This biopharmaceutical company could grow by as much as 300%, according to Wall Street

All of us try to look for interesting investment opportunities that can bring us high percentages. As far as such companies are concerned, you definitely cannot look for giant companies, as there such a 300% jump is more of a mere wish than a possible reality. On the other hand, an investor must paddle in other and often unknown waters, where he believes and hopes for a competitive advantage that will be appreciated over time or for an acquisition by a giant. In this case, we're going to talk about one interesting stock with potential that has an interesting product and is being highlighted on Wall Street.

Companies with giant potential can be hard to find. Personally, I don't lean much towards analysts' opinions, but that doesn't mean I can't be inspired and subject the stock to my own analysis. Wall Street sees the potential for 300% growth in biopharmaceutical company Provention Bio $PRVB. Now comes the important part - Why do they like it and see potential in it?

A promising product

Smaller biotechs are often highly focused on a particular therapeutic area or specific method of developing therapies. Provention Bio's mission is to address autoimmune diseases by finding ways to prevent or delay their onset. One of the company's first targets is type 1 diabetes (T1D). Provention Bio's teplizumab has produced solid results from clinical trials in at-risk T1D patients.

In one study, the treatment was shown to delay insulin dependence in at-risk individuals with T1D by nearly three years, which is very impressive. In addition, T1D could have a solid target market if approved. Provention Bio estimates that up to 2.3 million people worldwide may be at risk of developing T1D. This includes direct relatives of existing patients, as genetic factors and family history can increase the risk of developing it.

Teplizumab, however, has encountered regulatory hurdles. In July 2021, the US Food and Drug Administration (FDA) raised questions about manufacturing differences between the version of teplizumab Provention Bio used in clinical trials and the version of the therapy it plans to market.

The agency has so far refused to approve the drug, although it has not raised safety or efficacy concerns. Provention Bio has addressed the issues raised by the FDA and resubmitted an application for teplizumab in February. The company is expected to have a response by November 17. While there are more twists and turns in this story, teplizumab will likely eventually get the green light, according to experts, given the fact that it has generated such solid data in clinical trials and the fact that it appears to have a reasonable safety profile.

Provention Bio $PRVB

It's always true - If you want massive returns, you have to take risks, and that's true in this case as well.

However, to highlight the company's qualities, I must add that it is also involved in the development of other substantial drugs, which actually tells us that they are going after said drug predatorily, but again, it's not the kind of all in bet on one product that can blow them out of the water.

  • For the record - Provention Bio has other products in the pipeline, including potential drugs to delay systemic lupus erythematosus and celiac disease.

According to Wall Street, teplizumab will return several times the amount of money invested over the years if approved by T1D. That's before adding the drug's potential in other indications and other products Provention Bio is developing. In short, one could argue that Provention Bio is undervalued and that a substantial increase in its stock price of the kind Wall Street imagines is not that unlikely.

However, it is also necessary to consider the risks associated with this biotechnology. First, as a clinical-stage company, it currently generates little revenue and is permanently unprofitable. No matter how promising the therapy, it can be difficult to raise funds for clinical-stage biotechnology. Provention Bio had $113.4 million in cash and cash equivalents at the end of the first quarter.

However, the company recently raised an additional $60 million. The company's current cash situation appears to be sufficient until the FDA comes back with an answer on teplizumab. If the therapy gets the green light, Provention Bio may need to raise additional funds to cover commercialization efforts. The company may resort to dilutive financing in the next six months, which investors should keep in mind.

Second, Provention Bio could run into additional regulatory issues, or its products could fail to hit the mark in clinical trials. Third, Provention Bio is not the only company targeting T1D. Biotech giant Vertex Pharmaceuticals is currently developing a treatment for this chronic health condition. All of these factors make Provention Bio a risky bet, but one with high potential for growth.

Conclusion

At this point in time, this looks like an interesting choice in terms of risk:potential return, as we have a clear near-term catalyst for growth in the stock. The company's intent to continue to push its drugs provides a clear path to approval. Of course, we won't be seeing the results until November (as I write in the article). The interesting thing is that many experts (80-90%) are counting on approval, which could take the stock up to $10 in the first place. They then see the potential for up to 300% upside as the drug market expands and becomes more widespread.

Please note that this is not financial advice. Every investment must go through a thorough analysis.

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