Flexion Therapeutics, Inc. (Nasdaq:FLXN) today reported financial
results and recent business highlights for the quarter ended
September 30, 2019.
“The third quarter was marked by outstanding commercial
execution and growing ZILRETTA utilization in the market as
demonstrated by $21.8 million in net sales,” said Michael Clayman,
M.D., President and Chief Executive Officer. “Based on our strong
sales performance through the first three quarters of 2019, we are
tightening our full-year 2019 ZILRETTA net sales guidance to $70
million to $75 million.”
Dr. Clayman added, “In addition to our excellent commercial
performance, we also achieved several other key milestones
including the FDA clearance of the IND for FX201 and the addition
of a new pipeline program, FX301, for post-operative pain.
Furthermore, we recently initiated a Phase 2 trial to evaluate the
safety and efficacy of ZILRETTA in shoulder OA and adhesive
capsulitis. We also made the strategic decision to discontinue our
trial in hip OA.”
Third-Quarter Results & Financial
Highlights
The Company reported net sales of ZILRETTA of $21.8 million and
$7.0 million for the three months ended September 30, 2019 and
2018, respectively. Cost of sales was $2.9 million and $1.6 million
for the three months ended September 30, 2019 and 2018,
respectively.
Research and development expenses were $20.9 million and $13.6
million for the three months ended September 30, 2019 and 2018,
respectively. The increase in research and development expenses of
$7.4 million was primarily due to a $3.0 million upfront payment to
Xenon Pharmaceuticals for the global rights to XEN402 and $3.8
million for increased development expenses for ZILRETTA clinical
trial costs related to shoulder and hip and other life cycle
management activities.
Selling, general and administrative expenses were $32.1 million
and $32.8 million for the three months ended September 30, 2019 and
2018, respectively. Selling expenses were $23.9 million and $23.7
million for the three months ended September 30, 2019 and 2018,
respectively, which represents an increase of $0.2 million. General
and administrative expenses were $8.2 million and $9.1 million for
the three months ended September 30, 2019 and 2018, respectively,
which represents a decrease of $0.9 million.
Interest income was $0.7 million and $1.2 million for the three
months ended September 30, 2019 and 2018, respectively. Interest
expense was $4.7 million and $3.9 million for the three months
ended September 30, 2019 and 2018. The Company reported a net loss
of $38.2 million for the third quarter of 2019, compared to a net
loss of $43.6 million for the same period of 2018.
As of September 30, 2019, the Company had approximately $175.8
million in cash, cash equivalents, and marketable securities
compared with $258.8 million as of December 31, 2018.
ZILRETTA Commercial Metrics
Since the launch of ZILRETTA in November 2017 through September
30, 2019:
- 3,130 of Flexion’s approximately 4,600 target accounts had
purchased ZILRETTA. This reflects growth of approximately 400
accounts over the period from launch through June 30, 2019, when
2,733 accounts had purchased product.
- 75% (2,344) of purchasing accounts had placed at least one
reorder.
- 670 accounts had made ZILRETTA purchases of more than 50 units
representing growth of 45% over the period from launch through June
30, 2019; 916 accounts had purchased 11 to 50 units; and 1,544
accounts had purchased between 1 and 10 units.
- Accounts purchasing more than 50 ZILRETTA units have been
responsible for 79% of total ZILRETTA purchases (approximately
109,000 units).
Recent News & Business Updates
- Flexion recently initiated a Phase 2 clinical trial to
investigate the safety and efficacy of ZILRETTA in the treatment of
shoulder osteoarthritis (OA) pain as well as adhesive capsulitis,
also known as “frozen shoulder.” The trial is expected to complete
in the first half of 2021.
- The Company previously announced that a Phase 3 trial of
ZILRETTA in hip OA pain was paused due to a non-safety related
issue which resulted in the inability to deliver a full dose in a
small number of trial participants. In November, the Company
determined that an exploratory study designed to resolve the issue
was unsuccessful, and as a result, the Company made the decision to
discontinue the Phase 3 trial. Each year, fewer than 500,000
injections are administered for hip OA, as compared to
approximately 1 million injections for shoulder OA and adhesive
capsulitis combined and 7.8 million injections for OA knee
pain.
- On October 14, Flexion announced that the U.S. Food and Drug
Administration (FDA) informed the company it needs additional time
to complete the review of the supplemental New Drug Application
(sNDA) related to repeat administration of ZILRETTA. The Company is
in discussions with FDA and anticipates a decision in the coming
weeks.
