Flexion Therapeutics, Inc. (Nasdaq:FLXN) today reported financial
results and recent business highlights for the quarter ended
September 30, 2020.
“Throughout the third quarter, we saw strong execution across
all areas of our business, and we were particularly pleased to
achieve $23.7 million in ZILRETTA net sales,” said Michael
Clayman, M.D., President and Chief Executive Officer of Flexion
Therapeutics. “We firmly believe that ZILRETTA can play an
increasingly prominent role in helping the millions of patients who
confront osteoarthritis knee pain, and our confidence in its
long-term potential has only grown. Furthermore, during the quarter
we made outstanding progress with our pipeline of innovative
product candidates. We advanced FX201, our investigational
intra-articular gene therapy product candidate for osteoarthritis,
into the second cohort of the Phase 1 safety and tolerability
study, and we remain on track to file an IND and potentially
initiate clinical trials for FX301, our locally administered
peripheral nerve block candidate for control of postoperative pain
in 2021.”
Third-Quarter Results
& Financial
Highlights
The Company reported a net loss of $24.6 million for the
third quarter of 2020, compared to a net loss of $38.2 million
for the same period of 2019. Net sales of ZILRETTA were
$23.7 million and $21.8 million for the three months
ended September 30, 2020 and 2019, respectively.
Cost of sales was $5.1 million and $2.9 million for
the three months ended September 30, 2020 and 2019, respectively.
For the three months ended September 30, 2020, cost of sales
included $2.0 million for the actual cost of units sold and
$3.1 million of unabsorbed overhead associated with the
voluntary, temporary suspension of manufacturing activities at
Patheon due to COVID19 impacts on sales of ZILRETTA. For the three
months ended September 30, 2019, cost of sales was comprised
of $1.8 million related to the actual cost of units sold,
$0.9 million related to unabsorbed manufacturing costs and
$0.2 million of period costs and other adjustments.
Research and development expenses were $10.1 million and
$20.9 million for the three months ended September 30,
2020 and 2019, respectively. The decrease in research and
development expenses of $10.8 million was primarily due to a
decrease of $5.9 million in development expenses for ZILRETTA
due to a reduction in ZILRETTA life cycle management activities, a
decrease in $2.9 million in portfolio expansion-related
expenses as the upfront payment for the purchase of XEN402 from
Xenon Pharmaceuticals occurred in the third quarter of 2019, as
well as a decrease of $1.4 million in salary and other
employee-related costs and stock-based compensation expense related
to lower headcount.
Selling, general and administrative expenses were
$27.3 million and $32.1 million for the three months
ended September 30, 2020 and 2019, respectively. Selling
expenses were $19.3 million and $23.9 million for the
three months ended September 30, 2020 and 2019, respectively.
The year-over-year decrease of $4.6 million was primarily due
to the expense reduction measures taken in response to COVID19; in
particular, the elimination of live presence at industry
conferences, reductions in in-person physician speaker programs and
reductions in select marketing programs and materials, as well as a
reduction in travel expenses due to physician office limitations
and travel guidelines and restrictions at the state and local
level. General and administrative expenses were $8.0 million
and $8.2 million for the three months ended September 30,
2020 and 2019, respectively, which represents a decrease of
$0.2 million.
Flexion expects full-year 2020 total operating expenses
(including cost of sales, research and development, and selling,
general and administrative) will be in the range of
$172 million to $182 million.
Interest income was $0.1 million and $0.7 million for
the three months ended September 30, 2020 and 2019,
respectively. Interest expense was $5.1 million and
$4.7 million for the three months ended September 30,
2020 and 2019, respectively.
As of September 30, 2020, the Company had approximately
$185.3 million in cash, cash equivalents and marketable
securities compared with $136.7 million as of
December 31, 2019. Based on the Company’s current operating
plan and assuming purchasing activity at physician practices,
clinics and certain medical centers or hospitals that administer
ZILRETTA continue to return to pre-COVID19 levels, Flexion believes
that its current cash, cash equivalents and marketable securities
will be sufficient to fund operations into 2022.
