UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36193

Trevena, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)	26-1469215 (I.R.S. Employer Identification No.)

955 Chesterbrook Boulevard, Suite 110 Chesterbrook, PA (Address of Principal Executive Offices)	19087 (Zip Code)

Registrant’s telephone number, including area code: (610) 354-8840

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	TRVN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.


Common Stock, $0.001 par value	Shares outstanding as of May 11, 2023: 10,969,023

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, or this “Quarterly Report,” contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” but also are contained elsewhere in this Quarterly Report, as well as in sections such as “Risk Factors” that are incorporated by reference into this Quarterly Report from our most recent Annual Report on Form 10-K, or the “Annual Report.” In particular, we caution you that our forward-looking statements are subject to the ongoing circumstances related to the COVID-19 pandemic, which may have a material adverse effect on our business, operations and future financial results. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

●

our ability to successfully commercialize OLINVYK and any other product candidates for which we may obtain regulatory approval;

●

our sales, marketing and manufacturing capabilities and strategies;

●

any ongoing or planned clinical trials and nonclinical studies for our product candidates;

●

the extent of future clinical trials potentially required by the U.S. Food and Drug Administration for our product candidates;

●

our ability to fund future operating expenses and capital expenditures with our current cash resources or to secure additional funding in the future;

●

the timing and likelihood of obtaining and maintaining regulatory approvals for our product candidates;

●

our plan to develop and potentially commercialize our product candidates;

●

the clinical utility and potential market acceptance of our product candidates, particularly in light of existing and future competition;

●

the size of the markets for our product candidates;

●

the performance of third-parties upon which we depend, including contract manufacturing organizations, suppliers, contract research organizations, distributors and logistics providers;

●

our ability to identify or acquire additional product candidates with significant commercial potential that are consistent with our commercial objectives;

●

the extent to which health epidemics and other outbreaks of communicable diseases, including the ongoing COVID-19 pandemic and the efforts to mitigate it, could disrupt our operations and/or materially and adversely affect our business and financial conditions;

●

our intellectual property position and our ability to obtain and maintain patent protection and defend our intellectual property rights against third parties; and

●

our ability to satisfy all applicable Nasdaq continued listing requirements.

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PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

TREVENA, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	27,436	$	38,320
Inventories		906		906
Prepaid expenses and other current assets		2,425		1,782
Total current assets		30,767		41,008
Restricted cash		1,968		1,960
Property and equipment, net		1,406		1,488
Right-of-use lease asset		4,092		4,224
Other assets		59		—
Total assets	$	38,292	$	48,680
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, net	$	1,664	$	2,372
Accrued expenses and other current liabilities		5,429		5,461
Lease liability		926		899
Total current liabilities		8,019		8,732
Loan payable, net		13,476		13,430
Leases, net of current portion		5,194		5,436
Warrant liability		1,449		5,483
Total liabilities		28,138		33,081
Stockholders’ equity:
Preferred stock—$0.001 par value; 5,000,000 shares authorized, none issued or outstanding at March 31, 2023 and December 31, 2022		—		—
Common stock—$0.001 par value; 200,000,000 shares authorized at March 31, 2023 and December 31, 2022; 8,975,072 and 7,744,692 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		9		8
Additional paid-in capital		565,736		563,362
Accumulated deficit		(555,591)		(547,772)
Accumulated other comprehensive income		—		1
Total stockholders’ equity		10,154		15,599
Total liabilities and stockholders’ equity	$	38,292	$	48,680

See accompanying notes to consolidated financial statements.

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TREVENA, INC.

Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(in thousands, except share and per share data)


	Three Months Ended
	March 31,
	2023		2022
Revenue:
Product revenue	$	6	$	—
License revenue		—		20
Total revenue		6		20
Operating expenses:
Cost of goods sold		127		207
Selling, general and administrative		6,089		11,014
Research and development		3,909		5,259
Total operating expenses		10,125		16,480
Loss from operations		(10,119)		(16,460)
Other income (expense):
Change in fair value of warrant liability		2,466		—
Other income (expense), net		9		45
Interest income		289		24
Interest expense		(446)		—
(Loss) gain on foreign currency exchange		(18)		2
Total other income (expense), net		2,300		71
Net Loss		(7,819)		(16,389)
Unrealized gain on marketable securities		1		—
Comprehensive loss	$	(7,818)	$	(16,389)
Per share information:
Net loss per share of common stock, basic and diluted	$	(0.81)	$	(2.48)
Weighted average common shares outstanding, basic and diluted		9,594,072		6,620,800

See accompanying notes to consolidated financial statements.

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TREVENA, INC.

Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except share data)


	Stockholders' Equity
								Accumulated
	Common Stock							Other
	Number	$0.001		Additional				Comprehensive		Total
	of	Par		Paid-in		Accumulated		Income		Stockholders'
	Shares	Value		Capital		Deficit		(Loss)		Equity
Balance, January 1, 2023	7,744,692	$	8	$	563,362	$	(547,772)	$	1	$	15,599
Stock-based compensation expense	—		—		806		—		—		806
Unrealized loss on marketable securities	—		—		—		—		(1)		(1)
Exercise of pre-funded warrants and related reclassification of warrant liability	1,230,380		1		1,568		—		—		1,569
Net loss	—		—		—		(7,819)		—		(7,819)
Balance, March 31, 2023	8,975,072	$	9	$	565,736	$	(555,591)	$	—	$	10,154


	Stockholders' Equity

	Common Stock
	Number	$0.001		Additional					Total
	of	Par		Paid-in		Accumulated		Stockholders'
	Shares	Value		Capital		Deficit		Equity
Balance, January 1, 2022	6,618,096	$	7	$	558,725	$	(494,102)	$	64,630
Stock-based compensation expense	—		—		1,155		—		1,155
Net loss	—		—		—		(16,389)		(16,389)
Balance, March 31, 2022	6,618,096	$	7	$	559,880	$	(510,491)	$	49,396

See accompanying notes to consolidated financial statements.

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TREVENA, INC.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Three Months Ended
	March 31,
	2023		2022
Operating activities:
Net loss	$	(7,819)	$	(16,389)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		82		105
Stock-based compensation		806		1,155
Noncash interest expense		46		—
Change in Fair Value of warrant liability		(2,466)		—
Change in right-of-use asset		132		114
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(701)		(2,378)
Inventories		—		(393)
Operating lease liabilities		(212)		(188)
Accounts payable, accrued expenses and other liabilities		(742)		(283)
Net cash used in operating activities		(10,874)		(18,257)
Financing activities:
Proceeds from exercise of pre-funded warrants		1		—
Finance lease payments		(3)		(2)
Net cash used in financing activities		(2)		(2)
Net decrease in cash, cash equivalents and restricted cash		(10,876)		(18,259)
Cash, cash equivalents and restricted cash—beginning of period		40,280		68,234
Cash, cash equivalents and restricted cash—end of period	$	29,404	$	49,975
Supplemental disclosure of cash flow information:
Reclassification of warrant liability upon exercise of pre-funded warrants	$	1,568	$	—

See accompanying notes to consolidated financial statements.

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TREVENA, INC.

Notes to Unaudited Consolidated Financial Statements

March 31, 2023

1. Organization and Description of the Business

Trevena, Inc., or the Company, was incorporated in Delaware as Parallax Therapeutics, Inc. on November 9, 2007. The Company began operations in December 2007, and its name was changed to Trevena, Inc. on January 3, 2008. The Company is a biopharmaceutical company focused on the development and commercialization of novel medicines for patients affected by central nervous system, or CNS, disorders. The Company operates in one segment and has its principal office in Chesterbrook, Pennsylvania.

Since commencing operations in 2007, the Company has devoted substantially all of its financial resources and efforts to commercializing its lead asset, OLINVYK® (oliceridine) injection, or OLINVYK, and to research and development, including nonclinical studies and clinical trials. The Company has never been profitable. In August 2020, the FDA approved the NDA for OLINVYK and the Company initiated commercial launch of OLINVYK in the first quarter of 2021.

Since its inception, the Company has incurred losses and negative cash flows from operations. At March 31, 2023, the Company had an accumulated deficit of $555.6 million. The Company’s net loss was $7.8 million and $16.4 million for the three months ended March 31, 2023 and 2022, respectively. The Company follows the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 205-40, Presentation of Financial Statements—Going Concern, or ASC 205-40, which requires management to assess the Company’s ability to continue as a going concern for one year after the date the financial statements are issued. The Company expects that its existing balance of cash and cash equivalents as of March 31, 2023 is not sufficient to fund operations for more than one year after the date of this filing and therefore management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s plans to mitigate this risk include raising additional capital through equity or debt financings, or through strategic transactions. Management’s plans may also include the deferral of certain operating expenses unless and until additional capital is received. However, there can be no assurance that the Company will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to the Company, or that the Company will be successful in deferring certain operating expenses. If the Company is unable to raise sufficient additional capital or defer sufficient operating expenses, the Company may be compelled to reduce the scope of its operations and planned capital expenditures.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the ASC and Accounting Standards Updates, or ASUs, of the FASB. The Company’s functional currency is the U.S. dollar.

The consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s consolidated balance sheets as of March 31, 2023, its results of operations and its comprehensive loss for the three months ended March 31, 2023 and 2022, its consolidated statements of stockholders’ equity for the period from January 1, 2023 to March 31, 2023 and for the period January 1, 2022 to March 31, 2022, and its consolidated statements of cash flows for the three months ended March 31, 2023 and 2022. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and accompanying notes included in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2022. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period.

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The Company will continue to monitor the impact of COVID-19 on our business, results of operations, and financial condition. To date, the impact has been limited, although future developments remain uncertain.

