Analysts Dig Into Three Volatile Biotech Stocks: AcelRx Pharmaceuticals Inc (ACRX), Ardelyx Inc (ARDX), and Trevena Inc (TRVN)

Analysts are cautious to sure-fire confident on mover and shakers sending the Street into a frenzy today.


AcelRx Slammed with the Dreaded CRL

AcelRx Pharmaceuticals Inc (NASDAQ:ACRX) stock is getting walloped to the market floor today, losing over half in value, to the harsh tune of a 57% thunderclap. It was a rough day to be an AcelRx investor, considering its moderate-to-severe acute pain candidate Dsuvia was confronted with its first Complete Response Letter (CRL) from the FDA. The agency is asking for more data on 50 patients at the highest proposed Dsuvia dose along with a human factor trial to justify new directions for usage.

Cowen analyst Boris Peaker explains, “We continue to believe that Dsuvia and Zalviso’s risks are largely political,” reiterating a Market Perform rating on ACRX stock without listing a price target. (To watch Peaker’s track record, click here)

Peaker highlights, “At this point management does not know whether it already has the requested safety data on the 50 patients or if additional safety studies will need to be conducted. In terms of the Directions for Use, a human factor study is typically required when changes are made, and these studies are usually relatively quick to conduct. As such, we believe that the key limiting factor for resubmission will be the availability of the requested safety data and we anticipate and update on this on the 3Q17 earnings call. For the European filing, a CHMP opinion is anticipated in 1H18.”

So what’s next? “At this point the company doesn’t know whether the Dsuvia resubmission will receive a Type 1 or Type 2 review, and plans to meet with the FDA later this year to discuss the next steps. Additionally, management did not provide updated cash balance and guidance for expenses going forward, and we anticipate an update on this on the 3Q17 earnings call as well,” opines Peaker.

Worthy of note, the biotech firm’s second pain asset Zalviso also was hit with a CRL back in July three years prior. However, the ACRX team has plans to file the drug again by the close of 2018, which the analyst concludes could offer potential for approval come the back half of 2018.

Most voices are more confident than Peaker’s, with TipRanks analytics revealing ACRX as a Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 4 are bullish on AcelRx stock while 2 remain sidelined. With a return potential of 207%, the stock’s consensus target price stands at $7.10.ACRX analyst ratings chart

Ardelyx Brings a ‘Game-Changer’ to the IBS-C Patient Table

Ardelyx Inc (NASDAQ:ARDX) shareholders already were stoked in after-hours trading last night once the exciting second Phase III trial data read-out broke for tenapanor, designed to treat patients suffering from irritable bowel syndrome with constipation (IBS-C) attained not only its primary endpoint, but also every secondary endpoint, proving to be well-tolerated. Today, shares continue to zoom 48%.

Ardelyx Chief Executive Mike Raab took his drug maker’s results in stride as a real “game-changer” for the IBS-C arena. Though tenapanor once underwhelmed in a trial in the indication of chronic kidney disease (CKD), it seems that this “T3MPO-2 data could reset the valuation,” cheers Cantor analyst Mara Goldstein. The analyst is thrilled to see “lower risk” for ARDX revenue, rooting for tenapanor to carve out a “unique” opportunity.

With whispered hopes of a partnership for the IBS-C asset circling “on the horizon” coupled with prospects in indications such as opioid-induced constipation (OIC) and chronic idiopathic constipation (CIC) as well as clinical drivers, Goldstein eyes “opportunity for the valuation to expand.” Meanwhile, between hyperkalemia drug RDX7675, evaluating tenapanor in hyperphosphatemia, as well as IBS-C trial data waiting down the line, Goldstein is bullish on these future clinical catalysts to offer further upside potential to shares.

As such, the analyst reiterates an Overweight rating on ARDX stock while hiking the price target from $12 to $14, which represents a just under 77% increase from current levels. (To watch Goldstein’s track record, click here)

Goldstein asserts, “With positive T3MPO-2 results in IBS-C, we believe ARDX shares could gain back ground lost after the release of T3MPO-1, as data shows a path to NDA submission (expected in 2H18) and a commercial opportunity above the current valuation, in our view. This, combined with potential upside from trials in hyperphosphatemia and hyperkalemia (RDX7675), and possible partnerships, suggest to us that the shares have room to move up.”

It is no small victory that Ardelyx trounced investor expectations, and the analyst notes, “We believe the results are competitive compared to the currently approved therapies and should alleviate concern regarding relevance of the drug, in our view.”

Regarding tolerability, the analyst offers some context: “The rate of diarrhea in T3MPO-3 was 16%, numerically higher than T3MPO-1’s 14.6%, though we do not believe this will be an impediment to commercial success.” Goldstein underscores that with an NDA expected to be filed in the back half of next year and cash runway through the end of next year, though shares could face some pressure during this trajectory, once a partnership is nabbed, these overhangs could be resolved.

Ardelyx has one of the best ratings in the biotech sector. TipRanks reveals that ARDX has a Buy analyst consensus rating with 5 back-to-back buy ratings in the last 12 months. Meanwhile the average analyst price target of $16 suggests the stock still has upside potential of just over 7% from the current share price for the next 12 months.

Trevena Gets a Price Target Trim

Trevena Inc (NASDAQ:TRVN) investors are surely not amused today to find out the biotech firm has plans to restructure, an ominous word which entails saying adieu to 30% of its workforce. While the Trevena team hopes to use this refocus to ensure a prospective green light and maximize commercial potential for lead pain asset OLINVO (oliceridine), shares have been hit with a pullback today, crashing almost 15%.

Particularly, the restructuring also means a freeze on research in preliminary stages, which means no more attention paid to a series of novel S1P modulators designed to treat neuropathic pain coupled with acute migraine candidate TRV250. However, Trevena still plans to finish its ongoing Phase 1 study evaluating the compound, with data anticipated by the close of 2017.

Top analyst Ed Arce at H.C. Wainwright bears in mind that this restructuring has the “finish line” in mind and largely keeps his optimism on the pain drug’s commercial potential- even though he also cannot help asking, “but then what?”

In reaction to the news, maintaining a Buy rating on shares of TRVN while reigning in the price target from $8 to $7, which implies a just under 247% upside from current levels.

Arce writes, “Though TRV734 (an oral follow-on program to OLINVO) was not explicitly mentioned in the release, we expect its development is also paused. In addition, Trevena is cutting its workforce by about 30% (21 full time employees), mostly in research, including CSO, Michael Lark, PhD. This staff reduction is expected to result in a 4Q17 charge of about $2.0M (~ $1.7M cash), due to severance costs and related expenses. Importantly, the company announced that it expects to submit the OLINVO NDA this month, affirming prior guidance. Recall, OLINVO has been granted Breakthrough Therapy designation, so there is the possibility of an 8-month Priority Review, but we continue to model FDA approval in 4Q18.”

Overall, “[…] we believe the positive impact of higher OLINVO visibility through 2018 is likely to be largely offset by a potential financing overhang on the shares, as the drug may be granted U.S. approval just as the company would appear to be running out of cash,” contends the analyst.

Ed Arce has a very good TipRanks score with a 54% success rate and a high ranking of #104 out of 4,694 analysts. Arce realizes 33.2% in his annual returns. However, when recommending TRVN, Arce forfeits 35.2% in average profits on the stock.

Wall Street echoes Arce’s bullish sentiment on this pharma player, as TipRanks analytics exhibit TRVN as a Strong Buy. Based on 5 analysts polled by TipRanks in the last 3 months, all 5 rate a Buy on Trevena stock. The 12-month average price target stands at $8.38, marking a nearly 307% increase from where the stock is currently trading.