Trevena (NASDAQ:TRVN) and Array Biopharma (NASDAQ:ARRY) investors could be celebrating soon enough, should these two drug makers achieve that triumphant FDA approval at the close of a winding biotech road. Between Trevena’s opioid asset oliceridine, designed as an intravenous treatment of severe acute pain, and Array’s BRAF-mutant melanoma combination therapy candidate encorafenib + binimetinib getting close to final FDA verdicts, two bulls at Cowen are out shedding light on the opportunity ahead. By Cowen’s bet, these drug makers are steaming ahead to stamps of FDA approval.
Let’s dive in:
Trevena: A Small-Cap Biotech Stock With Big Catalysts
Trevena is eyeing a prospective FDA nod come its PDUFA date set November 2nd for moderate to severe acute pain management drug oliceridine. As of January, the FDA accepted this biotech player’s NDA for oliceridine, which is the first G protein biased ligand of the MU receptor created to offer IV opioid pain relief with less correlated adverse impacts- from the common and less serious effects of nausea and vomiting to the rare and perilous effect of respiratory depression. Before the PDUFA will come an AdCom sometime potentially in September. With a DEA scheduling of controlled substances often due in the span of 90 days of a green light, the TRVN team is calling for a commercial launch in the U.S. in the first quarter of next year.
Top analyst Ritu Baral at Cowen believes the spotlight here for TRVN moving forward will be on “differentiated safety at AdComm and on label,” but she sees a pain management asset tracking for a win in November.
Ultimately, “We expect a positive outcome from the meeting and anticipate broad indication for oliceridine. We anticipate a significant point of discussion of the panel will be the differentiated safety profile of oliceridine, particularly strong trends in the Phase 3 dataset that suggest improved respiratory safety (as well as stat sig improvements in GI tolerability). We think positive discussions and conclusions from the panel could be a major driver for TRVN shares,” Baral surmises, liking the odds on oliceridine’s approval.
As such, the analyst maintains an Outperform rating on TRVN stock with a $10 price target, which implies a nearly 459% upside from current levels.
Keep in mind, the company seeks alliances for its pain management asset, and newly walked into license deals with Pharmbio Korea and Jiangsu Nhwa Pharmaceutical in China. This international partnership offers the company both short-term capital while also driving long-term gains, the analyst cheers, adding: “Both companies have a strong track record of developing and commercializing products for anesthetics and analgesics in their respective geography’s hospital market.”
Under the terms of the agreement, Pharmbio Korea will pay $3 million in an upfront payment coupled with milestones as well as tiered royalties on product sales from high single digits to 20%. Jiangsu Nhwa also will shell out an upfront payment of $2.5 million along with a $3.0 million milestone payment once oliceridine wins an FDA nod. Moreover, Jiangsu Nhwa will pay further commercialization milestones as well as 10% royalties on every product sale in China.
“We believe the partnership is critical as it provides the much-needed cash for TRVN and supports long-term growth for oliceridine ex-US. The company remains in active discussions for additional oliceridine licensing both in the US and ex-US, which could meaningfully impact cash runway. Potential US partners probably wait until after the PDUFA date to avoid approval risk,” continues Baral.
Ritu Baral has a very good TipRanks score with a 58% success rate and a high ranking of #21 out of 4,819 analysts. Baral yields 37.9% in average profits on the stock. However, when recommending TRVN, Baral forfeits 36.6% in average profits on the stock.
TipRanks indicates a strong bullish consensus backing this biotech player. Out of 3 analysts polled in the last 3 months, all 3 are betting bullish on Trevena. With a monster return potential of nearly 310%, the stock’s consensus target price stands tall at $7.33.
Array BioPharma Boasts “Underappreciated” Commercial Potential
Array BioPharma and its partner privately-held French biotech firm Pierre Fabre just posted data exhibiting that their combination therapy practically circles twice over the survival in BRAF-positive melanoma against the Roche drug Zelboraf (vemurafenib). The data unleashed from the pivotal Phase III COLUMBUS study reveals that when patients took a combination of encorafenib 450mg daily and binimetinib 45mg twice daily, overall survival reached 33.6 months, much higher than the 16.9 months seen for patients who took Zelboraf as a monotherapy. The combination appears to be mostly well-tolerated by patients, encouragingly.
Notably, New Drug Applications are under review by the FDA to give a window to the utilization of a one-two combination punch of encorafenib and binimetinib in treating patients with BRAF-mutant advanced, unresectable, or metastatic melanoma.
After hosting a conference presentation, Cowen analyst Chris Shibutani shares his bullish takeaways on the drug maker. Specifically, the analyst takes in stride that the team indicated “confidence in their preparedness for the anticipated commercialization of BRAFTOVI (enco) and MEKTOVI (bini) combination in BRAF+ melanoma.” After all, pre-commercial endeavors are tracking with encouraging pacing, with the ARRY management team having just unleashed brand names BRAFTOVI for encorafenib capsules and MEKTOVI for binimetinib tablets. Shibutani sizes up ARRY’s BRAFmutant melanoma candidate raring to launch as soon as it scores a win on its June 30th PDUFA date.
Therefore, the analyst reiterates an Outperform rating on ARRY stock with a $19 price target, which implies a 15% upside from current levels. (To watch Shibutani’s track record, click here)
Meanwhile, Shibutani sees BEACON enrollment momentum rolling forward with enticing prospects for “more refined completion timelines” compared to the present guide calling for the year-end of 2018. This drug maker’s opportunity is undervalued, as far as Shibutani is concerned: “Potential in 1st-line settings for both BRAF+ CRC and MSS CRC with bini +MRK’s PD1 combo underappreciated in our view.”
“Management highlighted key hires including head of Medical Affairs who joins from Novartis. Outside the US, ARRY commented that their partner in Europe, Pierre Fabre, in addition to having a presence in oncology, has a relevant franchise in the dermatology market, as well,” adds the analyst.
When glancing at the BRAF-mutant melanoma commercial prospects at play, the analyst runs the numbers for a domestic market for BRAF/MEK inhibitors presently annualizing at a $400 million run-rate- and nearing $1 billion globally. The ARRY team recognizes opportunity for further market gains, especially generated on back of unit growth, with the analyst drawing attention to market leader Novartis’ current almost 90% share along with ARRY. Moreover, ARRY management spots prospects for longer duration of use, particularly considering the “relatively more favorable tolerability profile of ARRY’s combination (versus the current extrapolated estimate of 4-5 months […]” notes Shibutani.
That said, based on the Cowen’s “Melanoma and Renal Cell Cancer” panels at the conference, the analyst notes that community oncologists especially will need “some time, building a base of experience with ARRY’s agents, essentially building empiric experience themselves with the profile of BRAFTOVI/MEKTOVI.”
In addition to musing as to how to calibrate a pricing formula, the ARRY team likewise is very aware of its prospects to tackle a meaningfully unmet need for patients in the 1st-line setting, the analyst explains, likewise drawing note to the “efficacy and tolerability profile demonstrated thus far.” Bottom line, this drug maker has strategic standing to “capitalize” on MEK+IO combinations coupled with multiple collaborations.
TipRanks suggests the bulls win out on consensus opinion circling ARRY stock’s prospects, with all 4 analysts polled in the last 3 months rating a Buy on the biotech player. The 12-month average price target stands at $20.33, marking a healthy upside potential of 23% from where the stock is currently trading.