Flexion Therapeutics, Inc. (Nasdaq:FLXN) today reported financial
results and recent business highlights for the quarter ended June
30, 2019.
“The second quarter was marked by excellent progress across all
areas of our business, most notably, ZILRETTA sales of $17 million,
which reflect a 60% increase over the first quarter,” said Michael
Clayman, M.D., President and Chief Executive Officer. “This
impressive performance underscores our belief that ZILRETTA can
become the leading branded intra-articular therapy for the
management of OA knee pain.”
Second-Quarter Results & Financial
Highlights
The Company reported net sales of ZILRETTA of $17.0 million and
$3.8 million for the three months ended June 30, 2019 and 2018,
respectively. Cost of sales was $1.4 million and $0.9 million for
the three months ended June 30, 2019 and 2018, respectively.
Research and development expenses were $16.1 million and $13.1
million for the three months ended June 30, 2019 and 2018,
respectively. The increase in research and development expenses of
$3.0 million was primarily due to an increase of $1.2 million in
salary and other employee-related costs for additional headcount
and stock compensation expense, an increase of $1.5 million in
preclinical expenses related to our portfolio expansion and other
program costs, primarily related to the completion of toxicology
studies and ongoing manufacturing and testing for our gene therapy
product candidate, FX201, and an increase of $0.4 million in
development expenses for ZILRETTA.
Selling, general and administrative expenses were $33.1 million
and $31.0 million for the three months ended June 30, 2019 and
2018, respectively. Selling expenses were $24.8 million and $22.7
million for the three months ended June 30, 2019 and 2018,
respectively. The year-over-year increase in selling expenses of
$2.1 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 $8.3
million for each of the three months ended June 30, 2019 and
2018.
Interest income was $0.8 million and $1.3 million for the three
months ended June 30, 2019 and 2018, respectively. The decrease in
interest income was primarily due to a decrease in the average
investment balance. Interest expense was $3.9 million for each of
the three months ended June 30, 2019 and 2018. The Company reported
a net loss of $36.5 million for the second quarter of 2019,
compared to a net loss of $43.9 million for the same period of
2018.
As of June 30, 2019, the Company had approximately $176.6
million in cash, cash equivalents, marketable securities and
long-term investments compared with $258.8 million as of December
31, 2018.
ZILRETTA Commercial Metrics
Since the launch of ZILRETTA in November 2017 through June 30,
2019:
- 2,733 of Flexion’s approximately 4,400 target accounts had
purchased ZILRETTA. This reflects growth of 22% over the period
from launch through March 31, 2019 when 2,247 accounts had
purchased product.
- 73% (2,004) of purchasing accounts had placed at least one
reorder.
- More than 460 accounts had made ZILRETTA purchases of more than
50 units; nearly 850 accounts had purchased 11 to 50 units; and
roughly 1,425 accounts had purchased between 1 and 10 units.
- Accounts purchasing more than 50 ZILRETTA units have been
responsible for 70% of total ZILRETTA purchases (approximately
62,890 units).
Recent News & Business Updates
- On August 2, 2019, the Company entered into the Amended and
Restated Credit and Security Agreement with Silicon Valley Bank,
MidCap Financial Trust, and Flexpoint MCLS Holdings, LLC, which
provides 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 Company immediately borrowed the $40.0 million term loan
and used $7.7 million of the proceeds to pay off the remaining
amount owed on its $30.0 million debt facility with Silicon Valley
Bank and MidCap Financial Funding XIII Trust. The revolving credit
facility, which is secured by a portion of the Company’s accounts
receivable balance, will be available beginning January 1, 2020,
subject to certain conditions imposed by the lenders, including an
initial borrowing limitation of up to $10.0 million until the
lenders complete an audit of certain collateral accounts.
- In July, new findings from a post-hoc subgroup analysis of the
open-label Phase 3b repeat administration trial of ZILRETTA in
patients with knee osteoarthritis (OA) were presented at the
American Orthopaedic Society for Sports Medicine (AOSSM). The
analysis, which evaluated the efficacy of initial and repeat
administration of ZILRETTA in patients with symptomatic knee OA
ranging in radiographic severity from Kellgren-Lawrence (KL) Grades
2 to 4, indicated that ZILRETTA consistently reduced OA knee pain
for at least 12 weeks after each injection, regardless of KL Grade.
The incidence of treatment emergent adverse events (AEs) were
similar across all KL Grades and the most commonly reported AEs
were consistent with those reported in previous clinical studies of
ZILRETTA.
- In the second quarter, Flexion advanced FX201, a locally
administered gene therapy product candidate, towards first-in-human
testing. Good Manufacturing Practice (GMP) manufacturing of
clinical trial material and IND-enabling nonclinical studies were
completed and the nonclinical program, including Good Laboratory
Practice (GLP) toxicology, biodistribution, and pharmacology
studies, established a potentially safe and efficacious starting
dose for initial clinical testing. In addition, efficacy, in terms
of both symptomatic and structural effects, has been demonstrated
across multiple animal species. Flexion remains on track to file an
Investigational New Drug (IND) application and initiate clinical
studies by the end of the year. In June, the U.S. Patent and
Trademark Office (USPTO) issued patent number 10,301,647, which
covers the composition of matter and method of use of FX201 in the
treatment of OA with a term through January of 2033.