Principles of Consolidation

In connection with the royalty-based financing agreement disclosed in Note 5, the Company established three wholly owned subsidiaries, Trevena Royalty Corporation, Trevena SPV1 LLC and Trevena SPV2 LLC to facilitate the financing. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as of March 31, 2023. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on current facts, historical experience as well as other pertinent industry and regulatory authority information. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Fair Value of Financial Instruments

The carrying amount of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, accounts payable, and accrued expenses approximate their fair values, given their short-term nature. Additionally, at March 31, 2023, the Company believes the carrying value of the loan payable approximates its fair value as the interest rate is reflective of the rate the Company could obtain on debt with similar terms and conditions. Certain of the Company’s common stock warrants are carried at fair value, as disclosed in Note 3.

The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. See Note 3 for additional information.

3. Fair Value of Financial Instruments

ASC 820, Fair Value Measurement, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

●

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

●

Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

●

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

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To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The following table presents fair value of the Company’s cash, cash equivalents, restricted cash and warrant liability as of March 31, 2023 and December 31, 2022 (in thousands):



	March 31,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Unobservable Inputs
Description:	2023		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	841	$	841	$	—	$	—
Money Market Funds		26,595		26,595		—		—
Restricted Cash		1,968		1,968		—		—
Total assets measured and recorded at fair value	$	29,404	$	29,404	$	—	$	—
Liabilities:
Warrant Liability		1,449		—		—		1,449
Total liabilities measured and recorded at fair value	$	1,449	$	—	$	—	$	1,449



	December 31,		Quoted Prices in Active Markets		Significant Other Observable Inputs		Unobservable Inputs
Description:	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	9,651	$	9,651	$	—	$	—
Money Market Funds		28,669		28,669		—		—
Restricted Cash		1,960		1,960		—		—
Total assets measured and recorded at fair value	$	40,280	$	40,280	$	—	$	—
Liabilities:
Warrant Liability		5,483		—		—		5,483
Total liabilities measured and recorded at fair value	$	5,483	$	—	$	—	$	5,483

(1)	The fair value of Level 1 securities is estimated based on quoted prices in active markets for identical assets or liabilities.

The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. There were no transfers between Level 2 and Level 3 during the three months ended March 31, 2023.

The common stock warrants issued in connection with the Company’s equity raises in July 2022 and November 2022 were classified as liabilities at the time of issuance due to certain cash settlement adjustment features that were not deemed to be indexed to the Company’s stock. The warrant liability is remeasured each reporting period with the change in fair value recorded to other income (expense) in the consolidated statement of operations and comprehensive loss until the warrants are exercised, expired, reclassified or otherwise settled. The fair value of the pre-funded warrant liability is equal to its intrinsic value due to the nominal exercise price. The fair value of the warrant liability was estimated using a Black-Scholes Option Pricing Model.

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Registered Direct Stock Offering and Concurrent Warrant Issuance

The fair value of the July Offering Common Stock Warrant liability was determined using Level 3 inputs and was estimated using the Black-Scholes valuation model. The assumptions used to estimate the fair value were as follows:


	March 31		December 31,
	2023		2022
Expected term of warrants (in years)	4.3		4.6
Risk-free interest rate	3.7	%	4.0	%
Expected volatility	94.4	%	108.9	%
Dividend yield	—	%	—	%

The following is a roll forward of the July Offering Common Stock Warrant liability (in thousands):


Balance, December 31, 2022	$	259
Change in fair value		(191)
Balance, March 31, 2023	$	68

November 2022 Equity Offering and Warrant Issuance

Due to the nominal exercise price of the pre-funded warrants, the fair value is equal to the intrinsic value. The fair value of the November Offering Common Stock Warrant liability was determined using Level 3 inputs and was estimated using the Black-Scholes valuation model. The assumptions used to estimate the fair value were as follows:



	March 31, 2023			December 31, 2022
Expected term of warrants (in years)		4.6			4.9
Risk-free interest rate		3.6	%		4.0	%
Expected volatility		100.2	%		106.1	%
Dividend yield		—	%		—	%

The following is a roll forward of the November Offering Common Stock Warrant liability (in thousands):


	Warrant Liability
Balance, December 31, 2022	$	5,224
Change in fair value		(2,275)
Exercise of pre-funded common stock warrants		(1,568)
Balance, March 31, 2023	$	1,381

Warrants

As of March 31, 2023, the Company had the following common stock warrants outstanding:



	Classification	Warrants	Exercise Price	Expiration Date
July 2022 Offering	Liability	320,000	$6.58	12/28/2027
November 2022 Offering (Pre-funded warrants)	Liability	619,000	0.001	Until exercised
November 2022 Offering	Liability	2,614,380	2.95	11/18/2027
R-Bridge warrants	Equity	200,000	20.50	4/14/2025
Other warrants	Equity	11,014	31.25 - 265.48	1/29/24 - 3/31/27
		3,764,394

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The Company classifies investments available to fund current operations as current assets on its balance sheet. As of March 31, 2023 and 2022, the Company did not hold any investment securities exceeding a one-year maturity.

Accretion of bond discount on marketable securities is included in other income as a separate component of other income (expense) on the statement of operations and comprehensive loss. Interest income on marketable securities is recorded as interest income on the statement of operations and comprehensive loss.

4. Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method for all inventories. Inventory includes the cost of API, raw materials and third-party contract manufacturing and packaging services. Indirect overhead costs associated with production and distribution are recorded as period costs in the period incurred. OLINVYK was approved by the FDA in August 2020. Prior to FDA approval, all manufacturing costs for OLINVYK were expensed to research and development. Upon FDA approval, manufacturing costs for OLINVYK manufactured for commercial sale have been capitalized as inventory cost. Costs of drug product to be consumed in any current or future clinical trials will continue to be recognized as research and development expense.

The Company periodically evaluates the carrying value of inventory on hand using the same lower of cost or net realizable value approach as that used to initially value the inventory. Valuation adjustments may be required for slow-moving or obsolete inventory or in any situations where market conditions have caused net realizable value to fall below the carrying cost of the inventory.

Inventory consists of the following (in thousands):


	March 31, 2023		December 31, 2022
Finished goods	$	906	$	3,111
Inventory Valuation Adjustment		—		(2,205)
Total Inventories	$	906	$	906

5. Loan Payable

In April 2022, the Company, through its wholly owned subsidiary Trevena SPV2 LLC, entered into a royalty-based loan agreement (“the Loan Agreement”) with R-Bridge, pursuant to which the Company may be eligible to receive up to $40.0 million in term loan borrowings, or the R-Bridge Financing. Term loan borrowings will be advanced in three tranches. The first tranche of $15.0 million was advanced in April 2022. The second tranche of $10.0 million will become available upon achievement of either a commercial or financing milestone as set forth in the Loan Agreement. The third tranche of $15.0 million will become available upon the first commercial sale of OLINVYK in China.

The following table summarizes the impact of the Loan Agreement on the Company’s consolidated balance sheet as follows (in thousands):


	March 31,
	2023
Principal	$	15,000
Unamortized debt discount		(1,524)
Loans payable, net	$	13,476

The term loans bear interest at a rate per annum equal to 7.00% and will mature on the earlier of (i) the fifteen (15) year anniversary of the closing date in March 2022 and (ii) the date on which the license agreement with Nhwa expires. Repayment of any borrowings and related interest will be made quarterly beginning June 30, 2022. Repayment will be in the form of (i) a 4.0% royalty payment on the Company’s net sales of OLINVYK in the United States and (ii) proceeds from royalties from the Company’s license agreement with Nhwa. In the event Nhwa obtains Chinese approval

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of OLINVYK by December 31, 2023, royalties from net sales of OLINVYK in the United States will be capped at $10.0 million. In the event Chinese approval does not occur by December 31, 2023, the royalties from net sales in the United States will increase to 7.0% and will continue until certain combined totals from license agreement with Nhwa and royalties from net sales of OLINVYK are paid. Upon a change in control or in the event the Company elects to repay any outstanding borrowings prior to their contractual maturity, the Company is required to pay a control premium ranging from 125% to 150% of the outstanding principal and interest at the time of repayment and in the event the Company has not obtained approval for OLINVYK in China. In the event the Company obtains approval for OLINVYK in China, the premium, if triggered, would be equal to the greater of (i) principal and interest and (ii) $10.0 million or $20.0 million depending on the timing in which the triggering event occurs.

In April 2022, the Company placed $2.0 million into an interest reserve account in connection with the Loan Agreement. Payments of interest under the Loan Agreement are made quarterly from the royalty on the Company’s net sales of OLINVYK in the United States and proceeds from royalties from the Company’s license agreement with Nhwa. On each interest payment date, if the royalty payments received do not equal the total interest due for the respective quarter, the interest payment due will be paid from the interest reserve account. This interest reserve account is classified as restricted cash in the Company’s consolidated balance sheet at March 31, 2023.

Repayments of all borrowings, interest and other related payments, under the Loan Agreement are guaranteed by the Company and secured by substantially all of the assets associated with the license agreement with Nhwa, the Chinese intellectual property related to OLINVYK, and deposit accounts established to hold amounts received on account for repayment of the borrowings and related interest under the Loan Agreement. The Loan Agreement contains certain customary affirmative and negative covenants and contains customary defined events of default, upon which any outstanding principal and unpaid interest shall be due on demand. At March 31, 2023, there were no events of default pursuant to the Loan Agreement and the Company was in compliance with all covenants.

In connection with the first tranche borrowings in April 2022, the Company issued a warrant to R-Bridge to purchase 200,000 shares of the Company’s common stock at an initial exercise price of $20.50 per share and will be exercisable for a period of three years. The Company concluded the warrant was a freestanding equity-classified instrument to which the proceeds from the first tranche was allocated across the debt and warrant on a relative fair value basis. In addition, the Company incurred lender fees and third-party costs of $0.5 million each and were netted against the proceeds allocated to the debt and warrant. Fees netted against debt proceeds represent a debt discount and are amortized into interest expense using the effective interest method. During the three months ended March 31, 2023, the Company recognized interest expense of $0.4 million, respectively, of which less than $0.1 million pertained to the amortization of the debt discount.

