Flexion Therapeutics, Inc. (Nasdaq:FLXN) today reported financial
results and recent business highlights for the quarter and the full
year ended December 31, 2019.
“2019 marked an exciting period of growth for both Flexion and
ZILRETTA,” said Michael Clayman, M.D., President and Chief
Executive Officer. “While our full-year sales of $73 million
reflect the building market enthusiasm for ZILRETTA, we believe we
are still just scratching the surface of its potential. Based on
our recent label update, increasing utilization from existing
accounts, a growing prescriber base, and most importantly, the
strong clinical performance of the product, we have growing
confidence that ZILRETTA can become the leading intra-articular
therapy for the millions of people who confront osteoarthritis knee
pain each year. Furthermore, we continue to investigate ZILRETTA’s
potential in new indications with our Phase 2 trial in shoulder OA
and adhesive capsulitis.”
Added Dr. Clayman, “ZILRETTA is the engine that will drive our
growth in the years ahead and facilitate our goal of becoming the
leader in discovering, developing and commercializing new
treatments for musculoskeletal conditions. We are making great
strides towards this goal as evidenced by the progress of FX201 and
FX301, two potentially transformative product candidates.”
2019 Financial Highlights
The Company reported a net loss of $149.8 million for full-year
2019 as compared to a net loss of $169.7 million for full-year
2018. Net sales of ZILRETTA were $23.7 million for fourth-quarter
2019 and totaled $73 million for full-year 2019. The cost of sales
for full-year 2019 was $10.0 million.
Research and development expenses were $69.6 million and $53.1
million for the years ended December 31, 2019 and 2018,
respectively. The increase in research and development expenses
year-over-year of $16.5 million was primarily due to an increase in
salary and other employee-related costs for additional headcount
and stock-based compensation expense and an increase in expenses
related to portfolio expansion, ZILRETTA development and other
program costs.
Selling, general and administrative expenses were $129.7 million
and $121.3 million for the years ended December 31, 2019 and 2018,
respectively. Selling expenses were $96.3 million and $87.3 million
for the years ended December 31, 2019 and 2018, respectively. The
year-over-year increase in selling expenses of $9.0 million was
primarily due to salary and other employee-related costs and
external costs related to marketing and reimbursement support
activities. General and administrative expenses were $33.4 million
and $34.0 million for the years ended December 31, 2019 and 2018,
respectively, which represents a decrease of $0.6 million
year-over-year.
Interest expense was $17.1 million and $15.7 million for the
years ended December 31, 2019 and 2018, respectively.
As of December 31, 2019, the Company had approximately $136.7
million in cash, cash equivalents, and marketable securities
compared with $258.8 million as of December 31, 2018.
ZILRETTA Commercial Metrics Since the
commercial launch of ZILRETTA in November 2017 through December 31,
2019:
- 3,488 of Flexion’s approximately 4,972 target accounts had
purchased ZILRETTA. This compares to the 3,130 purchasing accounts
over the period from launch through September 30, 2019.
- 76% (2,642) of purchasing accounts had placed at least one
reorder.
- 794 accounts had made ZILRETTA purchases of more than 50 units;
1,028 accounts had purchased 11 to 50 units; and 1,666 accounts had
purchased between 1 and 10 units.
- Accounts purchasing more than 50 ZILRETTA units have been
responsible for 81% of total ZILRETTA purchases (142,789
units).
Recent News and 2019 Business Highlights
- In March 2020, the Company announced the appointment of Melissa
Layman as Chief Commercial Officer. Ms. Layman has more than 25
years of commercial experience within the life science industry,
most recently with Lantheus Medical Imaging where she served as
Vice President for Global Sales and Marketing.
- Also in March 2020, the first two patients were treated in 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, with symptomatic knee OA
(Kellgren-Lawrence Grade 2 or 3). The Company anticipates data from
the study will be available in 2021. FX201 is a gene therapy
product candidate designed to stimulate the production of an
anti-inflammatory protein, interleukin-1 receptor antagonist
(IL-1Ra), whenever inflammation is present within the joint. Based
on preclinical data, the Company believes FX201 holds the potential
to provide OA pain relief for a year or more and may slow disease
progression.
- Flexion completed the primary endpoint analysis of its
open-label, single-arm, Phase 3b trial assessing the effect of a
single administration of ZILRETTA on synovitis in patients with
knee OA. The data indicate that treatment with ZILRETTA resulted in
a significant reduction (>50%) in synovial tissue volume at Week
6 compared to baseline (N=89 patients). These patients also
reported improvements in pain and function scores over this time
period. Patients continue to be followed in the trial to capture
additional, longer-term exploratory measures as synovitis, or
inflammation of the synovial membrane, is believed to play an
important role in the progression of OA.
