Flexion Therapeutics, Inc. (Nasdaq:FLXN) today reported financial
results and recent business highlights for the quarter ended June
30, 2020.
“In light of the significant challenges presented by COVID-19,
we made excellent progress across all areas of the business in the
second quarter,” said Michael Clayman, M.D., President and
Chief Executive Officer of Flexion Therapeutics. “We saw
demand for ZILRETTA build month-over-month throughout the quarter,
and we continued to add new accounts, bolstering our confidence
that ZILRETTA can become the leading intra-articular therapy for OA
knee pain. Furthermore, in May, following the voluntary suspension
of clinical trials, we resumed the Phase 1, dose-escalation trial
evaluating the safety and tolerability of FX201, our novel,
intra-articular, IL-1RA gene therapy product candidate in
development for the treatment of OA. In addition, we continued to
advance the preclinical program for FX301, a locally administered
peripheral nerve block product candidate for control of
post-operative pain, and we remain on track to enter the clinic in
2021. While the impacts of the pandemic on the second half of the
year are impossible to predict, our confidence in ZILRETTA and our
ability to advance our pipeline of compelling product candidates,
remains as strong as ever.”
Second-Quarter Results & Financial
Highlights
The Company reported a net loss of $32.6 million for the second
quarter of 2020, compared to a net loss of $36.5 million for the
same period of 2019. Net sales of ZILRETTA were $15.5 million and
$17.0 million for the three months ended June 30, 2020 and 2019,
respectively.
Flexion recognizes revenue primarily on sales of ZILRETTA to
specialty distributors and a specialty pharmacy versus the
purchases of ZILRETTA by healthcare providers. Due to the
impacts of COVID-19, the level of product inventory held at
specialty distributors at the end of the first quarter was higher
than prior quarters. As purchases of ZILRETTA by healthcare
providers increased throughout the second quarter, the specialty
distributors worked through their elevated inventory
levels. As a result, the aggregate number of ZILRETTA units
that specialty distributors purchased and that the Company
recognized as revenue in the second quarter was less than the
aggregate amount purchased by healthcare providers from specialty
distributors during this period.
Cost of sales was $5.5 million and $1.4 million for the three
months ended June 30, 2020 and 2019, respectively. For the three
months ended June 30, 2020, cost of sales included $1.6 million for
the actual cost of units sold, $3.4 million of unabsorbed overhead
associated with the voluntary, temporary suspension of
manufacturing activities at Patheon due to COVID-19 impacts on
sales of ZILRETTA, and $0.5 million of period costs and other
adjustments.
Research and development expenses were $12.5 million and $16.1
million for the three months ended June 30, 2020 and 2019,
respectively. The decrease in research and development expenses of
$3.6 million was primarily due to a decrease of $2.7 million in
development expenses for ZILRETTA due to lower ZILRETTA clinical
trial activity during the period, as well as a decrease of $1.0
million in salary and other employee-related costs and stock-based
compensation expense related to lower headcount.
Selling, general and administrative expenses were $24.7 million
and $33.1 million for the three months ended June 30, 2020 and
2019, respectively. Selling expenses were $16.8 million and $24.8
million for the three months ended June 30, 2020 and 2019,
respectively. The year-over-year decrease of $8.0 million was
primarily due to the expense reduction measures taken in response
to COVID-19. General and administrative expenses were $7.9 million
and $8.3 million for the three months ended June 30, 2020 and 2019,
respectively, which represents a decrease of $0.4 million.
As a result of the Company’s musculoskeletal business managers
(MBMs) returning to the field and the resumption of the clinical
trial for FX201, 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 versus previous
guidance of $167 million to $177 million.
Interest income was $0.1 million and $0.8 million for the three
months ended June 30, 2020 and 2019, respectively. Interest expense
was $5.0 and $3.9 million for the three months ended June 30, 2020
and 2019, respectively.
As of June 30, 2020, the Company had approximately $200.6
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 begin to return
to pre-COVID-19 levels by early 2021, Flexion believes
that its current cash, cash equivalent and marketable securities,
will be sufficient to fund operations into 2022.
Recent News & Business Updates
- On July 14, 2020, Flexion pre-announced preliminary ZILRETTA
net sales for the second quarter and provided updated Commercial
metrics. Despite negative impacts from COVID-19 early in the
quarter, demand for ZILRETTA grew month-over-month in the second
quarter with purchases by healthcare providers reaching 4,863
units, 13,547 units and 18,287 units in April, May and June,
respectively. In total, approximately 36,700 units of ZILRETTA were
purchased in the second quarter, which is essentially in line with
the first quarter of 2020.
- In May 2020, Flexion completed an underwritten public offering
of 10,615,385 shares of its common stock, including the exercise in
full of the underwriters’ option to purchase shares, raising total
net proceeds of $97.3 million, after underwriting discounts and
commissions.