The accounting for the Loan Agreement requires the Company to make certain estimates and assumptions, particularly about future royalties under the license agreement with Nhwa and sales of OLINVYK in the United States and China. Such estimates and assumptions are utilized in determining the expected repayment term, amortization period of the debt discount, accretion of interest expense and classification between current and long-term portions of amounts outstanding. The Company amortizes the debt discount into interest expense over the expected term of the arrangement using the interest method based on projected cash flows. Similarly, the Company classifies as current debt for the Loan Agreement, amounts that are expected to be repaid during the succeeding twelve months after the reporting period end. However, the repayment of amounts due under the Loan Agreement is variable because the cash flows to be utilized for periodic payments is a function of amounts received by the Company with respect to the royalties and net product sales.

Accordingly, the estimates of the magnitude and timing of amounts to be available for debt service are subject to significant variability and thus, subject to significant uncertainty. Therefore, these estimates and assumptions are likely to change, which may result in future adjustments to the portion of the debt that is classified as a current liability, the amortization of debt discount and the accretion of interest expense. Other amounts that may become due and payable under the Loan Agreement, including amounts shared between the parties with respect to cash flows received in excess of pre-defined thresholds, are recognized as additional interest expense when they become probable and estimable. The amount of principal to be repaid in each of the five succeeding years is not fixed and determinable.

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6. Stock Compensation

The estimated grant date fair value of the Company’s share-based awards is amortized on a straight-line basis over the awards’ service periods. Share based compensation expense recognized was as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Research and development	$	189	$	275
Selling, general and administrative		617		873
Cost of goods sold		—		7
Total stock-based compensation	$	806	$	1,155

Stock Options

A summary of stock option activity and related information through March 31, 2023 follows:


	Options Outstanding
				Weighted
				Average
		Weighted		Remaining
		Average		Contractual
	Number of	Exercise		Term
	Shares	Price		(in years)
Balance, December 31, 2022	351,709	$	49.15	6.94
Granted	—		—
Exercised	—		—
Forfeited/Cancelled	(17,649)		52.37
Balance, March 31, 2023	334,060	$	48.98	6.75
Vested or expected to vest at March 31, 2023	334,060	$	48.98	6.75
Exercisable at March 31, 2023	232,127	$	55.70	6.05

The aggregate intrinsic value of options exercisable as of March 31, 2023 was zero, based on the difference between the Company’s closing stock price of $0.7000 and the exercise price of each stock option. At March 31, 2023, there was $2.4 million of total unrecognized compensation expense related to unvested options that will be recognized over the weighted average remaining vesting period of 1.84 years.

The Company uses the Black Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black Scholes model requires the Company to make certain estimates and assumptions, including estimating the fair value of the Company’s common stock, assumptions related to the expected price volatility of the Company’s common stock, the period during which the options will be outstanding, the rate of return on risk free investments and the expected dividend yield for the Company’s common stock.

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The per-share weighted-average grant date fair value of the options granted to employees and directors during the three months ended March 31, 2023 and 2022 was estimated at $0.00 and $0.46 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:


	March 31,
	2023		2022
Expected term of options (in years)	—		6.3
Risk-free interest rate	—	%	1.5	%
Expected volatility	—	%	92.5	%
Dividend yield	—	%	—	%

Restricted Stock Units

RSU-related expense is recognized on a straight-line basis over the vesting period. Upon vesting, these awards may be settled on a net-exercise basis to cover any required withholding tax with the remaining amount converted into an equivalent number of shares of common stock.

The following is a summary of changes in the status of non-vested RSUs during the three months ended March 31, 2023:



		Weighted
		Average
	Number of	Grant Date
	Awards	Fair Value
Non-vested at December 31, 2022	366,777	$	10.43
Granted	500,000		1.78
Vested	—		—
Forfeited/Cancelled	(32,507)		4.19
Non-vested at March 31, 2023	834,270	$	5.49

For the three months ended March 31, 2023, the Company recorded $0.4 million, in stock-based compensation expense related to RSUs, which is reflected in the consolidated statements of operations and comprehensive loss.

As of March 31, 2023, there was $3.61 million of total unrecognized compensation expense related to unvested RSUs that will be recognized over the weighted average remaining period of 2.53 years.

