disease, which to-date has no therapeutic option for patients other than attempting to avoid contamination from anti - genic gluten by way of dietary control. Preparing for teplizumab's potential approval is also catalyzing significant organizational change within Provention. As we transition to becoming a progressive, highly focused, Omni -channel commercial vehicle, leveraging capabilities and resources across the ecosystem to create, penetrate, and expand nascent markets and cost effectively commercialize innovative, immunomodulatory therapeutics to highly targeted audiences. Rather than go into greater detail regarding teplizumab commercialization plans on today's call, I'm delighted to announce that later this month, we will be conducting our promised commercial launch investor event. On Thursday, May 19, Provention's Chief Commercial Officer, Jason Hoitt and his commercial leadership team will be sharing with you our deep understanding of the critical aspects of the at-risk T1D target market and patient journey. Specific agenda items Jason and his team intend to cover at this event include the evolution and future of patient screening, our extensive market research which now includes in excess of 1300 respondents across multiple target audiences, our go-to market strategy, field force deployment, payer research, our supply chain and distribution model, patient services and support, as well as our well-qualified and well-prepared medical affairs, infrastructure and team. The potential approval of teplizumab just over one quarter from now would also be an important financial catalyst for prevention. Before handing over today's call to Thierry, to discuss our quarter one results and future financing strategy and optionality, I want to acknowledge his leadership, the hard work and expertise of his finance function, and the professionalism and dedication of the rest of the Provention team for the disciplined manner in which they have managed our business operations throughout the first quarter of 2022. As Thierry will explain, our cash-based operating expenses were well within guidance and we closed the quarter with a cash balance in excess of $113 million, efficient to take us beyond potential teplizumab launch and into next year, despite the worldwide macroeconomic challenges we're all witnessing. Thierry, over to you.
Thierry Chauche: Thank you, Ashleigh. Before I begin discussing the financials for the quarter, I would encourage you to read our 10-Q that was filed today. The 10-Q 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 projection. As Ashleigh indicated, as of March 31, 2022, our cash, cash equivalents, and marketable securities position was $113.4 million. Our cash-based operating expenses for the first quarter ended March 31, 2022 was $26.2 million, aligned with our previously communicated guidance. We expect our cash-based operating expenses to be between $29 million and $33 million in the second quarter of 2022, reflected an increase in launch readiness activities as we prepare for the potential every year approval of teplizumab in Q3 2022. At the same time, we will continue to prudently gate our expenses. Based on our current business plan, we believe that our cash, cash equivalents, and marketable securities on-hand as of March 31, 2022 are sufficient to meet our operating requirements into the first quarter of 2023. If the teplizumab is approved, factors that could impact our cash runway includes, but are not limited to, changes to estimated cost of commercialization, and potential milestone payments that may be triggered under our current agreement, including with MacroGenics. Despite the challenging financial markets, we believe our momentum with the potential approval of teplizumab in Q3, 2022, provides us with optionality to raise capital. And we will continue to be both strategic and opportunistic when evaluating potential financing alternatives. We will provide updates on our cash-based expenses and runway as we progress towards the potential regulatory approval and commercial launch of teplizumab and position ourselves for long-term success. From a P&L perspective, we generated a net loss for the first quarter of 2022, of $22 million or $0.35 per basic and diluted share compared to a net loss of $32.4 million or $0.52 per basic and diluted share for the first quarter of 2021. The decrease in net loss compared to the first quarter of 2021, is attributable to a $7.1 million income tax benefit the company recognized during the period and a $2.3 million decrease in research and development costs primarily driven by decreased costs for the protect trial as target enrollment was reached in August 2021 as well as lower-cost for the manufacturing and regulatory activities with teplizumab compared to the prior year. Our first quarter net loss included $3.3 million of non-cash stock-based compensation. Also, during the first quarter we recognized $0.6 million of collaboration revenue under our license agreement with Huadong. From the cash standpoint, we received $1.5 million in research, development, and manufacturing funding from Huadong in this quarter, which is recorded in deferred revenue. With that update, I'll now turn the call back over to Ashleigh.
Ashleigh Palmer: Thank you, Thierry. We believe we are well on our way to catalyzing a fundamental paradigm shift in the approach to managing serious life-threatening and debilitating autoimmunity. Our conceptual platform of intercepting and delaying the progression of disease before it's too late rather than treating advanced stage tissue damage and symptoms chronically for a lifetime, offers game-changing hope to the more than 23 million patients in just the U.S. alone affected by autoimmune diseases, along with their families and caregivers. Doing so would allow them to focus on maximizing their true potential and living their lives to the fullest. In turn, providing them with greater opportunity to positively change the world for the rest of us. With that Operator, we'd like to take any questions.
