I’m long SRPT and TRVN
Sarepta (SRPT) Just a few thoughts here. I’ll begin with Sarepta which has new briefing documents due by no later than Wednesday, April 20th. While there’s no guarantee that they’ll be revised it seems likely that they will be. Since the original briefing documents were published, Sarepta has submitted a rebuttal to the thoughts expressed by the agency in those documents and additional 6MWT data was also provided. The FDA received a letter authored by no less than 36 Duchene Muscular Dystrophy physician experts recommending conditional approval along with letters from both the U.S. House of Representatives and the U.S. Senate. This is a cumulative expression of political power and will directed at the agency that has not been focused in a similar manner before. What effect, if any, it has remains to be seen.
On April 24th, the greater DMD community will march on Washington D.C. in an historic rally on behalf of eteplirsen approval. There will be many speakers of note and several events including DMD patients participating in a 6MWT. How many of the still ambulatory Sarepta 12 will take part remains to be seen.
Then on Monday, April 25th quite possibly the biggest advisory committee meeting in the history of biotechnology will occur with Adam Feuerstein of The Street conducting his live blog of the event. Trading in Sarepta shares will be suspended after market close on Friday the 22nd and will likely resume at market open on Tuesday the 26th.
Because all of these calendar events are binary, I won’t be buying more Sarepta shares. I’m presently underwater on my Sarepta holdings by about 30%. I will, however, be holding my shares through April 25th whereupon I will reassess the idea of holding through the eteplirsen PDUFA date.
Trevena (TRVN) I’ve been regularly adding to my shares of Trevena Inc. in anticipation of the BLAST-AHF data which can come anytime in the Month of May. The company announced that it will be presenting that data set in Florence Italy, on Saturday, May 21st at the annual congress of the World Heart Failure Association of the European Society of Cardiology. While I’ve seen a biotechnology company make a similar announcement as a head fake to retail investors thereby allowing their near-proximity stakeholders an opportunity to flee, I don’t believe that’s the case here. Notably, the presentation will be made by G. Michael Felker, M.D., Professor of Medicine at Duke University Medical Center and co-chair of the BLAST-AHF Steering Committee. Since he’s close to the personal patient experience in this trial, and is travelling on the company dime, I see this as indicating that nothing negative is known at this time and that something positive is much more likely. That, however, is pure speculation.
It very well might be that if good data were generated especially in the 5 mg arm, then Trevena could wait until the afternoon of Friday, May 20th to make the announcement and follow that up with a conference call to discuss the results before market open on Monday, May 23rd. Should that be the case, you can look for Trevena shares to rise from between 50 and 100%. There will then be a waiting period of up to 2-weeks before we are told if Allergan (AGN) will exercise or pass on the TRV027 option. The implications surrounding this decision are binary as well. Allow me to explain.
Allergan will have 3 choices. The 1st, is to exercise the TRV027 option. This will include payment to Trevena of a $65mm option fee; $365mm in milestones; and 10 – 20% sales royalties. Obviously, news of this would stabilize Trevena shares well above what they currently trade for. The 2nd, would be to buy Trevena outright. While talk of buyouts is ludicrous at best, and harmful at worst, in this particular instance it isn’t all that crazy of a possibility. Allergan was thwarted in its recent aspiration to purchase Pfizer (PFE) and has money burning a hole in its pocket from the sale of its generic division to Teva (TEVA). Scanning about for valuable assets will reveal those positioned right beneath its nose. Trevena’s late stage asset, Oliceridine, is a potential blockbuster intravenous pain therapeutic and would be positioned beautifully with TRV027 as an emergent care product – easily marketed to roughly the same clients.
And finally, Allergan’s 3rd choice would be to walk away from TRV027. I want to emphasize that this could happen on good data or bad. There are many variables at play here including, but not limited to, how successful the therapeutic could be marketed if it should be approved. Make no mistake, news of an Allegan pass could prove to be devastating to Trevena because some degree of BLAST-AHF success is already built into the share price. How Trevena management handles this issue will determine how quickly the equity rebounds. I certainly hope that plans B, C, and D are already in place and ready to be implemented. Those could include partnering TRV734 – long the company’s intention; selling the company outright to another interested party; selling a TRV027 option to another big pharma partner; or simply going it alone with funds from an equity raise at the pinnacle of the share price rise on BLAST-AHF success.
The month of May will be pivotal for both Sarepta and Trevena. As with all nano-to-small-cap biotech you’re encouraged to recognize that your investment could be lost at a moment’s notice.
Always be well…
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