Shares Available for Future Grant

At March 31, 2023, the Company has the following shares available to be granted under its equity incentive plans:


		Inducement
	2013 Plan	Plan
Available at December 31, 2022	404,807	12,000
Authorized	309,363	—
Granted	(500,000)	—
Forfeited/Cancelled	49,706	—
Available at March 31, 2023	263,876	12,000

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Shares Reserved for Future Issuance

At March 31, 2023, the Company has reserved the following shares of common stock for issuance:


Stock options outstanding under 2013 Plan		326,060
Restricted stock units outstanding under 2013 Plan		834,720
Stock options outstanding under Inducement Plan		8,000
Shares reserved for future issuance under Inducement Plan		12,000
Shares reserved for future issuance under 2013 Employee Stock Purchase Plan		9,032
Warrants outstanding		3,764,394
Total shares of common stock reserved for future issuance		4,954,206

7. Commitments and Contingencies

Leases

The Company leases office space in Chesterbrook, Pennsylvania and equipment. The Company’s principal office is located at 955 Chesterbrook Boulevard, Chesterbrook, Pennsylvania, where the Company currently leases approximately 8,231 square feet of developed office space on the first floor and 40,565 square feet of developed office space on the second floor. The lease term for this space extends through May 2028. On October 11, 2018, the Company entered into an agreement with The Vanguard Group, Inc., or Vanguard, whereby Vanguard agreed to sublease the 40,565 square feet of space on the second floor for an initial term of 37 months. On October 2, 2020, Vanguard notified the Company that they exercised the first option to extend the sublease term for three years through November 30, 2024. Vanguard has a second option to extend the sublease term for an additional three years through November 30, 2027. The sublease provides for rent abatement for the first month of the term; thereafter, the rent payable to the Company by Vanguard under the sublease is (i) $0.50 less during months 2 through 13 of the sublease and (ii) in month 14 and thereafter of the sublease, $1.00 less than the base rent payable by the Company under its master lease with Chesterbrook Partners, L.P. Vanguard also is responsible for paying to the Company all tenant energy costs, annual operating costs, and annual tax costs attributable to the subleased space during the term of the sublease. Rent expense and associated sublease income are recorded in the Company’s consolidated statements of operations and comprehensive loss as other income (expense).

Supplemental balance sheet information related to leases was as follows (in thousands):


	March 31, 2023		December 31, 2022
Operating leases:
Operating lease right-of-use assets	$	4,092	$	4,224
Other current lease liabilities		917		890
Operating lease liabilities		5,179		5,419
Total operating lease liabilities	$	6,096	$	6,309

Finance leases:
Property and equipment, at cost	$	29	$	29
Accumulated depreciation		(6)		(4)
Property and equipment, net		23		25
Other current lease liabilities		9		9
Other long-term liabilities		15		17
Total finance lease liabilities	$	24	$	26

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The components of lease expense were as follows (in thousands):


	Three Months Ended
	March 31,
	2023		2022
Operating lease costs:
Operating lease rental expense	$	398	$	327
Other income		(350)		(315)
Total operating lease costs	$	48	$	12

Finance lease costs:
Amortization of right-of-use assets		2		1
Total finance lease costs	$	2	$	1

Supplemental cash flow information related to leases was as follows (in thousands):


	Three Months Ended
	March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(128)	$	(70)
Financing cash flows from finance leases		(3)		(2)

Our operating lease liabilities will mature, as follows (in thousands):


	Operating Leases		Financing Leases
2023 (April 1 - December 31)		1,071		8
2024		1,450		11
2025		1,474		7
2026		1,499		—
2027		1,523		—
2028 and beyond		640		—
Total minimum lease payments	$	7,657	$	26
Less: imputed interest		(1,561)		(2)
Lease liability	$	6,096	$	24

Per the terms of our sublease, we expect the following inflows (in thousands):


	Sublease
2023 (April 1 - December 31)		855
2024		996
Total minimum lease payments	$	1,851

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Lease term and discount rates are as follows:


	Three Months Ended March 31,
	2023		2022
Weighted average remaining lease term (years)
Operating leases		5		6
Finance leases		2		—
Weighted average discount rate
Operating leases		9.2%		9.2%
Finance leases		6.5%		6.5%

8. Product Revenue

Performance Obligation

The Company’s performance obligation is the supply of finished pharmaceutical products to its customers. The Company’s customers consist of major wholesale distributors. The Company’s customer contracts generally consist of both a master agreement, which is signed by the Company and its customer, and a customer submitted purchase order, which is governed by the terms and conditions of the master agreement.

Revenue is recognized when the Company transfers control of its products to the customer, which occurs at a point-in-time, upon delivery.

The Company offers standard payment terms to its customers and has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing, since the period between when the Company transfers the product to the customer and when the customer pays for that product is one year or less. Taxes collected from customers relating to product revenue and remitted to governmental authorities are excluded from revenues. The consideration amounts due from customers as a result of product revenue are subject to variable consideration.

The Company offers standard product warranties which provide assurance that the product will function as expected and in accordance with specifications. Customers cannot purchase warranties separately and these warranties do not give rise to a separate performance obligation. The Company permits the return of product under certain circumstances, mainly upon at or near product expiration, instances of shipping errors or where product is damaged in transit. The Company accrues for the customer’s right to return as part of its variable consideration.

