We are long, Trevena (TRVN).
I’ll admit it. I love a biotechnology company whose scientific cofounder also happens to be head of Investor Relations – Jonathan Violin, Ph.D. It doesn’t get any better than that!
Now, the last time I pounded the table on behalf of Trevena it was a quarter-billion dollar market-cap that has since more than doubled at the completion of the TRV130 Phase-2 abdominoplasty trial. Many would-be investors view an exponential rise in value as a one-time phenomenon subsequently exiting their positions with a hefty profit. And, there’s nothing wrong with that! Additionally, there’s been a recent slump in the stock price that I’ll try to lend some context to at the end of this article. But TRV130, now commercially named Oliceridine, isn’t the only blockbuster compound in Trevena’s stable of assets undergoing a catalytic Phase-2 study.
TRV027, prior to the hoopla surrounding Oliceridine, was Trevena’s lead therapeutic candidate in that it was partnered with Allergan who still holds an option to move the drug through to commercialization. Though the company’s fortunes have turned remarkably for the better, the original terms of that option – $65M upfront, $365M in backend milestones and 10-20% sales royalties still seem generous enough. Trevena, however, is positioning itself to happily keep the compound given the company’s focus on becoming an emergent-care, drug-distributing powerhouse. Regardless, if for any reason Allergan were to pass on its option to partner TRV027, Trevena’s stock would suffer a perception setback until such time as the company meaningfully clarified the situation. Of note, a pass on Allergan’s option would likely come days, or even weeks, after topline data was released thereby negating any negative impact from a trader’s perspective. The important thing for you to keep in mind is that, like Oliceridine’s Phase 2 abdominoplasty trial, the BLAST-AHF topline readout will be impactful.
BLAST-AHF is Designed to Succeed
When I look to trade a stock, I carefully examine how a trial is constructed. By doing so, I can then determine how likely it will be to readout successfully. This is important because the headline furnished by the company conducting the trial has to be positive in order for the stock to appreciate, at least temporarily, in value. A good example of this was Cara Therapeutics (CARA) recent Phase-2a trial of CR845 in chronic pain patients suffering from osteoarthritis. It’s not hard to publish a glowing press release when your trial is examining 4 dose regimens without a control arm. The stock, however, popped as I predicted it would but not nearly as much as investors had hoped for – something I also predicted. You see, the larger investment community is wise to trial constructs and their implications.
The BLAST-AHF trial, on the other hand, has more to offer catalyst driven investors than any other Phase-2 trial currently in existence. I realize that’s a bold statement. But it isn’t predicated upon Trevena’s penchant for designing Phase-2 endeavors that pit their compounds against active control agents, or even upon the aforementioned reward tied to Allergan exercising its option. Rather, it’s based upon these three truths.
- The BLAST-AHF Phase-2 trial has already received positive, compound affirming, news.
- Trevena’s G-Protein Biased Ligand technology undergirding TRV027 has already received affirmation through Oliceridine’s success in a similar Phase-2 format.
- The numerous endpoints of this trial are not only immanently achievable but, even if only a few are met, the press release to convey topline results will likely be positive.
Consequently, what you’re about to read could put in you the driver’s seat of equity enrichment. I thought of submitting this article to Seeking Alpha for Pro publication but already know that the editors there won’t see the value intrinsic to this opportunity, or appreciate the keen insight driving my ideation, because it doesn’t fit their preconceived notion of what a Pro article consists of. Consequently, I’m publishing it here for free. Since my only goal is to enable retail investors to become successful, I no longer wish to place myself in situations where the frustration of educating those with fixed ideas subtracts from my enjoyment of doing so. It is my hope that eventually the editorial staff at Seeking Alpha will tire of depriving their Pro audience of truly actionable information if only because that information resides outside the walls of their captive thinking.
If there’s nothing else that I could communicate to you today, please take away this idea for your consideration: BLAST-AHF is constructed for success. You see, acute heart failure is a therapeutic landscape that hasn’t been properly surveyed. And because of this, it hasn’t been the subject of clinical trials with historically defined endpoints that can serve as comparators. Therefore, BLAST-AHF is, more or less, a grand experiment. In fact, any one of the following four composite study endpoints could be used as the primary endpoint in a pivotal study.
Dyspnea – difficulty in breathing characterized by shortness of breath and an overwhelming feeling of drowning.
Worsening Heart Failure While Hospitalized – a clinically assessed set of parameters.
Length of Hospital Stay – how many days until released both from intensive care and from the hospital itself.
30-Day Readmission and Mortality Rates – self explanatory.
Yes, BLAST-AHF is well constructed in that it’s double blinded, placebo controlled and very large – 620 patients. More importantly, though, it contains this multitude of actionable targets any one of which could be declarative of trial success. Additionally, it’s somewhat de-risked in two important ways.
- The G-Protein Biased Ligand Technology behind it has already been validated by Oliceridine’s notable success in Phase-2. It’s highly likely that Oliceridine in Phase-3 will continue to demonstrate the clinical benefits of being more powerful, safer and with fewer tolerability issues than standard of care morphine. This will enable wide-spread commercial adoption of Oliceridine in acute pain settings.
- The pre-specified interim analysis of TRV027 in the BLAST-AHF study not only identified the most promising dose – 5 mg, but also opened enrollment to more compromised patients. This wouldn’t have been done had there not been some tangible therapeutic benefit observed.
