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small-cap

An Attractive NASDAQ-Listed Stock to Punt On – TRVN

Oct 18, 2021 | Team Kalkine
An Attractive NASDAQ-Listed Stock to Punt On – TRVN

 

 

Trevena, Inc.

TRVN Details

Trevena, Inc. (NASDAQ: TRVN) is a biopharmaceutical company engaged in developing and commercializing novel therapies for people suffering from Central Nervous System (CNS) diseases. TRVN currently has only one approved product OLINVYK (oliceridine) injection, which is used to treat individuals with acute pain severe enough to require an intravenous opioid analgesic and for whom other therapies are ineffective. Its product pipeline also includes TRV027 for acute lung injury, TRV250 for migraines, TRV734 for chronic pain and opioid use disorder and TRV045 for epilepsy. As of October 15, 2021, the company's market capitalization stood at USD 187.54 million.

Latest News:

  • Proof-of-Concept Study of TRV027: On September 30, 2021, TRVN released data from 30 COVID-19 patients who participated in a proof-of-concept study using TRV027, its innovative AT1 receptor-selective agonist, carried out at Imperial College London in collaboration with the British Heart Foundation Imperial Centre for Research Excellence Award. TRV027 was well tolerated, and the findings indicated that it could improve biomarker and clinical endpoints related to COVID-19 disease severity and progression. It was also observed that the TRV027 reduced the average hospitalization days by ~12 days in contrast to placebo.

Q2FY21 Results:

  • Visibility in Topline: TRVN reported total revenue of USD 0.18 million for Q2FY21 (ended June 30, 2021). It did not report any revenue in Q2FY20.
  • Increase in R&D Expenses: The company incurred research and development (R & R&D) expenses of USD 3.45 million in Q2FY21 compared to USD 2.96 million in Q2FY20. The increase was attributable to higher spending on the development of TRV045.
  • Expansion of Net Losses: The company's net loss increased to USD 14.02 million in Q2FY21 from USD 6.22 million in Q2FY20.
  • Cash and Debt Position: As of June 30, 2021, the company had cash and cash equivalents of USD 90.95 million and total debt of USD 0.01 million.

Risks:

  • Product Concentration Risk: TRVN's prospects are dependent solely on the commercial success of OLINVYK, its only product offering. Successful commercialization of OLINVYK depends on its endorsement by the physicians and the readiness of patients to take it, and their unwillingness to prescribe/continue the drug could harm the company's financial performance.
  • Regulatory Risk: TRVN must conduct its business in the ambit of a strict regulatory environment. Non-observance of norms could lead to recall or suspension of prior approvals.

Outlook:

Multiple Expected Catalysts (Source: Corporate Presentation, September 2021)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation   

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

TRVN Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

TRVN's share price has decreased 46.23% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 1.09 to USD 3.10. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 39.51. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 1.40.

Considering the correction in the stock price in the past nine months, encouraging outlook, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 1.14, down 1.72% as of October 15, 2021.

 

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.