What: Shares of the clinical-stage biotech Trevena (TRVN 7.35%) fell by as much as 18% today after the company announced that its experimental drug, TRV027, failed to meet either its primary or secondary endpoints in a mid-stage study for acute heart failure.
So what: Trevena's nosedive illustrates just how nervous this market has become toward developmental biotechs in general. After all, Trevena is already trading at a tiny fraction of the latent value of its lead clinical candidate oliceridine (TRV130), indicated for acute pain.
Now what: While this news is certainly disappointing, I think this double-digit drop is largely unwarranted due to the fact that oliceridine is currently entering two pivotal stage trials that are expected to produce top-line data early next year. The long and short of it is that Trevena has a decent shot at garnering its first regulatory approval in the not-so-distant future, especially in light of the drug's strong mid-stage results as a treatment for acute pain.
Aside from these upcoming clinical catalysts, investors should bear in mind that the acute pain market raked in $11 billion in sales in the U.S. in 2014, and there is a clear need for better treatment options. In other words, oliceridine is targeting a market that has the power to generate blockbuster-level sales figures.
Now, oliceridine would likely face stiff competition from Pacira Pharmaceuticals' (PCRX -1.54%) Exparel at the onset of its commercial launch, and potentially from Heron Therapeutics' (HRTX -3.77%) experimental stage drug, HTX-011, later down the road. After all, Exparel's sales are growing by double-digits right now, and the drug is set to enter the lucrative oral surgery market soon. On the bright side, Heron's HTX-011 appears to be at least a couple of years away from a potential commercial launch, given that the drug is only now entering a diversity of mid-stage studies.
At the end of the day, Trevena is undoubtedly a high-risk biotech play -- and its arguably even riskier following the failure of TRV027 in treating acute heart failure. That said, I think this small-cap biotech is worth keeping tabs on due to oliceridine's substantial value proposition.