Operator: We will now begin the question-and-answer session. The first question is from Gregory Renza of RBC Capital Markets. Please go ahead.
Gregory Renza: Hey, good morning Ashleigh and team, and congrats on that progress and thanks for taking my questions. Ashleigh, maybe two questions for me that I will just fire off now. On the commercial updates and the investor event coming up, I'm just curious if you could provide just a little tease on where you and Jason and the team really see the greatest areas of focus across the stakeholders that you'll be certainly addressing there with the go-to-market strategy? And I'm also just curious about the current state of the awareness of teplizumab in the provider and prescriber community? Maybe just a baseline understanding activated or otherwise, where that stands and what work you see ahead in order to prep and prompt those targets there? And then my second question, Ashleigh, just related to what you and Thierry had discussed around the cash and the runway? Maybe if it's possible to provide just some scenarios around where you see the spend and resource requirements being based on the potential outcomes of not just the FDA decision coming up, but also as the rest of your pipeline and priorities mature? Thank you very much.
Ashleigh Palmer: Good morning, Greg. Thank you for your question. So, whilst Thierry is preparing to address the second question, I'm going to ask Jason if he has a tease for Greg and the rest of our investors regarding the upcoming commercial event with perhaps some comments about awareness?
Jason Hoitt: Yeah, absolutely. Thanks for the question, Greg. For the event, obviously, we're really excited about having a focused event on the 19th of May to really just go through in a lot more depth than we've been able to provide our plans to launch teplizumab. We're going to get into a more in-depth look at the insights that we've gleaned over the last two years since the commercial leadership team came on board at Provention, how those insights have driven our launch strategy, how we've optimized our channel strategy with respect to both consumer and HDP education and information. We're going to discuss in a little bit more depth the insights we've gleaned from payers over the course of the last two years, as well as our distribution strategy, some of the learning that we've heard from patients and caregivers. And we're going to discuss in a lot more depth our sales force sizing and go-to-market strategy with respect to our field-based employees. With respect to awareness. Not surprisingly, Greg, we did a baseline ATU market research study. And in this quantitative piece of research, not surprisingly, physicians were more aware of teplizumab than they were of Provention Bio. As Provention Bio has only been around for a number of years. T eplizumab has been under study for decades now. And so, there's a pretty high degree of awareness of teplizumab among both pediatric and adult endocrinologists. And we'll get into a little bit more of that during the commercial event in a couple of weeks.
Ashleigh Palmer: Thanks, Jason. So, Thierry, I know we've been working very hard on ensuring that there is optionality, especially given the volatility of the markets. Do you want to talk about some of the scenarios that we have displayed?
Thierry Chauche: Very good, and thanks, Greg, for the question. I'll just , first of all, on the spending, as I mentioned, Q1 2022 guidance is an indication of the ramp up of spend for launch readiness activities with $29 million to $33 million versus $26.2 million cash-based operating expenses in the first quarter. So, from a spend standpoint, we'll continue to assess based on our regulatory progress on the bill negotiation and bill approval. We've been prudently gating our spend as you know. We'll continue to do so, and we will also evaluate this based on our our cash run rate. Now, when it comes to financing, as Ashleigh was mentioning, the financial markets have been challenging, but we think we have a significant momentum with a potential approval of teplizumab in Q3 2022. And we plan to be opportunistic about all the available options, whether it'd be equity offerings, product placement, debt royalties, or strategy transaction. Everything is on the table. And we'll make our decision based on what is in the best interest of our company and our shareholders. I will add to that, we -- as you know, we have an ATM $450 million of common stock. The raise year-to-date as per the 10-Q is $4.2 million. And we also acknowledge that regulatory progress as we energize some strategic partnership discussions, which could be a source of non - dilutive financing.
Gregory Renza: That's great. Thank you very much, guys.
Operator: The next question is from Thomas Smith of SVB securities. Please go ahead.
Thomas Smith: Hey, guys. Good morning. Thanks for taking the questions, congrats on the progress, and really looking forward to the commercial event on the 19th. Just on the teplizumab BLA and the regulatory review, would it be possible to provide any additional color on how the regulatory review is progressing here. Have the FDA provided any feedback on the proposed dosing regimen or any indication that they would be willing to engage in labeling discussions at this point?
Ashleigh Palmer: Thanks for the question, Tom. So, to date, we've had information request, very straightforward, and we immediately provided the agency with guidance as to where they could find the information in the BLA re-submission. We don't really expect there to be labeling discussions entered into in earnest until probably six to eight weeks out from the anticipated action date. That's usually the window.
