There’s a good-news, bad-news situation happening with Provention Bio (NASDAQ:PRVB) today. Provention’s management is celebrating a watershed moment with a Food and Drug Administration (FDA) approval of the company’s diabetes medicine. Yet, PRVB stock dropped today due to the surprisingly high price of the drug.
Based in New Jersey, Provention Bio is a fairly small clinical-stage biopharmaceutical company. It develops and commercializes therapeutics and solutions to help prevent immune-mediated diseases.
Without a doubt, it’s positive news that the FDA approved the Biologics License Application (BLA) for teplizumab-mzwv, brand name TZIELD. This is an intravenously administered antibody that’s the “first and only immunomodulatory treatment to delay the onset of Stage 3 T1D [Type 1 diabetes] in adult and pediatric patients aged 8 years and older with stage 2 T1D.”
Provention Bio CEO Ashleigh Palmer called this event a “historic occasion” and a “paradigm shifting breakthrough.” So, traders on Wall Street should be bidding up the Provention Bio share price today — right?
What’s Happening With PRVB Stock?
Actually, PRVB stock dropped 14% soon after today’s trading session commenced. It recovered somewhat but was still down significantly as of 10:00 a.m. Eastern.
That’s because there’s more to the story. Sure, the BLA approval is good news for Provention Bio, and perhaps for the medical community as well. However, there’s another press release that came out this morning, and it might shock you.
Reportedly, Provention Bio announced that just one vial of its recently approved diabetes drug would cost $13,850. Furthermore, on a conference call, Provention Bio said that a 14-day regimen of the drug would cost $193,900.
Thus, it’s easy to see now why many traders are dumping their PRVB stock shares. If Provention’s diabetes medicine is prohibitively priced, it will be more difficult to commercialize it. So, it will be interesting to see if Provention Bio reconsiders its drug pricing — some patients and stock traders will probably hope so.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.