Lake Street Capital Likes Felxion's Lead Drug Candidate, Prescribes A Buy Rating

Flexion Therapeutics Inc FLXN is expected to submit NDA for its lead drug candidate, Zilretta, in Q4 this year. Zilretta seems “well positioned to emerge as a breakthrough, best-in-class therapy,” Lake Street Capital Markets’ Bruce D. Jackson said in a report. He assigned a Buy rating on the company, with a price target of $38.

Zilretta Potential

Zilretta for treating osteoarthritis knee pain addresses a worldwide TAM of about $2.8 billion, including related indications. Analyst Jackson estimated the peak sales potential at more than $750 million. He expects the NDA submission in Q4, with Fast Track designation. This could mean a potential approval as early as Q2 2017.

Flexion remains on track with the transfer of manufacturing to Patheon NV PTHN, “with anticipated approval of facilities and processes consistent with approval timing of Zilretta,” Jackson wrote.

“Finally, we view the strength of Zilretta’s P3 and P2b trials, accompanied by the FDA’s waiver of a pre-NDA meeting, as major de-risking events for Zilretta’s approval and clinical differentiation from the standard of care (immediate-release corticosteroids intra-articular injections) as well as HA therapies,” the analyst commented.

Flexion’s stock valuation does not adequately reflect Zilretta’s market potential, Jackson stated, while adding that the drug candidate could “rapidly capture market share as it offers orthopedists and rheumatologists an efficacious, long-acting and safe alternative to existing therapies that are inadequate in controlling OA knee pain.”

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