What: Shares of the clinical-stage biotech Trevena (NASDAQ:TRVN) 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' (NASDAQ:PCRX) Exparel at the onset of its commercial launch, and potentially from Heron Therapeutics' (NASDAQ:HRTX) 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.

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.