Sales-Related Deductions

The following table presents a roll forward of the major categories of sales-related deductions included in trade receivable allowances for the three months ended March 31, 2023 (in thousands):


	Sales Discounts		Chargebacks		Fee for Service
Balance, January 1, 2023	$	1	$	30	$	36
Adjustment related to prior period sales		—		7		(4)
Balance, March 31, 2023	$	1	$	37	$	32

As of March 31, 2023, the Company has $6,000 outstanding accounts receivable and, as a result, the portion of the trade receivable allowance in excess of accounts receivable of $64,000 has been included with accrued expenses and other current liabilities on the Company’s consolidated balance sheets

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9. License Revenue

License and Commercialization Agreement with Pharmbio Korea Inc.

In April 2018, the Company entered into an exclusive license agreement with Pharmbio Korea Inc., or Pharmbio, for the development and commercialization of OLINVYK for the management of moderate to severe acute pain in South Korea. Under the terms of the agreement, the Company received an upfront, non-refundable cash payment of $3.0 million (less applicable withholding taxes of $0.5 million) in June 2018, and will receive a cash commercial milestone of up to $0.5 million if OLINVYK is approved in South Korea and tiered royalties on product sales in South Korea ranging from high single digits to 20%, less applicable withholding taxes. As part of the agreement, the Company also granted Pharmbio an option to manufacture OLINVYK, on a non-exclusive basis, for the development and commercialization of the product in South Korea, subject to a separate arrangement to be entered into if Pharmbio exercises the option. The license agreement is terminable by Pharmbio for any reason upon 180 days written notice.

In accordance with the terms of the agreement, Pharmbio is solely responsible for all development and regulatory activities in South Korea. The parties have formed a Joint Development Committee with equal representation from the Company and Pharmbio to provide overall coordination and oversight of the development of OLINVYK in South Korea. The parties also agreed to form a Joint Manufacturing and Commercialization Committee at least six months prior to the anticipated date of regulatory approval of OLINVYK in South Korea to provide overall coordination and oversight of the manufacture and commercialization of OLINVYK in South Korea.

License Agreement with Jiangsu Nhwa Pharmaceutical Co. Ltd.

In April 2018, the Company also entered into an exclusive license agreement with Jiangsu Nhwa Pharmaceutical Co. Ltd., or Nhwa, for the development and commercialization of OLINVYK for the management of moderate to severe acute pain in China. Under the terms of this agreement, the Company received an upfront, non-refundable cash payment of $2.5 million (less applicable withholding taxes of $0.3 million) in July 2018. In August 2020, the Company received a milestone payment of $3.0 million (less applicable withholding taxes of $0.3 million), that became payable by Nhwa upon FDA approval of OLINVYK. The Company is also eligible to receive a cash milestone payment of $3.0 million, subject to Chinese withholding taxes, upon regulatory approval of OLINVYK in China, up to an additional $6.0 million of commercialization milestone payments based on product sales levels in China, and a ten percent royalty on all net product sales in China, less applicable withholding taxes. This royalty is required to be used by the Company to repay its obligations under the Loan Agreement. As part of the license agreement with Nhwa, the Company also granted Nhwa an option to manufacture OLINVYK, on an exclusive basis in China, for the development and commercialization of the product in China. In the second quarter of 2018, Nhwa elected to exercise this manufacturing option. The license agreement is terminable by Nhwa for any reason upon 180 days written notice.

In accordance with the terms of the agreement, Nhwa is solely responsible for all development and regulatory activities in China. The parties have formed a Joint Development Committee with equal representation from the Company and Nhwa to provide overall coordination and oversight of the development of OLINVYK in China. The parties also agreed to form a Joint Manufacturing and Commercialization Committee at least six months prior to the anticipated date of regulatory approval of OLINVYK in China to provide overall coordination and oversight of the manufacture and commercialization of OLINVYK in China.

For the three months ended March 31, 2023 and 2022, license revenue in the accompanying consolidated statements of operations and comprehensive loss is comprised of the following:


	Three Months Ended
	March 31,
	2023		2022
Pharmbio Korea Inc.	$	—	$	20
Jiangsu Nhwa Pharmaceutical Co. Ltd.		—		—
Total license revenues	$	—	$	20

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License revenue for the year ended December 31, 2022 related to materials shipped to Pharmbio to support the development of oliceridine efforts in South Korea.

10. Net Loss Per Common Share

The following table sets forth the computation of basic and diluted net loss per share for the periods indicated (in thousands, except share and per share data):


	Three Months Ended March 31,
	2023		2022
Basic and diluted net loss per common share calculation:
Net loss	$	(7,819)	$	(16,389)
Weighted average common shares outstanding		9,594,072		6,620,800
Net loss per share of common stock - basic and diluted	$	(0.81)	$	(2.48)

The pre-funded warrants to purchase common shares issued in connection with the November 2022 offering are included in the calculation for basic and diluted net loss per share due to the nominal exercise price and perpetual term of the pre-funded warrants.

The following outstanding securities at March 31, 2023 and 2022 have been excluded from the computation of diluted weighted shares outstanding, as they would have been anti-dilutive:


	March 31,
	2023	2022
Options outstanding	334,060	506,662
RSUs outstanding	834,720	236,737
Warrants outstanding	3,145,394	11,014
Total	4,314,174	754,413

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year ended December 31, 2022, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 31, 2023. Unless the context otherwise requires, we use the terms “Trevena,” “Company,” “we,” “us” and “our” to refer to Trevena, Inc.

