By Raghav Mahobe and Nandhini Srinivasan
(Reuters) -Provention Bio Inc has priced its diabetes drug teplizumab at $13,850 a vial, it said on Friday, a day after receiving U.S. approval and far higher than some analysts' expectations.
The company's shares reversed course from premarket gains to trade down nearly 12% as the high pricing stoked fears over insurance coverage.
The U.S. Food and Drug Administration on Thursday approved use of the drug for patients, with stage 2 of type 1 diabetes, to delay the onset of insulin dependence in those aged 8 years and above.
A 14-day regimen, or a course of the drug would translate to a wholesale price of $193,900, the company said on a conference call. The wholesale price is not necessarily what patients pay for a drug.
"This (price) is much higher than perhaps what the Street was expecting," said Gregory Renza, an analyst at RBC Capital Markets.
"Investors will have some level of concern that this pricing could lead to insurance hurdles," said SMBC Nikko Securities analyst David Hoang, who was expecting the treatment to cost $70,000 to $80,000 per course.
Type 1 diabetes is an autoimmune disease caused by the destruction of beta cells in the pancreas that produce insulin.
More than 1.8 million people in the United States suffer from type 1 diabetes, according to Provention.
In October, the company signed a co-promotion deal for the drug with Sanofi (NASDAQ:SNY), offering the French drugmaker first negotiation for exclusive global rights to commercialize the drug in exchange for an upfront payment of $20 million.
Teplizumab belongs to a class of drugs known as anti-CD3 therapies, which bind themselves to certain white blood cells to suppress the body's immune response.