Forget Marijuana -- This Drug Offers a Far Bigger Opportunity

Legalized marijuana sales are booming in the U.S., with the industry growing by a whopping 74% last year. Even so, total sales came in less than $3 billion in 2014, according to a report from the ArcView Group, showing that the drug remains in its infancy in terms of its economic potential. 

Source: Wikimedia.

The interesting part from an investing viewpoint, though, is that although the medical marijuana market is expected to grow to over $10 billion by 2018, that figure still pales in comparison to other rapidly growing healthcare segments, such as treatments for severe pain.

Source: Wikimedia.

The opioid market for severe pain in the U.S., for instance, already tops an estimated $11 billion, with 25 million Americans reportedly using these drugs to control intense bouts of pain on an annual basis. And that figure balloons up to 100 million for chronic pain suffers. 

In 2013 alone, there were over 40 million insurance claims for opioids in just hospital settings in the U.S., showing that this is an absolutely monstrous market, especially compared to the high-profile, but relatively small, legalized cannabis industry. 

With that in mind, here's a look at one experimental drug for severe pain that offers a much richer opportunity for investors than legalized marijuana at the moment.

This experimental drug could make morphine obsolete
For severe post-operative or cancer pain, morphine has long been the go-to drug. The problem, though, is that morphine comes with a laundry list of severe side affects such as respiratory depression, nausea, and constipation.

Making matters worse, morphine isn't that great at reducing pain, with up to 40% of patients requesting additional doses almost immediately after an initial dose.

And its ability to control pain is short-lived. Studies have shown that patients on morphine often report a return to severe pain levels after only two hours on average, necessitating the administration of another dose that can cause further respiratory depression and other undesirable side effects. 

To fill this gap in the huge severe pain market, tiny biotech Trevena (TRVN 2.29%) is developing a small molecule drug, TRV-130, that binds to the mu opioid receptor -- a type of g-protein coupled receptor, that should, in theory, result in long-lasting pain relief without the problematic side affects. And so far, the mid-stage clinical trial data supports this notion.

In a mid-stage trial comparing four different doses of TRV-130 against placebo and morphine, the 2 and 3 mg doses of the experimental drug significantly improved pain control, compared to patients receiving either a placebo or morphine, and this result persisted for about two hours:

Source: Trevena.

Most impressively, TRV-130 was able to reduce severe pain to "mild" pain within minutes of being administered. Patients on morphine, by contrast, generally reported a reduction to only "moderate" levels of pain at best, down from severe. And a standard dose of morphine (4 mg) took about five minutes longer than TRV-130, in this trial, to provide adequate pain relief. Five minutes may not seem like a long time, but it's a big deal when you are in agonizing pain.

What's next?
Trevena is scheduled to report the results from another ongoing mid-stage study examining TRV-130's pain control effectiveness in patients following "tummy tuck" surgery by mid-2015. Assuming this trial reports similar levels of efficacy and safety, the company plans to launch a pivotal-stage trial in the first-quarter of 2016.

As pain med trials don't take that long given their short observation period (usually one or two days per patient, compared to months for, say, a cancer drug), TRV-130 could be under regulatory review as early as 2017.

The key thing for investors to understand is that this experimental drug is designed to replace morphine as the "best-in-class" severe pain medication, meaning it has blockbuster potential written all over it. That would be a monster catalyst for a company with a market cap of $275 million at present. 

Is Trevena a buy right now?
Although all clinical-stage biotechs are inherently risky, I'm cautiously optimistic that Trevena is the real deal, so to speak. TRV-130's mid-stage results, thus far, have painted a far superior clinical profile over morphine. That's why I have this stock at the top of my watchlist right now, and I'm considering taking a position following the upcoming top-line data readout for TRV-130's tummy tuck trial.