Overview

We are a biopharmaceutical company focused on developing and commercializing novel medicines for patients affected by central nervous system, or CNS, disorders. Our lead product, OLINVYK® (oliceridine) injection, or OLINVYK, was approved by the United States Food and Drug Administration, or the FDA, in August 2020. In October 2020, we announced that OLINVYK had received scheduling from the U.S. Drug Enforcement Administration, or DEA, and was classified as a Schedule II controlled substance. OLINVYK is an opioid agonist for use in adults for the management of acute pain severe enough to require an intravenous opioid analgesic and for whom alternative treatments are inadequate.

We initiated commercial launch of OLINVYK in the first quarter of 2021. Our commercial launch strategy is to focus on a subset of core specialties and clinically challenging patient, such as those patients with certain co-morbidities, elderly, obese or renal impairment. We intend to evolve and expand this focus as customers gain experience with OLINVYK. We are also developing a pipeline of product candidates based on our proprietary product platform, including TRV045 for diabetic neuropathic pain and epilepsy; TRV250 for acute migraines; and TRV734 for opioid use disorders.

Since our incorporation in late 2007, our operations have included organizing and staffing our company, business planning, raising capital, discovering and developing our product candidates, establishing our intellectual property portfolio, and commercializing our lead product. We have financed our operations primarily through private placements and public offerings of our equity securities, debt borrowings and royalty-based financing. As of March 31, 2023, we had an accumulated deficit of $555.6 million. Our net loss was $7.8 million and $16.4 million for the three months ended March 31, 2023 and 2022, respectively. Our ability to become and remain profitable depends on our ability to generate revenue or sales. We do not expect to generate significant revenue or sales unless and until we or a collaborator successfully commercialize OLINVYK or obtain marketing approval for and commercialize TRV045, TRV250, or TRV734.

We expect to incur significant expenses and operating losses for the foreseeable future as we continue to commercialize OLINVYK and continue the development and clinical trials of our other product candidates. We will need to obtain substantial additional funding in connection with our continuing operations. We will seek to fund our operations through the sale of equity, debt financings or other sources, including potential collaborations. However, we may be unable to raise additional funds or enter into such other agreements when needed on favorable terms, or at all. If we fail to raise capital or enter into such other arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue our operations, development programs, and/or any future commercialization efforts.

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Recent Developments

Approval of OLINVYK in China

On May 8, 2023, we announced that our partner in China, Jiangsu Nhwa, received formal approval from the National Medical Products Administration for OLINVYK. It has been approved for use in adults for the management of acute pain severe enough to require an intravenous opioid analgesic and for whom alternative treatments are inadequate. The approval is based on results of two bridging trials conducted in China and also leveraged US clinical data. Results from the bridging studies demonstrated that the safety, tolerability and pharmacokinetic profile of OLINVYK in Chinese patients is consistent with what has been seen in other OLINVYK clinical trials. Jiangsu Nhwa has an exclusive license agreement for the development and commercialization of OLINVYK in China. We are due to receive a $3 million milestone payment from Jiangsu Nhwa with the approval. We are also eligible to receive $15 million upon first commercial sale of OLINVYK in China, in connection with our non-dilutive royalty-based financing with an affiliate of R-Bridge Healthcare Fund (the R-Bridge Financing).

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, as well as the reported revenues and expenses during the reported periods. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are more fully described in the notes to our audited consolidated financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K. However, we believe that the following accounting policies are important to understanding and evaluating our reported financial results, and we have accordingly included them in this discussion.

Stock-Based Compensation

We have applied the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation, or ASC 718, to account for stock-based compensation for employees. We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant.

We have equity incentive plans under which various types of equity-based awards including, but not limited to, incentive stock options, non-qualified stock options, restricted stock unit awards and performance stock unit awards, may be granted to employees, non-employee directors, and non-employee consultants. We also have an inducement plan under which various types of equity-based awards, including non-qualified stock options and restricted stock unit awards, may be granted to new employees.

We recognize compensation expense on a straight-line basis over the requisite service period for all stock-based awards based on the estimated grant-date fair values. For restricted stock unit awards to employees, the fair value is based on the closing price of our common stock on the date of grant. The fair value of stock options is determined using the Black-Scholes option pricing model. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention of paying cash dividends. We elected an accounting policy to record forfeitures as they occur.

See Note 6, included in Part 1, Item 1 of this Quarterly Report, for a discussion of the assumptions we used in determining the grant date fair value of options granted under the Black-Scholes option pricing model, as well as a summary of the stock option activity under our stock-based compensation plan for all years presented.


		Page
Cautionary Note Regarding Forward-Looking Statements		ii

	PART I- FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations and Comprehensive Loss	2
	Consolidated Statements of Stockholders’ Equity	3
	Consolidated Statements of Cash Flows	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25
	PART II- OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28

SIGNATURES		29