Massachusetts based biopharmaceutical company Flexion
Therapeutics (FLXN 12.76, +0.43, +3.48%) touched worse than 2-year lows this morning in
reaction to the company’s worse than expected fourth quarter and full year 2019
Simply put, Flexion now sees worse than expected fourth quarter revenue of about $9.5 mln, an increase of 36% over the previous quarter, yet still not as brisk as the market had hoped. Flexion noted that 2018 was a foundational year for the company’s osteoarthritis pain treatment, ZILRETTA, and in the first full year of the launch Flexion saw strong product uptake. Furthermore, the clinical feedback on ZILRETTA from physicians and patients alike, says company management, continues to be overwhelmingly positive and gratifying.
The company enters 2019 with a permanent, product-specific J code (J3304), which it believes will be a key driver of continued ramp, as providing prescribers with a familiar and clearly defined reimbursement mechanism utilized by both private payers and Medicare may thus increase consumer confidence regarding reimbursement, which could result in improved access to and awareness of ZILRETTA. Flexion announced issuance of the J code, a reimbursement code assigned to “buy and bill” products administered by physicians under Medicare Part B, for ZILRETTA back in November.
That said, Flexion sees worse than expected 2019 ZILRETTA product revenue, expecting to see revenues between $65-80 mln. While the guidance may at face value seem a bit light, it’s likely that investors may welcome the initial look at Flexion’s 2019 roadmap, as it appears that the company viewed market expectations as a bit high. Last night’s guide, then, serves to reset those expectations – which were undoubtedly lofty amid increased growth from ZILRETTA.
Specifically, in Q2 the company reported $3.8 mln in ZILRETTA sales; in Q3, the drug made $7.0 mln; and in Q4, Flexion anticipates $9.5 mln in sales.
Recall that on Wednesday, Flexion announced that enrollment in its Phase 3 hip osteoarthritis trial for ZILRETTA, which the company expects to be completed in 2020, has begun. An additional Phase 2 study of shoulder osteoarthritis and adhesive capsulitis (frozen shoulder) are planned for the second half of 2019.
Trading action in FLXN indicates investors are more optimistic on the guidance than initially thought. After opening 10.8% lower this morning, shares have pared their losses and now stand above 3% higher. To be sure, the stock has had an interesting start to 2019, as on Wednesday, shares added 10.1% only to give back 1.0% yesterday. Volatile, indeed.
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