Here's Where The Real Value Is In Trevena Inc (NASDAQ:TRVN)

A couple of weeks ago, Trevena Inc (NASDAQ:TRVN) announced that it was cutting its workforce by around 30% and repositioning itself to focus squarely on its lead development asset – a drug called Olinvo.The company was trading for around $2.30 a share when the announcement hit press and markets have responded to the news relatively negatively, trading down to current levels in and around $1.47 a piece.That's close to 40% dip on the update. TRVN Daily ChartThese sorts of restructuring type events are generally an indication that a company is struggling and – as a result – will often imply near-term weakness. In some instances, however, these implications are far less concrete and – when this is the case – there can sometimes be an opportunity rooted in picking up an exposure as share prices are depressed.So is that the case here?In a word, maybe.Trevena is trying to develop the above mentioned Olinvo in a target indication of pain management. It's being billed as an alternative to treatment with traditional opioid-based treatments but without the side effects commonly associated with the latter. When a patient takes opioids for pain management, the active compound of the treatment bins to opioid receptors on the cell membrane to stimulate analgesia. The analgesia comes about through the activation of what's called the G protein pathway. At the same time, however, opioids stimulate the activation of something called the B Arrestin pathway, which results in the adverse effects of therapy – things like morphine-induced constipation, respiratory depression, and analgesic tolerance.With Olinvo, the drug is designed to stimulate the activation of the G protein pathway but not the B Arrestin pathway, meaning it should (theoretically) bring about the analgesic effects of an opioid but with the adverse effects of the latter.If this proves to be the case, it could be a real game-changer in a sector that desperately needs an overhaul.So this program and, specifically, two phase III trials that were set up to demonstrate the above-discussed mechanism of action, are what underpin the company's current valuation – for the most part.If the FDA does approve the drug in a pain management indication (and the data was strong in both trials, suggesting there's a real chance that it will do), there's a billion dollar market for the company to go at; one that could drive substantial upside revaluation of the company's market capitalization in a very short period of time.So what are we looking at in terms of catalysts and development advance related to this program?Back in August, Trevena management outlined its plan for regulatory submission in the US. The company is going to make a bid for commercialization by way of a New Drug Application based on data from the above-discussed trials and – as per the August communication – expects to submit the NDA for the target indication at some point during September or October 2017. Of course, we're now heading into the close of October, so it's looking like this target submission period was a bit far-fetched, but we should definitely see a submission before the end of November.This submission is an immediate upside catalyst, with a particular focus on the agency's initial response (i.e. the acceptance of the application for review and the subsequent setting of a PDUFA date for the drug).Cash on hand isn’t particularly strong – at least not in terms of what's going to be needed to fund a commercialization strategy – reported at about $14 million at the end of the second quarter this year. This means there's a chance we'll see some degree of dilution ahead of the FDA's decision hitting press next year.It's not prohibitive to an exposure, but it's a potential risk factor that should be kept in mind.We will be updating our subscribers as soon as we know more. For the latest updates on TRVN, sign up below!Image courtesy of Kurtis Garbutt via FlickrDisclosure: We have no position in TRVN and have not been compensated for this article.