Flexion Therapeutics, Inc. (Nasdaq:FLXN) today reported financial
results and recent business highlights for the quarter ended March
31, 2020.
“We were very pleased with ZILRETTA’s trajectory earlier in the
first quarter of 2020; however, in March we began to experience
impacts from the COVID-19 pandemic,” said Michael Clayman, M.D.,
President and Chief Executive Officer of Flexion Therapeutics. “The
pandemic negatively affected our customers’ ability to treat
patients as well as our first-quarter sales, and we believe that
COVID-19 will adversely impact revenue for the remainder of the
year. That said, our field teams have been utilizing various
technologies to engage in conversations with prescribing
physicians, and our confidence in ZILRETTA’s long-term potential is
undiminished. In fact, given the cancellations and postponements of
total knee replacement surgeries, we believe ZILRETTA has the
potential to play an increasingly prominent role in a post-pandemic
environment. However, since that time horizon is uncertain, we have
taken meaningful actions to reduce our operating expenses.”
Dr. Clayman added, “We recently made the strategic decision to
discontinue our Phase 2 trial investigating ZILRETTA in shoulder OA
and adhesive capsulitis. Given the small number of patients
enrolled in that trial, the uncertainty around when we will be able
to restart it, as well as the costs required to maintain the study
in an inactive status, we believe terminating the trial is the most
responsible action at this time. Moving forward, we will look to
leverage our learnings from the study and potentially incorporate
them into a new trial design to advance ZILRETTA in these
indications. We continue to plan to reinitiate the FX201 single
ascending dose trial as soon as feasible. Ultimately, we are
committed to ensuring Flexion emerges from the crisis in a position
of strength and that we are ready to quickly reaccelerate our
commercial and R&D activities.”
First-Quarter Results & Financial
HighlightsThe Company reported a net loss of $36.8 million
for the first quarter of 2020, compared to a net loss of $41.5
million for the same period of 2019. Net sales of ZILRETTA were
$20.1 million and $10.6 million for the three months ended March
31, 2020 and 2019, respectively. Cost of sales was $2.3 million and
$1.8 million for the three months ended March 31, 2020 and 2019,
respectively.
Research and development expenses were $21.1 million and $15.4
million for the three months ended March 31, 2020 and 2019,
respectively. The increase in research and development expenses of
$5.7 million was primarily due to an increase of $2.2 million in
salary and other employee-related costs for additional headcount
and stock compensation expense, an increase in expenses related to
FX201, including the payment of $2.5 million to GeneQuine for
dosing the first human patient in the Phase I clinical trial, and
an increase in other portfolio expenses, primarily related to the
$0.5 million milestone to Xenon Pharmaceuticals, offset by a
decrease of $0.5 million in development expenses for ZILRETTA due
to lower clinical trial expenses during the period.
Selling, general and administrative expenses were $29.3 million
and $32.2 million for the three months ended March 31, 2020 and
2019, respectively. Selling expenses were $20.5 million and $23.8
million for the three months ended March 31, 2020 and 2019,
respectively. The year-over-year decrease in selling expenses of
$3.3 million was primarily due to a reduction in physician and
patient marketing activities. General and administrative expenses
were $8.8 million and $8.4 million for the three months ended March
31, 2020 and 2019, respectively, which represents an increase of
$0.4 million.
Interest income was $0.4 million and $1.0 million for the three
months ended March 31, 2020 and 2019, respectively. Interest
expense was $4.7 and $3.9 million for the three months ended March
31, 2020 and 2019, respectively.
As of March 31, 2020, the Company had approximately $125.2
million in cash, cash equivalents and marketable securities
compared with $136.7 million as of December 31, 2019.
ZILRETTA Commercial Metrics Since the launch of
ZILRETTA in November 2017 through March 31, 2020:
- 3,672 of our approximately 5,000 target accounts had purchased
ZILRETTA. This reflects growth of 184 accounts over the period from
launch through December 31, 2019 when 3,488 accounts had purchased
product.