- Also in May, Flexion restarted enrollment in the Phase 1,
dose-escalation trial evaluating the safety and tolerability of
FX201, its investigation gene therapy product candidate for OA.
Throughout the quarter Flexion continued to advance the preclinical
program for FX301, its locally administered NaV1.7 inhibitor
product candidate, known as funapide formulated for extended
release in a thermosensitive hydrogel. The Company anticipates
initiating FX301 clinical trials in 2021. In addition, the Company
intends to initiate a trial investigating ZILRETTA in shoulder OA
in 2021.
- After voluntarily pausing ZILRETTA manufacturing early in the
second quarter, Flexion announced plans to recommence manufacturing
in the fourth quarter of this year to help ensure adequate and
uninterrupted supply of ZILRETTA to meet future demand.
Indication and Select Important Safety Information for
ZILRETTA
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 OA knee pain
for 12 weeks, with some people experiencing pain relief through
Week 16. Learn more at www.zilretta.com.
About FX201FX201 (humantakinogene hadenovec) is
a novel, intra-articular gene therapy product candidate which
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 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 Knee OA, 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 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, a type of degenerative
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;
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; expected timing of manufacturing
activities and Flexion’s ability to maintain commercial supply of
ZILRETTA; the long-term potential of ZILRETTA, including following
the COVID-19 pandemic; expected increases in the rate of
individuals with OA of the knee; and the potential therapeutic and
other benefits of ZILRETTA, 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 fact that the impacts and expected duration of the
COVID-19 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 March 31, 2020 filed with the SEC on May 7, 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 THERAPEUTICSCONDENSED
CONSOLIDATEDSTATEMENTS OF OPERATIONS |
(in thousands, except for per share
information) |
|
|
Three Months Ended June 30, |
|
|
2020 |
|
|
|
2019 |
|
Revenue |
$ |
15,451 |
|
|
$ |
16,953 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
5,481 |
|
|
|
1,398 |
|
Research and
development |
|
12,507 |
|
|
|
16,125 |
|
Selling, general and
administrative |
|
24,730 |
|
|
|
33,103 |
|
Total operating expenses |
|
42,718 |
|
|
|
50,626 |
|
Loss from operations |
|
(27,267 |
) |
|
|
(33,673 |
) |
Interest income (expense),
net |
|
(4,907 |
) |
|
|
(3,118 |
) |
Other (expense) income |
|
(197 |
) |
|
|
304 |
|
Loss from operations before
income tax |
|
(32,371 |
) |
|
|
(36,487 |
) |
Income tax expense |
|
248 |
|
|
|
- |
|
Net loss |
|
(32,619 |
) |
|
|
(36,487 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.76 |
) |
|
$ |
(0.96 |
) |
Basic and diluted weighted
average number of common shares outstanding |
|
42,776 |
|
|
|
38,010 |
|
|
FLEXION
THERAPEUTICSCONDENSED
CONSOLIDATEDSTATEMENTS OF OPERATIONS |
(in thousands, except for per share
information) |
|
|
Six Months Ended June 30, |
|
|
2020 |
|
|
|
2019 |
|
Revenue |
$ |
35,578 |
|
|
$ |
27,517 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
7,757 |
|
|
|
3,160 |
|
Research and
development |
|
33,641 |
|
|
|
31,550 |
|
Selling, general and
administrative |
|
54,029 |
|
|
|
65,325 |
|
Total operating expenses |
|
95,427 |
|
|
|
100,035 |
|
Loss from operations |
|
(59,849 |
) |
|
|
(72,518 |
) |
Interest income (expense),
net |
|
(9,201 |
) |
|
|
(6,043 |
) |
Other (expense) income |
|
(123 |
) |
|
|
536 |
|
Loss from operations before
income tax |
|
(69,173 |
) |
|
|
(78,025 |
) |
Income tax expense |
|
248 |
|
|
|
- |
|
Net loss |
|
(69,421 |
) |
|
|
(78,025 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(1.71 |
) |
|
$ |
(2.05 |
) |
Basic and diluted
weightedaverage number of common shares outstanding |
|
40,664 |
|
|
|
38,001 |
|
|
FLEXION THERAPEUTICS SELECTED BALANCE SHEET
DATA(in
thousands) |
|
June 30, |
|
December 31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
Cash and cash equivalents |
$ |
183,099 |
|
$ |
82,253 |
|
Marketable securities |
|
17,509 |
|
|
54,407 |
|
Total current assets |
|
246,567 |
|
|
195,675 |
|
Working capital |
|
209,210 |
|
|
159,456 |
|
Total assets |
|
271,776 |
|
|
217,560 |
|
Total notes payable |
|
60,468 |
|
|
40,176 |
|
Total convertible notes |
|
157,990 |
|
|
153,413 |
|
Total stockholders' equity
(deficit) |
|
16,515 |
|
|
(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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