On Thursday, tiny King of Prussia, Pennsylvania-based biotech Trevena (TRVN) released the data from an Imperial College London trial involving 30 patients enrolled in the proof-of-concept study of its TRV027 treatment for hospitalized COVID-19 patients. “The results showed that TRV027 was well-tolerated and provided initial evidence of its potential to improve biomarker and clinical endpoints associated with COVID-19 disease severity and progression,” reported Trevena, and patients treated with TRV027 left the hospital on average 12 days sooner than patients who received only a placebo.
Upon hearing this news, investors bid up Trevena stock less than 1%. But at least one analyst was impressed.
Trevena is developing TRV027 as a treatment for Covid patients suffering from acute lung damage and/or abnormal blood clotting associated with COVID-19, and according to JMP Securities analyst Jason Butler, it’s a key reason why Trevena is likely to outperform the market over the next 12 months.
According to the analyst, yesterday’s data show a “92% probability that TRV027 has a potentially beneficial effect on D-dimer,” a biomarker indicating blood coagulation, and on reducing a Covid patient’s time in hospital. In the analyst’s view, this data is “clearly supportive of the program’s advancement” into larger trials, and a reason for “enthusiasm” about the stock — which Butler believes could nearly quintuple in price to $6 a share. Furthermore and beyond Covid, the analyst believes that the drug could prove useful in treating other, non-Covid diseases causing acute respiratory distress syndrome. (To watch Butler’s track record, click here)
Not everyone is as enthusiastic as Butler, however.
In a separate note discussing the same trial data, Oppenheimer analyst Jeff Jones agreed that the trial’s outcome was “positive” and said he was “encouraged by these results.” He also agreed that TRV027 could potentially have applications beyond Covid-19. Nevertheless, Jones left its mere Perform (i.e. Hold) rating on Trevena stock unchanged, and demurred from setting a price target on the $1.25-per-share stock.
As Jones explained, Trevena’s stock market valuation of just over $200 million remains “principally based on US sales of Olinvyk,” an opioid designed for acute pain management which accounts for the bulk of Trevena’s $3.5 million in annual sales. Olinvyk was launched just this year, so hasn’t had much time to grow its market yet. Still, Jones notes that “ongoing efforts to reduce opioid use [and] non-opioid competition [will] keep the overall injectable opioid market flat to lower in the near term,” limiting upside potential from that drug.
That leaves TRV027 to do much of the heavy lifting if this stock is to outperform. Problem is, currently investors seem to be assigning “limited value… to the pipeline” (including TRV027), says Jones. There’s a chance that could change as TRV027 will be part of a larger NIH-sponsored ACTIV-4 study, with data coming out in mid-2022, as well as a REMAP-CAP study of potentially beneficial Covid treatments being conducted in the UK. And there’s the potential Trevena could file a request for Emergency Use Authorization based on these data.
This is not certain to happen, however, and for the time being, Jones seems content to sit on the sidelines on this one. (To watch Jones’ track record, click here)
Overall, it seems the Street is on JMP’s side with this one. 4 Buys and 1 Hold assigned in the last three months to TRVN add up to a Strong Buy consensus rating. With a return potential of over 340%, the stock’s consensus target price stands at $5.5. (See TRVN stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
