What happened

Shares of Provention Bio (NASDAQ:PRVB), a clinical-stage biopharmaceutical company, were beaten down 25.2% as of 12:40 p.m. EDT on Tuesday. Investors are responding to a Complete Response Letter that the company received from the Food and Drug Administration instead of an approval decision. 

So what 

Provention Bio's lead candidate, teplizumab, is an experimental antibody meant to delay the onset of type 1 diabetes for at-risk patients. In a majority of patients given a 14-day course in the pivotal TN-10 study, the onset of insulin-dependent diabetes was delayed by more than two years.

Investor looking at a sinking stock chart.

Image source: Getty Images.

Instead of the approval investors were hoping for, the FDA sent Provention Bio a Complete Response Letter. The main issue, according to the company, involves an incomplete comparability study. In a nutshell, the FDA doesn't think the company has proved that commercial teplizumab behaves exactly the same way as teplizumab used in clinical trials.

Now what

While the delay is disappointing, it could have been much worse. Provention Bio said the issues brought up earlier this year by an FDA advisory committee weren't to blame. In May, independent experts expressed concerns regarding a small pivotal trial size and a lack of follow-up data for teplizumab.

Provention Bio expects relevant compatibility data from an ongoing phase 3 trial with newly diagnosed diabetes patients before the end of September. The company also said there was an issue at the fill and finish plant that needs to be addressed.

Since the FDA cited problems that can be addressed without running another long clinical trial, there's a good chance that this biotech stock can bounce back from today's beating.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.