Recent News
& Business
Updates
- On October 13, 2020, Flexion
pre-announced preliminary ZILRETTA net sales for the third quarter
and provided updated Commercial metrics.
- In September 2020, the first
patient was treated in the mid-dose cohort of a Phase 1 clinical
trial evaluating the safety and tolerability of FX201 in patients
with osteoarthritis (OA) of the knee. The open-label,
dose-escalation study is expected to enroll 15 to 24 patients,
30-80 years of age and test three doses (low, mid and high dose) of
FX201 in cohorts of five to eight patients. Following the
completion of the first cohort in which five patients
(Kellgren-Lawrence Grade 2 or 3) were treated with the low dose of
FX201, safety data were collected and reviewed by an independent
Drug Monitoring Committee (DMC). After evaluating the first cohort
safety data, the DMC supported continuing the trial and initiating
treatment in the next dosing cohort, which will include KL Grade 4
patients. The Company anticipates data from the study will be
available in H2 2021.
- Also in September, the Company
announced the podium presentation of previously presented
preclinical efficacy and pharmacokinetic data for FX301, its
locally administered peripheral nerve block candidate for control
of post-operative pain at the virtual ANESTHESIOLOGY 2020
meeting.
Indication and Select Important Safety Information for
ZILRETTA
Indication: ZILRETTA is indicated as an
intra-articular injection for the management of OA pain of the
knee.
Limitation of Use: The efficacy and safety of repeat
administration of ZILRETTA have not been demonstrated.
Contraindication: ZILRETTA is
contraindicated in patients who are hypersensitive to triamcinolone
acetonide, corticosteroids or any components of the product.
Warnings and Precautions:
- Intra-articular Use
Only: ZILRETTA has not been evaluated and should not
be administered by epidural, intrathecal, intravenous, intraocular,
intramuscular, intradermal, or subcutaneous routes. ZILRETTA should
not be considered safe for epidural or intrathecal
administration.
- Serious Neurologic Adverse
Reactions with Epidural and Intrathecal
Administration: Serious neurologic events have been
reported following epidural or intrathecal corticosteroid
administration. Corticosteroids are not approved for this use.
- Hypersensitivity
reactions: Serious reactions have been reported with
triamcinolone acetonide injection. Institute appropriate care if an
anaphylactic reaction occurs.
- Joint infection and
damage: A marked increase in joint pain, joint
swelling, restricted motion, fever and malaise may suggest septic
arthritis. If this occurs, conduct appropriate evaluation and if
confirmed, institute appropriate antimicrobial treatment.
Adverse Reactions: The most commonly
reported adverse reactions (incidence ≥1%) in clinical studies
included sinusitis, cough, and contusions.
Please
see ZilrettaLabel.com for full
Prescribing Information.
About ZILRETTA (triamcinolone acetonide
extended-release injectable suspension)On October 6, 2017,
ZILRETTA was approved by the U.S. FDA as the first and only
extended-release intra-articular therapy for patients confronting
OA-related knee pain. ZILRETTA employs proprietary microsphere
technology combining triamcinolone acetonide—a commonly
administered, short-acting corticosteroid—with a poly
lactic-co-glycolic acid (PLGA) matrix to provide extended pain
relief. The pivotal Phase 3 trial on which the approval of ZILRETTA
was based showed that ZILRETTA significantly reduced OA knee pain
for 12 weeks, with some people experiencing pain relief through
Week 16. Learn more at www.zilretta.com.
