Exit This NASDAQ-Listed Biopharmaceutical Stock - TRVN

Apr 01, 2022 12:00 AM PDT | Team Kalkine
Exit This NASDAQ-Listed Biopharmaceutical Stock - TRVN

Trevena, Inc.

Trevena, Inc. (NASDAQ: TRVN) is a biopharmaceutical company focused on developing and commercializing novel medicines for patients suffering from CNS disorders. TRVN currently only has one FDA-approved product, OLINVYK (oliceridine) injection, which is used to treat people with severe acute pain who require an intravenous opioid analgesic and have failed to respond to previous treatments. TRV027 is being developed for critical lung damage, TRV250 is being developed for migraines, TRV734 is designed for chronic pain and opioid use disorder, and TRV045 is being developed for epilepsy.

Why Should Investors Book Profit?

  • Relatively Low Gross Margins: The company is operating at a gross margin of -9.9% in Q3FY21 compared to the industry median of 87.0%.
  • High Cash Conversion Days: Compared to the industry, the company has a long Cash Conversion Cycle (Days), meaning that it takes more days to convert its inventory to cash. In Q3FY21, its Cash Cycle was 1,640 days, compared to an industry median of 50 days.
  • Product Concentration Risk: TRVN's prospects are highly dependent on the commercial success of OLINVYK, the company's single approved product. The success of OLINVYK's commercialization is dependent on physician prescription and acceptance of patients to take it, their refusal to prescribe/continue the treatment could impair the company's financial performance.

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.

Stock Recommendation:

TRVN's share price has declined 65.65% in the past nine months and is currently leaning towards the lower band of the 52-week range of USD 0.40 to USD 2.31. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 0.49.

Considering the company's negative margins, longer cash conversion cycle, current valuation and associated risks. we recommend a "Sell" rating on the stock at the closing price of USD 0.5499, down 24.64% as of March 31, 2022.

Three-Year Technical Price Chart (March 31, 2022). Analysis by Kalkine Group

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

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