From the March 9th press release covering the results of the interim analysis, we have the following insights.
The purpose of the planned interim analysis was to qualitatively and quantitatively evaluate safety and efficacy data to determine how best to allocate future patients in the study to generate the most robust data. Upon reviewing the data, the data safety monitoring board (DSMB) and the BLAST-AHF Steering Committee recommended that future enrollment be weighted to the most promising dose of 5 mg/hr. Remaining enrollment will be weighted 2:1:2:1 for placebo, 1 mg/hr, 5 mg/hr, and 25 mg/hr, respectively. In addition, the DSMB and Steering Committee determined that patients with lower baseline systolic blood pressure could safely enroll in the study; inclusion criteria have been modified accordingly. As a result of the increased target enrollment, Trevena now expects to release top-line data in the first half of 2016.
Casual observers of this increase in patient participants probably came to the erroneous conclusion that the study wasn’t achieving statistical significance when, in fact, that likely had nothing to do with it. It was Allergan that chose to pay Trevena an additional $10M to not only allow patients with lower baseline systolic blood pressure to come on board, but to scrap the original plan to select and study only the most promising dose which turned out to be 5 mg in favor of continuing with the other dosing regimens.
What’s Up With The Insider Sale And Filing Of An S-3?
Well, I can’t be certain of that. And I’m not about to contact investor relations inquiring into the private business of any insider at Trevena in regard to selling their shares. That said, Chief Medical Officer David Soergel’s sale of 94% of his Trevana stock for a profit in excess of $287K wasn’t a promising sign. To jump to the conclusion, however, that it was a bad omen is equally erroneous.
The company curiously continues to carry a small amount of debt when it doesn’t have to which is confounding to me. And on December 14th filed an S-3 registering mixed shares of common and preferred stock, debt securities and warrants totaling some $250M. They also bolstered their stock purchase and sales agreement with Cowen and Company to the tune of $75M. I never like these latter arrangements which are almost always depressive to share price appreciation and, therefore, deleterious to retail shareholders.
The motivation to register these shares is somewhat, but not entirely, clear to me. They needed to replace the available shares for public offerings which were utilized in the aftermath of the Phase-2 Oliceridine trial success. And, if BLAST-AHF reads out well, something I’ve predicted, they will no doubt conduct yet another public offering to buffer themselves from an Allergan rejection. Doing so will allow Trevena to bring TRV027 to Phase-3 themselves or allow the company to negotiate a partnership with another interested party from a position of strength.
Additionally, these shares may be used to entice a partner for TRV734, Trevena’s chronic pain compound, by offering an ownership interest in the company. Though this is a long-shot, it isn’t entirely out of the realm of possibility as Trevena has stated a desire to enter into a developmental agreement. Trevena may also elect to use them in the furtherance of an ex-U.S. commercial partnership with respect to Oliceridine with options on further commercialized product candidates from their growing asset portfolio.
Always be well…
Additional disclosure: Any information or opinion expressed herein may not be true, accurate or correct and it does not constitute any suggestion to buy, sell, hold or adopt any investment strategy for this stock or any stock that may be mentioned. Reliance upon information in this article is at the sole discretion of the reader. The sole purpose of my article is to entertain by providing information, the accuracy of which is as good as the public sources it was derived from. Do not act on anything I have written. Rather, do your own due diligence and consult an investment professional before making any investment decision. Acting on what any one writer, including me has imparted to you is foolish at best. I have no better access to resources or gift of opinion formulation than you do. I sometimes make mistakes. There are a myriad of things, which can happen in lieu of any forward-looking statement I have made. Any stock featured or mentioned in an article I compose is subject to all manner of influences, which can change its value in dramatic fashion upwards or downwards. These events can be of a wide variety not limited to news-related occurrences, managerial decisions, trial failures, stock manipulations and so on. I make every effort to declare positions I have in stocks I cover or mention in an article but reserve the right to move in and out of said investments at my own discretion based upon the wisdom of doing so. I implore you to do your own due diligence, invest at your own considerable risk attaining the just reward your efforts have wrought.
As the few people who come up to my site already realize, I’ve had a strained relationship a good amount of the time with my editors at Seeking Alpha. Quite frankly, I’m a difficult person to work with because I have impossible standards for myself that bleeds over to unrealistic expectations of others.
Yesterday, however, Mike Taylor, Eli Hoffman, George Moriarty, Daniel Shvartsman and company did something truly heroic. They allowed me to speak openly within a published piece on Seeking Alpha about an added layer of due diligence I perform on most stocks I consider called a tarot card reading. This is no small thing. Many, if not most, people treat practitioners of tarot as if they were charlatans. Just as marginalizing are those who feign acceptance while insisting we not talk about it thereby keeping it in the closet.
Therefore, I wish to thank Mike, Eli, George, Daniel and anyone else who participated in that decision for their courage. I doubt seriously that anyone of them has an experience with this craft that would afford them the confidence in it that I possess, but that’s what makes their choice uncommon, and what makes me highly appreciative.
And I want to thank Mike Taylor, once again, for saving me due embarrassment by nixing the publication of my naïve submission on NovaBay recently. Due because I haven’t learned to stop falling for the nonsense that biotech executives habitually throw out there for gullible people like me to eat up. In this regard, and many others, I’m a total loser. Mike saved me from myself. And for that I’m grateful.
Always be well…