With growing sales for Zilretta® (triamcinolone acetonide extended-release injectable suspension), its first gene therapy candidate expected to generate clinical data before year’s end and another drug set to enter the clinic before July, Flexion Therapeutics president and CEO Michael Clayman, MD, has reason to be upbeat about his company’s prospects.
“This is, without question, the most exciting time in Flexion’s 14-year history,” Clayman told analysts this week on the company’s quarter conference call.
Flexion focuses on local therapies for musculoskeletal disease, beginning with osteoarthritis (OA), but also including post-operative pain and low back pain. Flexion finished last year with a net loss of $113.7 million, compared with a net loss of $149.8 million in 2019, buoyed by the $85.5 million in net sales generated in 2020 by Zilretta, the company’s extended-release synthetic corticosteroid for managing OA knee pain.
Zilretta’s sales rose 17% from $72.96 million in 2019. While that’s not exactly “blockbuster” level sales—and the drug has been on the market since 2017—Clayman told GEN that 2020 sales exceeded company expectations given the pandemic.
Following Flexion’s 2020 results, Needham analyst Serge Belanger maintained the firm’s “Buy” rating on the company’s stock and set a price target of $20 on Flexion’s shares. Over the past year, Flexion shares have more than doubled from a closing price of $5.53 on March 23, 2020, to a close of $11.73 on Thursday, March 11. It was the third “buy” rating for Flexion and came a month after similar ratings from H.C. Wainwright and Northland Securities.
“We certainly expect continued momentum, because at the end of the day, we want to deliver medicines that matter to patients in need, and we firmly believe that that’s absolutely the case with Zilretta,” Clayman said. “And with FX201, we similarly believe it has that potential too.”
FX201 is a gene therapy candidate that uses a helper-dependent adenovirus (HDAd) vector devoid of all viral genes which carries a coding sequence for the anti-inflammatory protein interleukin-1 receptor antagonist (IL-1Ra), under the control of an inflammation-responsive promoter. FX201 is injected directly into the intra-articular space, with the goal of treating knee pain in OA patients.
6 to 12 Months’ relief
“We are super excited about this product, because it has the potential following a single injection, to confer meaningful pain relief and functional improvement for at least 6-12 months on the one hand, based on preclinical data, but also slow disease progression, which is a holy grail in the osteoarthritis space,” Clayman said.
Last month, Flexion advanced FX201 into the high-dose cohort of its first clinical study, a Phase I dose-escalation trial (NCT04119687) to assess safety and tolerability. The company also said it will expand the study’s low- and mid-dose cohorts to include an additional 20 patients, to get a better idea of efficacy trends.
The open-label trial dosed its first two patients in March 2020, then progressed to the second dose cohort six months later, and at deadline was looking at enrolling more than 50 patients.
By year’s end, Flexion expects to announce data through week 52 for patients treated in the initial low- and mid-dose cohorts of the single ascending dose phase—as well as preliminary data from the high-dose cohort and expanded treatment groups.
“We expect to have directionally defining clinical data, not only on tolerability, but initially on efficacy,” Clayman said. “Stay tuned.”
FX201 is designed to address the sizeable OA market of more than 32.5 million U.S. adults, according to the U.S. Centers for Disease Control and Prevention (CDC)—a number expected to grow substantially in the years ahead due to aging, obesity, and sports injuries.
FX201 originated at Baylor College of Medicine with Kilian Guse, PhD, about a decade ago when he was a postdoc in the lab of Brendan Lee, MD, PhD, director of the Center for Skeletal Medicine and Biology, and chair of the department of molecular and human genetics. In 2017, Flexion acquired FX201 (then called GQ-203) for up to $64 million from GeneQuine Biotherapeutics, which was co-founded by Kuse and is based in Hamburg, Germany. GeneQuine is developing near-identical versions of the gene therapy to treat OA in horses (GQ-201) and in dogs (GQ-202), after Guse showed that HDAd triggered higher levels of expression in the knee than an adeno-associated virus (AAV) vector.
Clayman told GEN last year that FX201 offers two key benefits: The HDAd vector is non-replicating and non-integrating. And directly injecting the therapy to the knee requires a smaller dose per treatment than present-day treatments—which the CEO said recently could reduce treatment cost.
“To achieve a therapeutic concentration in a 5 ml volume, which is the volume of the knee, is orders of magnitude less than what it would be if we’re trying to achieve therapeutic concentration systemically, which is 6,000 ml,” Clayman said. “We haven’t revealed the exact doses, in terms of vector copies. But we are dosing down orders of magnitude compared to what we would have to dose if we were trying to achieve a systemic effect.”