Thomas Smith: Okay. That's great. Thanks Ashleigh. And then just perhaps a follow-us. Is there an expectation for a formal mid-cycle review meeting with this BLA resubmission? And I guess if so, has that been scheduled?
Ashleigh Palmer: Yes. Unlike original BLA. If you remember last year when we had noticed that the BLA had been filed after our submission, the agency provided us immediately with a mid-cycle review date, a late cycle review date, and the date of the AdCom. This is resubmission in response to a CRL, and so those formalities are not provided.
Thomas Smith: Okay. Understood. And then just maybe a question and again, looking forward to the commercial event here, but I guess maybe one for Jason just in terms of sales force hiring, if you could just remind us, I guess where you are in terms of hiring the commercial leadership here and then ultimately, I think you've kind of previously stated that the labeling discussions could be a little bit of a gating factor in terms of more fully building out the sales force. But if you could just remind us, I guess exactly where you are in terms of building out the commercial force here.
Ashleigh Palmer: Yes. Thanks, Tom. So, Jason can do that. I just want to say in general that yes, we're very thoughtful in how we gate this and move forward, especially in the current environment. We have an amazing leadership team in place with Jason that is able to do a great deal in preparation and be ready to try to align any significant increase in organizational size and spend around that approval -- anticipated or potential approval date. So, Jason, do you want to give a little bit more color on that?
Jason Hoitt: Yeah. Sure. Thanks for the question, Tom. So, our intent right now -- as a foundation, we've mentioned before that we deployed a pilot team in the field about a year ago. And they've done really amazing work in engaging with healthcare providers, local advocacy, centers of excellence, etc. It's a modest force out there, really targeting profiling of key accounts and disease state education. Our intent would be to recruit over the course of the next couple of months and have contingent offers that would be based on approval at this point. Obviously, if we see an opportunity to accelerate that, we will consider it. But our base case right now is that we would offer -- have contingent offers that would go live at the time we announce an approval.
Thomas Smith: Okay. Got it, great. Thanks guys. I appreciate you taking the questions.
Ashleigh Palmer: Thank you, Tom.
Operator: The next question is from David Hoang of SMBC, please go ahead.
David Hoang: Hey, thanks for the update and taking my questions. Ashleigh, you talked a little bit about the potential opportunities post market for expansion into the younger population and also looking at re-dosing of patients. Could you elaborate a little bit on the efforts that you might undertake to pursue those opportunities should teplizumab be approved? And then, in terms of timeframe, how are you thinking about pursuing that?
Ashleigh Palmer: Good morning, David. Thank you for the question. I'm going to ask Francisco to provide some more details, but I think the very first priority is the under eights. We know that the disease, type 1 diabetes, autoimmunity, and the onset tend to be more aggressive in the younger population. And, of course, we're limited by the eight years ' enrollment criteria that was used in the TN-10 study. So, we want to reach the population or populations that can benefit most from this and provide the FDA with the data to expand the labeling accordingly. And then, Francisco can perhaps also talk about another high priority for us, which is re-dosing because everything that we're working on at the moment is the consequence of a single course of therapy in a TN-10 study, and we believe that there's the potential to explore the possibility of even better results from redosing at the right time. We need to generate data to evaluate that as well. Francisco.
Francisco Leon: Good morning, David. Thank you for the question. So as Ashleigh said, and without providing any specific timelines because we haven't guided to that kind of detail. Our priorities in these are going below eight years of age than pre -dosing, which as he mentioned, to be potentially then by looking at exhausted T-cells as a biomarker to guide the timing of re-dosing. As you know, to have the greatest expansion in exhausted T-cells appeared to be very long duration responders. We can use those cells to determine when is the best time to dose again; that's the hypothesis. So, we will study that post-approval. We also continue working on combinations. As you know, we have a combination ongoing right now with Precigen ActoBio, with excellence Phase 2 data that has been released in newly diagnosed patients. Beta cell transplantation, as Ashleigh mentioned, we have good data with islet transplant and the potential to now move into the islet and stem cell derived beta cell field. And then non type 1 diabetes indications, Celiac and others. And finally, potentially subcutaneous administration as well. So, we will turn on and overlap all of its programs, post-approval.
David Hoang: Okay. Thanks a lot.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Ashleigh Palmer for closing remarks.
Ashleigh Palmer: Thank you, Kate. So, thank you again, everybody for dialing in today for your time and attention this morning. We're very much looking forward to keeping you updated on our progress 2022, and especially to the upcoming commercial event on May 19th. Have a good day.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
