Though Trevena Inc (NASDAQ:TRVN) released positive Phase III trial data read-outs yesterday, shares are dropping 8% today. From the viewpoint of Aegis analyst Difei Yang, this is an “unwarranted “over-reaction” from the Street, and the stock should not have traded down towards 40%.
Therefore, the analyst maintains her confidence on the biotech firm and reiterates a Buy rating on shares of TRVN with a $14 price target, which represents a just under 258% increase from current levels.
What ultimately happened that sent the shares on a tumble despite solid clinical results? Yang underscores five key components at play: “(1) the lowest dose 0.1 mg did not prove non-inferiority to that of morphine; (2) on the safety side, improvements on the respiratory and nausea/vomiting measurement did not show statistical significance to that of Morphine; (3) investors may think that the current data set points to an Oliceridine that has no commercial value proposition relative to that of morphine. This could lead to slow market adoption; (4) the company may need a capital raise before the NDA is accepted. If a capital raise is completed with current share price, this may lead to excessive dilution; (5) the Athena open label study may be a little behind schedule which puts further pressure on cash runway of the company.”
However, for the analyst, most important of all will be for the firm to generate sufficient data to file an NDA by the fourth quarter of this year, once the Athena Trial ends. “While the available clinical data does not represent a home-run scenario, we believe available data (both efficacy and safety) can still allow Oliceridine to be a niche player in a big morphine market. […] We would be buyers of the stock on share weakness,” Yang concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate, four-star analyst Difei Yang is ranked #805 out of 4,490 analysts. Yang has a 45% success rate and earns 5.6% in her annual returns. However, when recommending TRVN, Yang faces a loss of 34.4% in average profits on the stock.
TipRanks analytics demonstrate TRVN as a Strong Buy. Out of 7 analysts polled by TipRanks in the last 3 months, all 7 are bullish on Trevena stock. With a return potential of nearly 183%, the stock’s consensus target price stands at $12.14.