Trevena, Inc.

Trevena, Inc. (NASDAQ: TRVN) is a biopharmaceutical company, which focuses on the development and commercialization of novel medicines used for the treatment of central nervous system (CNS) disorders. The Company has one approved product in the United States, OLINVYK® (oliceridine) injection, used for the treatment of severe acute pain in adults.

Key Highlights:

• Positive technical indicators: The TRVN stock closed above the 30-days and 50-days simple moving average (SMA), while 14 day RSI is hovering at 51.96, with a bullish bias.

One-year technical Price chart

• Operation Update: On June 16, 2021, the company resumed its study for TRV734, the Company’s novel mu-opioid receptor selective agonist, which was paused earlier in March 2021 due to the global COVID-19 pandemic. The TRV734 is intended to improve the tolerability of the patients suffering from opioid use disorder as per the current standard of care. Additionally, the group has collaborated with the National Institutes of Health (NIH).

• Pipeline: The company has an innovative product pipeline of the following products:

1. Novel CNS - Targeted for the treatment for acute migraine, diabetic neuropathic pain, epilepsy, opioid use disorder.
   • TRV027 – Intended to cure Novel MOA to treat COVID-19 acute lung injury / abnormal clotting.
   • The company is also developing a novel sphingosine-1-phosphate (S1P) receptor modulator, TRV045, which is a non-opioid treatment used for various central nervous system (CNS) disorders.

Q1FY21 Financial Highlights:

• TRVN announces its quarterly result, wherein the company posted total revenue of USD 0.209 million.
• Total operating expenses stood at USD 10.167 million, higher than USD 5.823 million in pcp. The surge was primarily due to higher general and administrative costs coupled with higher research and development expenses.
• Loss from operations extended to USD 9.958 million, from USD 5.823 million in pcp, due to higher operating expenses.
• The group reported a net loss of USD 9.842 million, as compared to USD 5.725 million in pcp.

Q1FY21 Income Statement Highlights (Source: Company Report)

Risks: The company’s product pipeline is subject to regulatory approval which is a time-consuming process. Moreover, any negative outcome from the trials would affect the business prospect.

Stock Recommendation:

The company is conducting studies on TRV734 and is yet to be approved by FDA for distribution in the US. Moreover, the timing of the approval would depend upon the clinical results. The product pipeline of the company is impressive and would cater to the COVID 19 patients, which is a key positive and offers ample opportunities if the company received approval for its products.  On the valuation front, the stock is available at an EV to Sales multiple of 12.0x on an NTM basis compared to the industry (Biotechnology & Medical Research) median of 14.3x. Considering the aforesaid facts, we recommend a ‘Hold’ rating on the stock at the closing price of USD 1.91.

One-Year Technical Price Chart (as on June 24, 2021). Analysis by Kalkine Group

Moleculin Biotech Inc

Moleculin Biotech Inc (NASDAQ: MBRX) is a clinical-stage pharmaceutical company with its focus on the treatment of highly resistant cancers and viruses through the development of its drug candidates.

Key highlights

• Enrolled and Dosed in Phase 1b/2 Clinical Trial of Annamycin: The company recently reported that the first subject in its Phase 1b/2 clinical trial investigating Annamycin for the treatment of soft tissue sarcoma (STS) lung metastases has been enrolled and dosed. The Phase 1b/2 trial is a multicenter, open-label, single-arm research in the United States that would assess the maximum tolerated dosage (MTD) or recommended Phase 2 dose (RP2D) and safety of Annamycin in Phase 1b, and then investigate the effectiveness of Annamycin as a single agent in Phase 2.

• WP1122 showing superior efficacy over 2-DG against SARS-CoV-2: WP1122 has shown greater efficacy against SARS-CoV-2 in vitro and in numerous animal tumor models, but it has yet to be tried in people. Furthermore, the company believes that the improved drug-like properties of WP1122 may allow it to outperform 2-DG in COVID-19 patients and may provide the opportunity for it to become an important drug to potentiate existing therapies.

• Rich product pipeline: The Company holds three core technologies, which has rich pipeline of drug candidates in development, including AML Combo with Ara-C, which would initiate Phase 2 trial in H2 FY2021. Besides this there are many products at different stages of trials. The table below reflects the products at different stages.          

Source: Company

• Prices are sustaining above the rising trend line: On the daily price chart, prices are taking the support of rising trend line at USD 3.56 level, which reflects upside momentum. Moreover, the prices are trading above the 50-day simple moving average, which may act as a crucial support zone in medium term. The momentum oscillator RSI (14-period) is hovering at ~57.5 level, which supports bullish momentum for the stock. However, the stock may face a resistance around USD 4.46 level in the near term.

Financial overview of Q1 2021 (in thousands of USD)

Source: Company

• The company did not realize any revenues in the reported period.
• In Q1 2021, the company’s total operating loss increased to USD 6.0 million against USD 5.0 million in the previous corresponding period. The increase in loss was mainly due to higher R&D and G&A expenses, related to increased clinical trial activity and costs related to manufacturing of additional drug product.
• Net loss stood at USD 4.4 million against USD 1.2 million, partially offset by gain from change in fair value of warrant liability.

Risks associated with investment

The Company is an early stage and emerging growth company (EGC) and has not generated any revenues to date. As such, it is subject to all the risks associated with early stage and emerging growth companies. Since inception, the Company has incurred losses and negative cash flows from operating activities. Additionally, any delays in completing its clinical trials would increase costs, slow down their product development, timeliness and approval process and would further delay its ability to generate revenue.

Stock recommendation

In Q1 2021, the company continued to make significant progress on multiple fronts. Importantly, it is equipped with the resources to advance its portfolio of drug candidates across several oncology indications and viruses. On the clinical front, the group would be going through seven clinical trials this year, including investigator sponsored trials, which is a key positive. The Company's income depends upon the results of the clinical trial and the subsequent approval of trials. There is a chance of cancellation of the drug approval, which might result in the commencement of new clinical activities and require more funds and delay the launch's timeline. Furthermore, the management has stated that they anticipate incurring operating losses for the next few years. Based on technical analysis, the stock has support at USD 3.15 level. On the valuations front, the stock is trading at TTM P/BV multiple of 1.2 as against the industry (Pharmaceuticals) median P/BV multiple of 2.69. Hence, considering the current trading levels, decent outlook and the key risks associated with the business we recommend "Speculative Buy" rating on the stock at the closing price of USD 3.85 on June 24, 2021, with lower double digit upside potential.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock if the price closes below the support level.

One-Year Technical Price Chart (as on June 24, 2021). Analysis by Kalkine Group

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

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