Trevena – Late stage innovation flying under the radar

Post-surgical pain is not the first indication people think about in the context of innovative drugs. From an investor standpoint, pain in the acute care setting is perceived as a temporary, symptomatic hospital-related issue with a poor value proposition. Some may even claim the unmet need is limited given available treatments (especially opioids). This is demonstrated by Trevena’s (TRVN) modest market cap ($264M) despite a positive clinical signal, an ongoing phase 2b and a potential FDA approval within three years.I believe that Trevena’s current valuation undervalues the commercial opportunity and the need (both medical and commercial) for better post-surgical pain solutions. Trevena’s lead program (TRV130), which represents a scientifically innovative approach for an old target, already generated preliminary clinical proof of concept that supports the company’s hypothesis. Pending validation in P2b later this quarter, TRV130 may emerge as a best-in class opioid with a ~$2B potential globally.

Post-surgical pain is a lucrative market (ask Pacira)

Pacira’s (PCRX) is one the few successful post-surgical pain stories based on a strong launch and a market cap of $2.25B (after a 50% drop this year). Its marketed product, Exparel, is a sustained release version of a generic analgesic (bupivacaine) which is injected locally at the surgical site to provide sustained pain relief. Exparel’s primary selling point is its ability to substitute opioids,   which are very effective but are typically reserved as a last resort due to side effects (respiratory depression, drowsiness, vomiting, and constipation) and related complications.

Ultimate goal is minimizing opioid use

The primary motivation behind drugs like Exparel and TRV130 is the problematic safety profile for opioid drugs (e.g. morphine). When used, opioids are carefully managed by doctors who have to balance between safety and efficacy, especially in high risk populations. From a cost perspective, opioid use leads to increased cost due to longer hospitalization and a higher risk of complications.

Pacira’s claim to fame, which is supported by multiple studies, is the ability of Exparel to reduce opioid use in patients who undergo surgeries like knee replacement, colectomy and hemorrhoidectomy.  While Pacira tries to minimize opioid use, Trevena tries to replace opioids with TRV130, which activates the same target opioids do (μ-opioid receptor) but in a more selective manner. The scientific rationale is activating a certain component of the receptor in a more selective way which may translate to a better clinical profile (better efficacy with a similar side effect profile or similar efficacy with a superior side effect profile). In other words, TRV130 may be the first opioid that uncouples some opioid-related side effects from the analgesic effect.

It is important to note that even when Exparel is used, a significant portion of patients require opioids to treat post-surgical pain so the market for a better/safer opioid definitely exists.

Clinical data – Impressive efficacy but open questions regarding tolerability

TRV130 was tested in a P2 bunionectomy study where the drug demonstrated quick and profound pain reduction that was superior to morphine. The graph below presents TRV130’s effect on pain as reported by patients (on a 0-10 scale). Patients started the trial with significant pain intensity (~7, with 10 referred to as “worst pain imaginable”). TRV130 demonstrated an immediate and dose-dependent reduction in pain score with a striking 5.5-point reduction for the highest dose. The two highest doses had a statistically significant improvement over morphine, which reduced pain intensity by only 2 points.


Source : Company presentation

The company did not present the complete safety data but disclosed “trends towards better safety than morphine with similar tolerability”. The safety endpoint was respiratory depression, which appears numerically better (but is this statistically significant? See figure below). Tolerability probably refers to classic opioid-related side effects (nausea, drowsiness, vomiting). The company did not break down side effects for the different doses, so it is not clear whether “similar tolerability” refers to the pooled data or the higher doses. There is always a concern that TRV130 is not differentiated from morphine and that the efficacy advantage came at the expense of lower tolerability (which can also be achieved with higher doses of opioids on the market). Although it is reasonable to expect high doses of TRV130 to lead to more adverse events, what matters is finding a dose with a clear advantage over morphine.

Respiratory depression

Source : Company presentation

Significant commercial implications for hospitals

US hospitals are evaluated by the HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) survey based on patient feedback. The scores, publicly available on Medicare’s website (see link), influence patient preference as well as overall reimbursement programs.

Importantly, pain control is the only clinical metric surveyed by the HCAHPS questionnaire (the rest of the questions are about quality of service and communication with caregivers). This makes pain control a crucial element in hospitals’ reputation with a direct impact on commercial performance via patient preference and reimbursement. Therefore, a drug that can deliver superior pain reduction even with a similar adverse event profile may still experience broad adoption by hospitals.

Upcoming P2b catalyst

Later in the quarter, Trevena will report results from a phase 2b abdominoplasty trial in 200 patients. The study will compare TRV130 to morphine or placebo but instead of using fixed doses, the drugs will be administered via patient controlled analgesia device (PCA). An advantage over morphine in pain management or safety profile should justify advancing to phase 3.

The trial also exemplifies the short development timelines for drugs used in the acute care setting. Trevena initiated the trial in December 2014 and expects to have top line results in ~9 months. If P2b data are positive, confirming them in pivotal trials could take less than a year.

Portfolio updates

We are selling our position in Incyte (INCY) for a profit of 1994%. Although Incyte is a great company with multiple high quality assets, it is hard to justify a $21B valuation based on its existing pipeline.

biotech portfolio - after changes - 19-7-2015biotech etfs - 19-7-2015

76 thoughts on “Trevena – Late stage innovation flying under the radar

  1. Ohad,

    FMI just released Q2 results and they lowered the guidance, seems the stock will keep dropping for a while. Do you have any plan to cut the hold? The management team looks very incompetent since they did really bad job after Roche’s offer.



