Why Flexion Therapeutics' New Pain Drug Could Be a Game-Changer

By Motley Fool Staff Markets Fool.com

Flexion Therapeutics'(NASDAQ: FLXN) Zilretta is awaiting an FDA approval decision. If the regulator gives it a green light, Zilretta could reduce the use of opiates and corticosteroids in treating osteoarthritis of the knee.

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In this clip from The Motley Fool's Industry Focus: Healthcare podcast, Todd Campbell joins analyst Kristine Harjes to discuss Zilretta's market opportunity.

A full transcript follows the video.

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This video was recorded on April 12, 2017.

Kristine Harjes:Last company we want to talk about today isone that calledFlexion. InDecember of last year, they filed forapproval of their drug, which is called Zilretta.

Todd Campbell:Yeah. Zilrettais an intriguing drug, becauseit could reduce the need for both opioids andcorticosteroid shots. Ifyou suffer from osteoarthritis of the knee, you know how much pain you're under regularly because of it. Typically speaking, you start off with things like NSAIDs,so you're taking things like aspirin and ibuprofen and those types of things. Then you may advance to other types of solutions,including corticosteroid injections that are givenonce every three months. The problem with that isonce those corticosteroid injectionsoftentimes wear off relatively quickly, in a matter of weeks -- ifyou're still suffering from chronic pain, you might needother pain-relief medications, including opioids. Zilretta, in its trials, showedit could control pain for the entire three-month period. Since it's not anopioid, that istheoretically a major advantage. If you can control pain for that entire period, and remove the needto have to rely onopioids as a back-up medication, it wouldn't take a lot of patients who aresuffering from pain that requires corticosteroids to make this drug into a top seller. And, full disclosure,I happen to be long the stock myself, and a lot can go wrong from here. TheFDA could come back and say they want more studies, the FDAcould reject it. We'renot on the market yet, but this is an intriguing drug.

Harjes:And if it does end up on the market, peak sales estimates are upwards of $500 million, and perhaps could even be a blockbuster drugif the label ended up being expanded to reach some other joints. Approval should come in October. One other thing you need to mentionwhen you're talking about this drug is the potential buyoutrumors. AtThe Motley Fool, we don't believe in buying a stockjust because of the buyout rumors. But I think when you're looking at the share price of this company and trying tounderstand how much the market cap has moved lately. This is the center of that story. So,pretty much on March 23,FiercePharmareported that Flexion's board had voted to accept a buyout offer fromSanofithat would be worth more than $1 billion in cash, which has inflated this company's market cap quite a bit. Today, it's standing around $845 million. You have a whole handful of Sanofiexecutive going from Sanofi over to Flexion. Just last week, one of the top officials at Sanofi joined Flexionas the chief medical officer. So itcertainly does seem like this buyout would make sense, although,to my knowledge, neither company has commented to confirm that it actually is even being discussed.

Campbell:Right, it's all rumor and innuendo right now. You'redrawing lines between some dots.Who knows what ends up happening? Obviously, there's a lot of activity in this space; that means there's a lot of options that Sanofi could be considering. Don't buy a stock, any stock, this stock,based upon the potential for a suitor to come and pony up some money to buy. Instead,look at all of these companies on the basis of, can they displace the use ofopioids and help reduce the risk of dependency and potential deaths?

Kristine Harjes has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.