Spooked Investors Send Trevena Inc (TRVN) Shares Spiraling; Here’s Why

TRVN logoTrevena Inc (NASDAQ:TRVN) shares are tumbling nearly 16% to $1.98 in after-hours trading Wednesday, after the biopharmaceutical company announced that the development of its early stage candidates has been suspended and the company’s workforce was cut by 30%. As part of this, chief scientific officer Michael Lark will depart the Company in mid-December.

As part of its strategic repositioning, Trevena will shift its focus on the potential approval and commercialization of OLINVO™ (oliceridine injection) in the United States.

The Company estimates this reduction in force, along with other cost savings initiatives, will reduce cash expected to be used in operating activities over the next three calendar years by approximately $40 million. The Company also expects to incur a charge in the fourth quarter of 2017 of approximately $2.0 million related to the reduction, of which approximately $1.7 million is a cash charge relating primarily to severance costs and related expenses.

Trevena CEO Maxine Gowen commented, “After a thorough review of our portfolio, we have decided to reduce our capital needs and focus our resources on the future approval and commercialization of OLINVO, which we believe will be an important new option for physicians and patients.  As part of this plan we made the very difficult, yet necessary, decision to reduce our work force.”

The Company also announced that the New Drug Application for OLINVO remains on track for submission to the U.S. Food and Drug Administration this month. In addition, the Company continues to expect to report data later this year from the ongoing Phase 1 study of TRV250. Additionally, the Company expects to report cash, cash equivalents and marketable securities as of September 30, 2017 of approximately $76.7 million, which the Company expects will be sufficient to support operations into the fourth quarter of 2018.

On the ratings front, TRVN stock has been the subject of a number of recent research reports. In a report issued on August 3, Oppenheimer analyst Derek Archila reiterated a Buy rating on TRVN, with a price target of $8, which represents a potential upside of 225% from where the stock is currently trading. Separately, on the same day, Cowen’s Ritu Baral reiterated a Buy rating on the stock and has a price target of $10.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Derek Archila and Ritu Baral have a yearly average loss of 11.5% and a return of 22.9% respectively. Archila has a success rate of 35% and is ranked #4489 out of 4696 analysts, while Baral has a success rate of 52% and is ranked #86.

Sentiment on the street is mostly bullish on TRVN stock. Out of 5 analysts who cover the stock, 5 suggest a Buy rating . The 12-month average price target assigned to the stock is $9.00, which represents a potential upside of 266% from where the stock is currently trading.

Trevena, Inc. is a clinical stage biopharmaceutical company. It discovers, develops and intends to commercialize therapeutics that use a novel approach to target G protein coupled receptors. The company product pipeline consists of TRV027, TRV130, TRV734, and Delta Opiod.


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