- In early October, the FDA cleared the Investigational New Drug
(IND) application for FX201, enabling the initiation of
first-in-human trials. Nonclinical safety and efficacy data
submitted in the IND application demonstrated that a single
administration of FX201 was well-tolerated, had no significant
biodistribution outside the target tissues, and pharmacology
studies with the rat, mouse, and horse orthologues showed
symptomatic improvement and delay in disease progression. The
preclinical data established a potentially safe and efficacious
starting dose for a Phase 1 single ascending dose study. The trial
is expected to enroll approximately 15 - 24 patients who will be
followed for 104 weeks, with initial readout anticipated in 2021.
Flexion remains on track to treat the first patient by the end of
the year. FX201 data showing dose-dependent decreases in the
severity of cartilage and bone lesions following anterior cruciate
ligament transection in rats will be presented at the American
College of Rheumatology (ACR) annual meeting on Tuesday, November
12 at 9:00 a.m. ET (Abstract: 1974).
- At ACR, Flexion will also present data from a study which used
machine learning to evaluate magnetic resonance imaging (MRI) data
from the Osteoarthritis Initiative to develop a three-dimensional
OA bone shape model of disease progression. The study looked at
47,858 knee MRIs (9,433 knees; 5,031 without OA), taken at various
time points over an eight-year period, with the aim of establishing
a relationship between structure and clinical outcomes. The poster
will be presented on Tuesday, November 12 at 9:00 am ET (Abstract:
2196).
- In October, results from a Phase 2a study evaluating the safety
and systemic exposure of concurrent injections of ZILRETTA in
patients with bilateral knee OA were published in the peer-reviewed
journal, Therapeutic Advances in Musculoskeletal Disease. Findings
from the open-label randomized study showed that concurrent,
bilateral administration of ZILRETTA appeared safe and well
tolerated, resulting in reduced systemic exposure and substantially
lower plasma concentrations of triamcinolone acetonide compared to
immediate-release triamcinolone acetonide in crystalline
suspension.
- In September, Flexion entered into a definitive agreement with
Xenon Pharmaceuticals that provides the Company with the global
rights to develop and commercialize XEN402, a NaV1.7 inhibitor, for
control of post-operative pain. The new preclinical product
candidate, known as FX301, will consist of XEN402 formulated for
extended release from a thermosensitive hydrogel for administration
as a peripheral nerve block for control of post-operative pain. The
thermosensitive formulation is designed to transition from a liquid
into a gel within minutes following injection and provide local
delivery of XEN402 near target nerves for up to a week. Unlike
typical local anesthetics, the selective pharmacology of XEN402 has
the potential to deliver effective pain relief while preserving
motor function. As such, Flexion believes FX301 could enable
ambulation, rapid discharge, and early rehabilitation following
musculoskeletal surgery.
Conference Call Flexion’s management will host
a conference call today at 4:30 p.m. ET. The dial-in number for the
conference call is 855-770-0022 for domestic participants and
908-982-4677 for international participants, with Conference ID #
2438387. A live webcast of the conference call can also be
accessed through the “Investors” tab on the Flexion Therapeutics
website, and a replay will be available online after the call.
Indication and Select Important Safety Information for
ZILRETTA® (triamcinolone acetonide extended-release injectable
suspension)
Indication: ZILRETTA (triamcinolone acetonide
extended-release injectable suspension) is indicated as an
intra-articular injection for the management of osteoarthritis pain
of the knee. It is not intended for repeat administration.
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 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
osteoarthritis-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 knee pain for
12 weeks, with some people experiencing pain relief through Week
16. Learn more at www.zilretta.com.
About FX201FX201 is a locally administered gene
therapy product candidate which utilizes a helper-dependent
adenovirus (HDAd) vector, designed to stimulate the production of
an anti-inflammatory protein, interleukin-1 receptor antagonist
(IL-1Ra), whenever inflammation is present within the joint.
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 both reduce OA pain and modify the disease.
About FX301FX301 is a locally administered
NaV1.7 inhibitor product candidate 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 pain relief while preserving motor
function.
About Osteoarthritis (OA) of the Knee OA, also
known as degenerative joint disease, affects more than 30 million
adults living in the U.S. 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 Therapeutics Flexion
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. For the past three years, Flexion
has been named one of the Best Places to Work by the Boston
Business Journal, and Flexion was recognized as a Top Place to
Work in Massachusetts by The Boston Globe in 2017
and 2018. Visit flexiontherapeutics.com.