- In May, the Company announced that results from a pooled
analysis of data from three Phase 2/3 randomized clinical trials on
the use of rescue medications with ZILRETTA were published in the
peer-reviewed journal, Pain and Therapy. The analysis showed that
the overall number of rescue medication tablets used per day
through Week 24 was significantly less for ZILRETTA compared to
both saline-placebo (LSM difference, −0.43) and immediate-release
triamcinolone acetonide crystalline suspension (–0.24). The safety
profile of ZILRETTA in this pooled analysis was consistent with
that of the pivotal Phase 3 trial.
- Also in May, Flexion paused enrollment in the Phase 3 trial of
ZILRETTA in hip OA pain, due to a non-safety related issue, which
resulted in the inability to deliver a full dose in a small number
of trial participants. The Company has developed a strong working
hypothesis about the root cause of the issue and is testing those
assumptions in the clinic. Pending successful results, trial
enrollment is expected to resume in the fourth quarter of this
year.
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 #
8464449. 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 pre-clinical, locally
administered 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. 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 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 an immediate-release corticosteroid 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. 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.
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;
Flexion’s plans and expected timing for clinical and regulatory
milestones and activities; expected increases in the rate of
individuals with OA of the knee; and the potential therapeutic and
other benefits of ZILRETTA and FX201, 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 March
31, 2019 filed with the SEC on May 8, 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
THERAPEUTICSCONDENSED
CONSOLIDATEDSTATEMENTS OF OPERATIONS |
(in thousands, except for per share
information) |
|
|
Three Months
Ended June 30, |
|
|
2019 |
|
|
|
2018 |
|
Revenue |
$ 16,953 |
|
|
$ 3,797 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
1,398 |
|
|
|
946 |
|
Research and development |
|
16,125 |
|
|
|
13,094 |
|
Selling, general and administrative |
|
33,103 |
|
|
|
31,036 |
|
Total operating expenses |
|
50,626 |
|
|
|
45,076 |
|
Loss from operations |
|
(33,673) |
|
|
|
(41,279) |
|
Interest income (expense),
net |
|
(3,118) |
|
|
|
(2,672) |
|
Other income |
|
304 |
|
|
|
76 |
|
Loss from operations before
income tax |
|
(36,487) |
|
|
|
(43,875) |
|
Net loss |
|
(36,487) |
|
|
|
(43,875) |
|
|
|
|
|
Basic and diluted net loss per
share |
$ (0.96) |
|
|
$ (1.16) |
|
Basic and diluted weighted
average number of common shares outstanding |
|
38,010 |
|
|
|
37,697 |
|
FLEXION THERAPEUTICSCONDENSED
CONSOLIDATEDSTATEMENTS OF OPERATIONS |
(in thousands, except for per share
information) |
|
|
Six Months
Ended June 30, |
|
|
2019 |
|
|
|
2018 |
|
Revenue |
$ 27,517 |
|
|
$ 5,991 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
3,160 |
|
|
|
3,644 |
|
Research and development |
|
31,550 |
|
|
|
24,645 |
|
Selling, general and administrative |
|
65,325 |
|
|
|
57,935 |
|
Total operating expenses |
|
100,035 |
|
|
|
86,224 |
|
Loss from operations |
|
(72,518) |
|
|
|
(80,233) |
|
Interest income (expense),
net |
|
(6,043) |
|
|
|
(5,430) |
|
Other income |
|
536 |
|
|
|
219 |
|
Loss from operations before
income tax |
|
(78,025) |
|
|
|
(85,444) |
|
Net loss |
|
(78,025) |
|
|
|
(85,444) |
|
|
|
|
|
Basic and diluted net loss per
share |
$ (2.05) |
|
|
$ (2.27) |
|
Basic and diluted weighted
average number of common shares outstanding |
|
38,001 |
|
|
|
37,659 |
|
|
|
|
|
|
|
|
|
FLEXION THERAPEUTICS SELECTED BALANCE SHEET
DATA(in thousands) |
|
|
June 30, |
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
Cash and cash equivalents |
|
$ 45,701 |
|
$ 87,299 |
Marketable securities (current
and non-current) |
|
|
130,861 |
|
|
171,555 |
Total current assets |
|
|
211,184 |
|
|
285,042 |
Working capital |
|
|
184,114 |
|
|
248,425 |
Total assets |
|
|
232,480 |
|
|
295,752 |
Total notes payable |
|
|
8,956 |
|
|
13,607 |
Total convertible notes |
|
|
149,046 |
|
|
144,879 |
Total stockholders'
equity |
|
|
41,471 |
|
|
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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