Pricing flexibility
“Dosing down means that the COGS [cost of goods sold] is proportionally less. That creates pricing flexibility that would allow us to charge a price that would reflect the value delivered, but would not have to be outrageous,” Clayman added.
As a result, Clayman added, Flexion was looking to price FX201 “south of seven figures”—a far cry from the seven-figure list prices for gene therapies that have drawn public attention, such as the $2.1 million treatment course for Zolgensma, marketed by Novartis, which has developed discounted patient-access programs with insurers.
“We’re very cognizant of pricing according to value. but not being in the range of what some of the very high-profile ultra-orphan disease gene therapies have charged,” Clayman said.
Earlier this month, the FDA cleared the company’s IND for another pain-fighting pipeline candidate—the peripheral nerve block FX301, a locally administered thermosensitive hydrogel formulation of the preferential NaV1.7 inhibitor, funapide.
Unlike FX201 and Zilretta, FX301 targets post-operative pain, a market large enough to encompass the 48 million ambulatory surgery procedures performed in the U.S. in 2010, according to CDC data released in 2017. According to a study published in 2016, over 80% of patients who undergo surgical procedures experience acute post-operative pain and ~75% of those patients report their pain severity as moderate, severe, or extreme.
During the first half of this year, Flexion plans to dose its first patient in a Phase Ib proof of concept clinical trial of FX301 administered as a popliteal fossa block, a commonly used nerve block in foot and ankle-related surgeries, in patients undergoing bunionectomy. Topline results are expected before the end of the year.
3–5 Days’ relief
“Following that injection, you would get at least 3-5 days’ worth of meaningful pain relief in the post-op space, which would be groundbreaking. You would also get sparing of motor function,” Clayman said.
FX301 would contrast with present-day peripheral nerve blocks that incorporate local anesthetics in the “-caine” class such as lidocaine or bupivacaine or ropivacaine. Those ‘canes are indiscriminate blockers that block sodium channels on motor fibers as they are on sensory fibers, resulting in compromise of motor function.
Flexion has cited a validated preclinical model of post-operative pain showing that FX301 administered as a peripheral nerve block demonstrated analgesic effect beginning at 1 hour post-dosing compared to placebo and significantly greater analgesic effect compared to liposomal bupivacaine at 36 hours post-dosing.
Data from the study also showed that treatment with FX301 did not significantly affect total walking distance in animals at 2 and 24 hours post-injection, compared with a significant reduction in total walking distance for animals treated with liposomal bupivacaine.
“If you’ve just had your knee replaced and the hospital staff is interested in getting you out of bed and starting at rehab the next morning, your ability to do so is imperfect, and falls increase in that setting,” Clayman explained. “The idea of having a product that could confer meaningful pain relief and leave motor function intact, is very, very appealing to the community.”
“Scratching the surface”
Meaningful pain relief is also the aim of Flexion’s Zilretta, which has only begun to penetrate its market of 5 million patients who receive intra-articular knee injections for OA pain: “We ended 2020 with slightly more than 2% penetration of the intra-articular injection market. And our view is that this is just scratching the surface of Zilretta’s potential, which includes becoming a frontline treatment for knee OA patients.”
At 1.6 injections a year on average, that translates to 8 million injections for which patients may seek relief through Zilretta.
“We moved into this space [because] we came to appreciate how ripe it was for innovation, and how large that medical need was,” Clayman told GEN. “We’ve been very pleased with the launch of the product, with its growth, with the clinical data that supported its approval, and particularly over the course of the last few years, the spontaneous patient testimonials that tell us how important Zilretta has been to allow them to regain the function that creates the capability to perform those activities of daily living, or those activities of exercise—mild, moderate, or intense—that give their life meaning.”
Clayman and Neil Bodick, MD, PhD, co-founded Flexion in 2007, after working in drug development at Eli Lilly. Flexion started focusing on OA in 2009 and went public five years later. Bodick served as the company’s chief medical officer until 1026, then chief scientific officer until retiring in January 2020.
Headquartered in Burlington, MA, Flexion employs about 250 people—a headcount that Clayman said is expected to grow “modestly” this year. Flexion’s staff includes a sales force of about 100 representatives, which the company calls “musculoskeletal business managers,” who focus on marketing Zilretta to prescribing physicians, predominantly orthopedic surgeons.