Forward-Looking Statements This 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, including,
but not limited to, statements relating to the future of Flexion;
expectations regarding future financial results; Flexion’s plans
and expected timing for clinical and regulatory milestones and
activities; potential impact of changes in the ZILRETTA label;
expected increases in the rate of individuals with OA; and the
potential therapeutic and other benefits of ZILRETTA, FX201 and
FX301, are forward looking statements. 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 risk
that we may not be able to successfully maintain an effective sales
force to commercialize ZILRETTA; competition from alternative
therapies; risks inherent in clinical development and the
regulatory approval process, including the risk that future
clinical results will not be consistent with prior results, the
risk that clinical trials may be delayed or terminated, and the
risk that the FDA may not approve our regulatory submissions; 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, including as a result of limitations in ZILRETTA's
label and package insert information; 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 key employees, markets, economic conditions, health care
reform, prices and reimbursement rates; the risk that we may use
our capital resources in ways that we do not currently expect; 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, 2019 filed with the SEC on
August 6, 2019 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, |
|
2019 |
|
2018 |
Revenue |
$ |
21,786 |
|
|
$ |
6,990 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
2,872 |
|
|
|
1,619 |
|
Research and development |
|
20,938 |
|
|
|
13,578 |
|
Selling, general and administrative |
|
32,136 |
|
|
|
32,804 |
|
Total operating expenses |
|
55,946 |
|
|
|
48,001 |
|
Loss from operations |
|
(34,160 |
) |
|
|
(41,011 |
) |
Interest income (expense),
net |
|
(3,931 |
) |
|
|
(2,773 |
) |
Other (expense) income |
|
(141 |
) |
|
|
144 |
|
Loss from operations before
income tax |
|
(38,232 |
) |
|
|
(43,640 |
) |
Net loss |
|
(38,232 |
) |
|
|
(43,640 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(1.00 |
) |
|
$ |
(1.15 |
) |
Basic and diluted
weighted |
|
|
|
|
|
|
|
average number of common
shares outstanding |
|
38,125 |
|
|
|
37,818 |
|
FLEXION
THERAPEUTICS CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in thousands, except for per share
information) |
|
|
Nine Months Ended September 30, |
|
2019 |
|
2018 |
Revenue |
$ |
49,303 |
|
|
$ |
12,981 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
6,032 |
|
|
|
5,264 |
|
Research and development |
|
52,488 |
|
|
|
38,223 |
|
Selling, general and administrative |
|
97,461 |
|
|
|
90,739 |
|
Total operating expenses |
|
155,981 |
|
|
|
134,226 |
|
Loss from operations |
|
(106,678 |
) |
|
|
(121,245 |
) |
Interest income (expense),
net |
|
(9,974 |
) |
|
|
(8,203 |
) |
Other income |
|
395 |
|
|
|
364 |
|
Loss from operations before
income tax |
|
(116,257 |
) |
|
|
(129,084 |
) |
Net loss |
|
(116,257 |
) |
|
|
(129,084 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(3.06 |
) |
|
$ |
(3.42 |
) |
Basic and diluted
weighted |
|
|
|
|
|
|
|
average number of common
shares outstanding |
|
38,043 |
|
|
|
37,712 |
|
FLEXION THERAPEUTICS SELECTED BALANCE SHEET
DATA (in thousands) |
|
September 30, |
|
December 31, |
|
2019 |
|
2018 |
|
|
|
|
Cash and cash equivalents |
$ |
87,769 |
|
$ |
87,229 |
Marketable securities (current
and non-current) |
|
87,991 |
|
|
171,555 |
Total current assets |
|
225,084 |
|
|
285,042 |
Working capital |
|
187,294 |
|
|
248,425 |
Total assets |
|
244,353 |
|
|
295,752 |
Total notes payable |
|
40,070 |
|
|
13,607 |
Total convertible notes |
|
151,204 |
|
|
144,879 |
Total stockholders'
equity |
|
7,173 |
|
|
110,079 |
|
|
|
|
|
|
Contact:
Scott YoungVice President, Corporate Communications &
Investor RelationsT: 781-305-7194syoung@flexiontherapeutics.com
Julie DownsSenior Manager, Corporate Communications &
Investor RelationsT: 781-305-7137jdowns@flexiontherapeutics.com
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