Trevena Inc

Trevena Inc (NASDAQ: TRVN) is a biopharmaceutical company. It focuses on the development and commercialization of novel medicines used for the treatment of central nervous system disorders.

Investment Rationale – Hold at USD 1.28

• Recently, TRVN initiated its ACTIV-4 Host Tissue trial for Covid-19.
• TRVN has increased its efforts to commercialize OLINVYK, used for the treatment of severe acute pain in adults.
• TRVN has several product candidates in the pipeline, including TRV027 for the treatment of acute lung injury that could be caused by Covid-19.
• On the liquidity front, TRVN’s quick ratio in Q2 FY2021 has been higher than the industry median of 3.94x.
• From a technical standpoint, 14-day RSI at ~37.44 is close to the oversold zone, indicating a potential uptick in the stock price in the near term.

Key Risks

• In H1 FY2021, two of TRVN’s largest customers accounted for the full product revenue, leading to high customer concentration risk for the Company.
• The sector is exposed to stringent regulatory requirements. Any failure to comply with them could lead to fines or penalties for TRVN.
• Any delay in the commercialization of products could lead to a significant cost overrun for the Company.

Financial Highlights (for three months ended 30 June 2021 (Q2 FY2021), as of 12 August 2021)

(Source: Company Website)

• Due to the increased commercialization activities for OLINVYK, selling, general and administrative expenses in Q2 FY2021 increased to USD 10.5 million from USD 3.3 million in Q2 FY2020.
• It resulted in an increase in the net loss. Net loss in Q2 FY2021 reached USD 14.0 million from USD 6.2 million in Q2 FY2020.
• The Company continued to raise capital through the issuance of equity. In Q2 FY2021, it raised USD 7.9 million by equity issuance.
• It led to a cash balance of USD 91.0 million in Q2 FY2021. However, it declined from USD 109.4 million in FY2020 due to significant operating expenses.

One Year Share Price Chart

(Source: Refinitiv, Analysis done by Kalkine Group)

Conclusion

Driven by vaccinations, the US market is gradually coming back on track, and the situation in international locations is also expected to improve. For the rest of FY2021, the Company would continue to invest in research and development and commercialization activities. The product pipeline of the Company is impressive and would cater to the Covid-19 patients. With substantial liquidity, the Company is ready for growth and weather any adverse impacts. The stock made a 52-week low and high of USD 1.15 and USD 3.40, respectively.

Based on the impressive product pipeline of the Company, its initiation of a new trial, and its favourable liquidity than the industry, we have given a “HOLD” recommendation on Trevena Inc at the closing market price of USD 1.28 (as of 13 August 2021), while we would revisit our stand based on further corporate announcements by the Company.

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

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