  2. Hi Ohad,

    What’s the investment thesis behind OCAT. Any specific catalyst you have in mind and are holding into? They did an awful offering recently and the price action has been atrocious.


  3. Hi Ohad,

    Galapagos (GLPG) just announced excellent 24 week darwin1 results for filgotinib. Within 2 weeks darwin2 results will follow. Abbvie will decide within 8 weeks if they take the license. Also this year CF and Crohns results. Imo it all looks very good, what’s your opinion?


  4. Ohad,

    Your thoughts on extreme sell-off in ESPR would be appreciated. Do you believe such a low ($1.4 MM) market cap may attract suitors before PIII program defined?



  5. Ike (ESPR) – I am not optimistic about CETP inhibitors and believe ATP citrate lyase is a more validated approach.

    dan (ESPR) – Still didn’t have a chance to listen to the webcast but so far the data set looks good, another trial with 20%+ LDL reduction in another patient population. Yes I plan to add on the portfolio update on Sunday.

    Cloud (FMI) – Very disappointing execution, their business looks very weak vs. what one would expect based on the Roche validation and the shift towards personalized medicine. (e.g. LOXO). Will listen to the call before making a decision.

    Alex (OCAT) – The next clinical update will be in Q2 with 3-month data from te first cohort in the Dry AMD study.

    Bert (GLPG) – Agree, results look solid. Very curious to see the full safety profile for the 100mg BID cohort.

    Cloudy (FLXN) – I like the story, they had good P2 data and just completed enrollment in the osteoarthritis P3. ARRY also validated the target (p38) with its systemic drug so the odds look good.

    Steve (ESPR) -I don’t anything material has changed due to the PCSK9 label debate, the value proposition for an oral drug with a novel MOA and 20%+ LDL reduction is still significant IMO. I plan to add more on Sunday. My guess is that an acquisition will take place only after minutes from the end of P2 meeting (September) but it’s hard to predict.




  6. Hi ohad
    what is your take on $ESPR, 30% down, PCSK9 just approved, excellent ph2b results declared july 28, CETP inhibitors in question, good p/n or b/o asset, good safety profile, good attractive price point.


  7. OUCH with FMI! Wish I could go back a few months and sell at that $50 share price. What are your thoughts after listening to the Q2 CC? I wonder if Roche is dumping share in the open market…


  8. Chris/Dan,

    I’m very upset about FMI too. I guess they don’t care much now since majority shares of management already dumped at $50 a few months ago. Very regret didn’t do the same thing in April 😦



  9. FMI and what to do…..
    As Alex said is this the biotech life,not many options at hand, you dump it and wait to see what happens or stay in and hope for the best.
    Myself took the first path.


  10. Alex –
    (STML) – Nothing I know of. Their P2 is open label so perhaps they are seeing disappointing results but that’s pure speculation.

    AAVL – I would wait as it looks like there is no deal with REGN.

    ryan (ESPR) – I bought more yesterday and plan to add to the portfolio on Sunday’s portfolio update. The bull case for ETC-1002 (oral, new MOA, LDL+ CRP effect) remains intact and so are risks (especially long term safety).

    Re: FMI – OUCH indeed! This is the worst execution I’ve seen in a long time. For now I plan to hold, valuation is low considering the potential from AGIO and CLVS for their companion Dx.



  11. Hey Ohad
    Any thoughts about kbio’s chances with the anti-epha3 program chances in the ph2 readout? The company market cap is just $8M… With $30 million in cash, no debt. It looks ridiculous. Nobody seems to give it any change? What is your take on this target and the chances of this program? if you could please give me your point of view? They have an interim Ceo, and have yet to recruit somebody permanent to the post. Two of their non-oncology programs failed to meet endpoints and were shut down in the past 12 months… Thus the lack of credibility, I suppose.
    Thanks a lot


  12. why do you say “AAVL it looks like there is no deal wit REGN” what indications do you see to think so? BTW, today was 6% up


  13. Hi Ohad,
    Congrats for your excellent blog. Very helpful and informative!!

    In your answer to Toby you say:
    “Toby (LOXO/ARRY) – It is hard to quantify ARRY’s exposure to LOXO (they have equity as well as royalty stake but I don’t think this has been disclosed. In retrospect ARRY made a mistake selling the Trk program, which was fairly advanced at the time.”
    Well, we do have some info (from Array`s website):

    Loxo will fund Array’s research and will be responsible for target selection and conducting clinical trials. Array is eligible to receive up to $435 million in milestone payments and to receive royalties on sales of any resulting drugs. In addition, Array received an equity position in Loxo Oncology. – See more at:


  14. lgonber (AAVL) – I conclude that based on the CEO resignation. If they were working on a deal the CEO wouldn’t have resigned imo.

    Peter (LOXO/ARRY) – Thanks. From what I saw they didn’t specify actual numbers so it is hard to value their exposure to LOXO’s programs.



  15. Hi Ohad Hammer, I am relatively of new to the biotech stock industry, but I am a doctor in training. I was wondering if you had any good stocks that I should research and possibly open a position in. I see you invest in my type of companies and sharing your expertise with me would really help me out, I am planning on writing an article about the science of the product. Thanks!



  16. TRVN data came in earlier than expected and positive on all metrics other than matching morphine efficacy for pain relief. I assume TRV-130 needed to beat out morphine on pain relief or safety but not both. Fr pr: “markedly improved safety and tolerability profile” comparred to morphine.


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