About FX201 (humantakinogene hadenovec)FX201 is
a novel, intra-articular gene therapy product candidate that
utilizes a helper-dependent adenovirus [HDAd] vector based on human
serotype 5 (Ad5) that is designed to transfer a gene to cells in
the joint to produce an anti-inflammatory protein, interleukin-1
receptor antagonist (IL-1Ra), under the control of an
inflammation-sensitive promoter. Inflammation is a known cause of
pain, and chronic inflammation is thought to play a major role in
the progression of OA. By persistently suppressing inflammation,
Flexion believes FX201 holds the potential to provide long-term
pain relief and functional improvement, and to modify the
disease.
About FX301 (funapide formulated in a
proprietary thermosensitive hydrogel)FX301 is a locally
administered NaV1.7 inhibitor product candidate, known as funapide,
formulated for extended release in a thermosensitive hydrogel. The
initial development of FX301 is intended to support administration
as a peripheral nerve block for control of post-operative pain.
Flexion believes FX301 has the potential to provide effective and
durable pain relief while preserving motor function and anticipates
initiating clinical trials in 2021.
About Osteoarthritis (OA) of the
KneeOA, also known as degenerative joint disease, affects
more than 30 million Americans and accounts for more than
$185 billion in annual expenditures. In 2017, approximately
15 million Americans were diagnosed with OA of the knee and
the average age of physician-diagnosed knee OA has fallen by 16
years, from 72 in the 1990s to 56 in the 2010s. The prevalence of
OA is expected to continue to increase as a result of aging,
obesity and sports injuries. Each year, approximately five million
OA patients receive either a corticosteroid (immediate-release or
extended-release) or hyaluronic acid intra-articular injection to
manage their knee pain.
About Flexion TherapeuticsFlexion Therapeutics
(Nasdaq:FLXN) is a biopharmaceutical company focused on the
development and commercialization of novel, local therapies for the
treatment of patients with musculoskeletal conditions, beginning
with osteoarthritis, the most common form of arthritis. The
Company's core values are focus, ingenuity, tenacity, transparency
and fun. Please visit flexiontherapeutics.com.
Forward-Looking StatementsThis release contains
forward-looking statements that are based on the current
expectations and beliefs of Flexion. Statements in this press
release regarding matters that are not historical facts are forward
looking statements, including, but not limited to, statements
relating to the future of Flexion; expectations related to
Flexion’s expenses for the year ended December 31, 2020, and
cash runway; timing and plans with respect to clinical trials;
expected impacts from COVID-19 and the timing and duration of such
impacts; the long-term potential of ZILRETTA; expected increases in
the rate of individuals with OA of the knee; and the potential
therapeutic and other benefits of ZILRETTA and our product
candidates. These forward-looking statements are based on
management’s expectations and assumptions as of the date of this
press release and are subject to numerous risks and uncertainties,
which could cause actual results to differ materially from those
expressed or implied by such statements. These risks and
uncertainties include, without limitation, the fact that the
impacts and expected duration of the COVID19 pandemic are uncertain
and rapidly changing; risk that we may not achieve expense
expectations for 2020; the potential for unexpected expenditures or
cash requirements; the risk that we may not be able to successfully
maintain an effective sales force to commercialize ZILRETTA;
competition from alternative therapies; the risk that we may not be
able to maintain and enforce our intellectual property, including
intellectual property related to ZILRETTA; the risk that ZILRETTA
may not be successfully commercialized or adopted; risks regarding
our ability to obtain adequate reimbursement from payers for
ZILRETTA; risks related to the manufacture and distribution of
ZILRETTA, including our reliance on sole sources of supply and
distribution; risks related to clinical trials, including potential
delays, safety issues, or negative results; risks related to key
employees, markets, economic conditions, health care reform,
prices, and reimbursement rates; and other risks and uncertainties
described in our filings with the Securities and Exchange
Commission (SEC), including under the heading “Risk Factors” in our
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2020, filed with the SEC on August 5, 2020, and
subsequent filings with the SEC. The forward-looking statements in
this press release speak only as of the date of this press release,
and we undertake no obligation to update or revise any of the
statements. We caution investors not to place considerable reliance
on the forward-looking statements contained in this press
release.