- In December 2019, Flexion announced that the FDA approved its
supplemental New Drug Application (sNDA) for ZILRETTA. The revised
product label removed language which previously stated that
ZILRETTA was “not intended for repeat administration” and replaced
it with new language stating that “the efficacy and safety of
repeat administration of ZILRETTA have not been demonstrated.”
- Also in December, Flexion announced the enrollment of the first
three patients in a clinical trial to evaluate the efficacy of
ZILRETTA in patients with either shoulder OA or adhesive capsulitis
(AC), also known as frozen shoulder. The Phase 2 double-blind,
placebo-controlled, study is expected to enroll up to 250 patients
– approximately 135 with shoulder OA and 115 with shoulder AC. The
data are anticipated in 2021.
- 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,
known as funapide, for control of post-operative pain. The new
preclinical product candidate, known as FX301, consists of XEN402
formulated for extended release from a thermosensitive hydrogel for
administration as a peripheral nerve block for control of
post-operative pain. Flexion held a pre-IND meeting with FDA in
January and remains on track to initiate FX301 clinical trials in
2021.
- In August 2019, the Company entered into an Amended and
Restated Credit and Security Agreement with Silicon Valley Bank,
MidCap Financial Trust, and Flexpoint MCLS Holdings, LLC, for a
term loan of $40.0 million and a revolving credit facility up to
$20.0 million, both of which mature on January 1, 2024. The
revolving credit facility is secured by a portion of the Company’s
accounts receivable balance. The Company drew down the term loan of
$40 million in August and in February 2020 drew down $20 million
from the revolving credit facility.
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
#8074875. 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 is indicated as an
intra-articular injection for the management of osteoarthritis 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 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.
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 2016, more than 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 an immediate-release corticosteroid or
hyaluronic acid intra-articular injection to manage their knee
pain.
About FX201 FX201 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 osteoarthritis
(OA). By persistently suppressing inflammation, Flexion believes
FX201 holds the potential to both reduce OA pain and modify the
disease.
About FX301 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 pain relief
while preserving motor function and anticipates initiating clinical
trials in 2021.
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.
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;
our expectations regarding revenues for the year ended December 31,
2020; expected sales growth of ZILRETTA; expected clinical
developments and clinical trial timelines; expected increases in
the rate of individuals with OA of the knee; and the potential
therapeutic and other benefits of ZILRETTA and Flexion’s product
pipeline, 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, risk
that we may not achieve revenue expectations for 2020; 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 September 30, 2019 filed with
the SEC on November 7, 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.
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|
FLEXION THERAPEUTICSCONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(in
thousands, except for per share information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2019 |
|
2018 |
Revenue |
|
$ |
72,957 |
|
$ |
22,524 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Cost of sales |
|
9,960 |
|
7,336 |
Research and development |
|
69,559 |
|
53,079 |
Selling, general and administrative |
|
129,709 |
|
121,311 |
Total operating expenses |
|
209,228 |
|
181,726 |
Loss from operations |
|
(136,271) |
|
(159,202) |
Interest income (expense),
net |
|
(13,854) |
|
(11,145) |
Other income |
|
352 |
|
688 |
Loss from operations before
income tax |
|
(149,773) |
|
(169,659) |
Net loss |
|
(149,773) |
|
(169,659) |
|
|
|
|
|
Basic and diluted net loss per
share |
|
$ |
(3.93) |
|
$ |
(4.49) |
Basic and diluted
weighted |
|
|
|
|
average number of common
shares outstanding |
|
38,086 |
|
37,751 |
|
|
|
|
|
|
|
|
|
|
FLEXION THERAPEUTICS SELECTED BALANCE SHEET
DATA(in thousands) |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
82,253 |
|
$ |
87,299 |
Marketable securities |
|
54,407 |
|
171,555 |
Total current assets |
|
195,675 |
|
285,042 |
Working capital |
|
159,456 |
|
248,425 |
Total assets |
|
217,560 |
|
295,752 |
Total notes payable |
|
40,176 |
|
13,607 |
Total convertible notes |
|
153,413 |
|
144,879 |
Total stockholders' (deficit)
equity |
|
(20,108) |
|
110,079 |
|
|
|
|
|
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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