- 77% of purchasing accounts (2,832) had placed at least one
reorder.
- 916 accounts had made ZILRETTA purchases of more than 50 units;
1,077 accounts had purchased 11 to 50 units; and 1,679 accounts had
purchased between 1 and 10 units.
- Accounts that had purchased more than 50 ZILRETTA units
accounted for 177,664 of the total 212,327 ZILRETTA units
purchased.
Reductions in Operating ExpensesIn response to
the economic and business disruption caused by COVID-19, Flexion
undertook prudent and disciplined steps to reduce expenses across
the organization. The Company believes these steps will enhance
financial flexibility and liquidity and estimates they will deliver
between $43 million and $53 million in savings this year. As a
result, Flexion expects full-year 2020 operating expenses
(including cost of sales, research and development, and selling,
general and administrative) will be in the range of $167 million to
$177 million. The Company expects to achieve these cost
savings through:
- Hiring and travel freezes;
- Suspension and/or termination of active clinical trials;
- Elimination of live presence at medical and industry
conferences, reductions in in-person physician speaker programs and
reductions in market research and select marketing programs and
materials; and
- Elimination of non-essential operating expenses.
ZILRETTA Supply Chain The Company remains
confident in its ability to maintain adequate commercial supply of
ZILRETTA and expects its current finished goods inventory will be
sufficient to meet demand for at least the remainder of 2020. To
avoid excess levels of inventory, Flexion is temporarily suspending
manufacturing activities for ZILRETTA. Since Flexion employs a
“condominium model” at Patheon’s manufacturing site, the Company
has the ability to reinitiate manufacturing following three months’
notice to Patheon once additional supply is needed.
Recent News & Business Updates
- On April 1, 2020 Flexion announced an exclusive license
agreement with Hong Kong Tainuo Pharma Ltd. (HK Tainuo) and Jiangsu
Tainuo Pharmaceutical Co. Ltd. (Jiangsu Tainuo, a subsidiary
of China Shijiazhuang Pharmaceutical Co, Ltd.) for the
development and commercialization of ZILRETTA in Greater
China (consisting of mainland China, Hong
Kong and Macau, and Taiwan). Under the terms of the
agreement, HK Tainuo is obligated to pay Flexion an upfront payment
of $10 million. Flexion will also be eligible to receive up to
$32.5 million in aggregate development, regulatory and commercial
sales milestone payments. HK Tainuo will be responsible for the
clinical development, product registration and commercialization of
ZILRETTA in Greater China.
- Also in April, the Company announced the temporary voluntary
suspension of clinical trials. Subsequently, Flexion terminated the
Phase 2 shoulder OA and adhesive capsulitis trial. The Company aims
to reinitiate its Phase 1 trial evaluating the safety and
tolerability of FX201, its investigational intra-articular gene
therapy product candidate for OA when feasible.
- Effectively all medical and scientific congresses scheduled for
the spring of 2020 have been cancelled due to the COVID-19
pandemic. As a result, the following abstracts and posters have
been published online:
- American Society of Gene & Cell Therapy Annual
Meeting/Molecular Therapy
- Establishing the Efficacy, Safety, and Biodistribution of
FX201, a Helper-Dependent Adenoviral Gene Therapy for the Treatment
of Osteoarthritis, in a Rat Model (Abstract 747)
- Development of a Highly Productive and Reproducible
Manufacturing Process for FX201, a Novel Helper-Dependent
Adenovirus-Based Gene Therapy for Osteoarthritis (Abstract
1273)
- Osteoarthritis Research International (OARSI)/Osteoarthritis
& Cartilage
- Prospective Radiographic Analysis of the Effect of Single and
Repeat Administrations of Intra-Articular Corticosteroids in Knee
Osteoarthritis (Abstract 741)
- Fitbit®-Derived Evidence of Enhanced Mobility of Patients with
Knee OA Treated with ZILRETTA: Results from a Phase 3b, Single-Arm,
Open-Label (Abstract 745)
- A Thousand Patient Voices: Knowledge, Impact, and Experiences
of Living with OA of the Knee (Abstract 735)
- American Society of Regional Anesthesia and Acute Pain Medicine
- Efficacy and PK of Peripheral Nerve Block by FX301, a Novel
Nav1.7 Antagonist Hydrogel, in a Postoperative Pain Model in Pigs
(Poster 1169)
Conference
Call Flexion’s management will host a conference call
today at 4:30 p.m. ET. A live webcast of the conference call can be
accessed through the “Investors” tab on the Flexion Therapeutics
website, and a replay will be available online after the call. For
those planning to ask a question, 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 #
4498458. Please dial in at least 15 minutes in advance to ensure a
timely connection to the call.