|
FLEXION THERAPEUTICS |
CONDENSED CONSOLIDATED |
STATEMENTS OF OPERATIONS |
(in thousands, except for per share
information) |
|
|
Three Months Ended September
30, |
|
2020 |
|
2019 |
Revenue |
$ |
23,664 |
|
|
$ |
21,786 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
5,130 |
|
|
|
2,872 |
|
Research and development |
|
10,092 |
|
|
|
20,938 |
|
Selling, general and administrative |
|
27,312 |
|
|
|
32,136 |
|
Total operating expenses |
|
42,534 |
|
|
|
55,946 |
|
Loss from operations |
|
(18,870 |
) |
|
|
(34,160 |
) |
Interest income (expense),
net |
|
(5,063 |
) |
|
|
(3,931 |
) |
Other expense |
|
(457 |
) |
|
|
(141 |
) |
Loss from operations before
income tax |
|
(24,390 |
) |
|
|
(38,232 |
) |
Income tax expense |
|
248 |
|
|
|
- |
|
Net loss |
|
(24,638 |
) |
|
|
(38,232 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.50 |
) |
|
$ |
(1.00 |
) |
Basic and diluted
weighted |
|
|
|
|
|
|
|
average number of common
shares outstanding |
|
49,298 |
|
|
|
38,125 |
|
|
FLEXION THERAPEUTICS |
CONDENSED CONSOLIDATED |
STATEMENTS OF OPERATIONS |
(in thousands, except for per share
information) |
|
|
Nine Months Ended
September 30, |
|
2020 |
|
2019 |
Revenue |
$ |
59,242 |
|
|
$ |
49,303 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
12,887 |
|
|
|
6,032 |
|
Research and development |
|
43,733 |
|
|
|
52,488 |
|
Selling, general and administrative |
|
81,341 |
|
|
|
97,461 |
|
Total operating expenses |
|
137,961 |
|
|
|
155,981 |
|
Loss from operations |
|
(78,719 |
) |
|
|
(106,678 |
) |
Interest income (expense),
net |
|
(14,264 |
) |
|
|
(9,974 |
) |
Other (expense) income |
|
(581 |
) |
|
|
395 |
|
Loss from operations before
income tax |
|
(93,564 |
) |
|
|
(116,257 |
) |
Income tax expense |
|
495 |
|
|
|
- |
|
Net loss |
|
(94,059 |
) |
|
|
(116,257 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(2.16 |
) |
|
$ |
(3.06 |
) |
Basic and diluted
weighted |
|
|
|
|
|
|
|
average number of common
shares outstanding |
|
43,563 |
|
|
|
38,043 |
|
|
FLEXION THERAPEUTICS SELECTED BALANCE SHEET
DATA |
(in thousands) |
|
|
September
30, |
|
December 31, |
|
2020 |
|
2019 |
|
|
|
|
Cash and cash equivalents |
$ |
128,637 |
|
|
$ |
82,253 |
|
Marketable securities |
|
56,709 |
|
|
|
54,407 |
|
Total current assets |
|
237,065 |
|
|
|
195,675 |
|
Working capital |
|
186,187 |
|
|
|
159,456 |
|
Total assets |
|
263,367 |
|
|
|
217,560 |
|
Total notes payable |
|
60,694 |
|
|
|
40,176 |
|
Total convertible notes |
|
160,360 |
|
|
|
153,413 |
|
Total stockholders'
deficit |
|
(3,095 |
) |
|
|
(20,108 |
) |
|
|
|
|
|
|
|
|
Contact:
Scott YoungVice President, Corporate Communications &
Investor RelationsT: 781-305-7194syoung@flexiontherapeutics.com
Julie DownsAssociate Director, Corporate Communications &
Investor RelationsT: 781-305-7137jdowns@flexiontherapeutics.com
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