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 knee pain for
12 weeks, with some people experiencing pain relief through Week
16. Learn more at www.zilretta.com.
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 2018, 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 a corticosteroid (immediate-release or extended-release) 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 disease
progression.
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 Flexion Therapeutics Flexion
Therapeutics (Nasdaq:FLXN) is a biopharmaceutical company
focused on the development and commercialization of novel, local
therapies for the treatment of people 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 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, including,
but not limited to, statements relating to the future of Flexion;
our expectations regarding expenses for the year
ended December 31, 2020; expected savings from actions to
reduce operating expenses; expected impacts from COVID-19 and the
timing and duration of such impacts; Flexion’s ability to maintain
commercial supply of ZILRETTA; long-term potential of ZILRETTA,
including following the COVID-19 pandemic; 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 expense expectations for 2020; the fact
that the impacts and expected duration of the COVID-19 pandemic are
uncertain and rapidly changing; 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 Annual Report on Form 10-K for the year ended December
31, 2019 filed with the SEC on March 12,
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 March 31, |
|
|
2020 |
|
|
|
2019 |
|
Revenue |
$ |
20,127 |
|
|
$ |
10,564 |
|
|
|
|
|
Operating expenses: |
|
|
|
Cost of sales |
|
2,276 |
|
|
|
1,762 |
|
Research and
development |
|
21,134 |
|
|
|
15,424 |
|
Selling, general and
administrative |
|
29,299 |
|
|
|
32,222 |
|
Total
operating expenses |
|
52,709 |
|
|
|
49,408 |
|
Loss from operations |
|
(32,582 |
) |
|
|
(38,844 |
) |
Interest income (expense),
net |
|
(4,294 |
) |
|
|
(2,925 |
) |
Other income |
|
74 |
|
|
|
231 |
|
Loss from operations before
income tax |
|
(36,802 |
) |
|
|
(41,538 |
) |
Net loss |
$ |
(36,802 |
) |
|
$ |
(41,538 |
) |
|
|
|
|
Basic and diluted net loss per
share |
$ |
(0.95 |
) |
|
$ |
(1.09 |
) |
Basic and diluted weighted
average number of common shares outstanding |
|
38,553 |
|
|
|
37,992 |
|
FLEXION THERAPEUTICS SELECTED BALANCE SHEET
DATA(in thousands) |
|
|
March 31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
112,019 |
|
|
$ |
82,253 |
|
Marketable securities |
|
|
13,212 |
|
|
|
54,507 |
|
Total current assets |
|
|
181,396 |
|
|
|
195,675 |
|
Working capital |
|
|
145,700 |
|
|
|
159,456 |
|
Total assets |
|
|
204,582 |
|
|
|
217,560 |
|
Total notes payable |
|
|
60,282 |
|
|
|
40,176 |
|
Total convertible notes |
|
|
155,675 |
|
|
|
153,413 |
|
Total stockholders'
deficit |
|
|
(52,306 |
) |
|
|
(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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