$heff's $tation of $tocks & $olid DD

[Chimaera]

$FLXN...had some time tonight for further research and this one looks solid. Question is whether to add to starter position (avg. $23.96, got lucky on the dip this morning), and if so, when. Market is a roller coaster, $FLXN already popped a bit today (+7%) and I don't like to hold through catalysts. Will probably add if the market provides a bargain, but otherwise be happy with my starter for now and look to add if positive Ph2b data is released this month. Summary of what I've found:

It's all about the lead product, FX006, which is an extended-release version of the current standard of care (triamcinolone acetonide, TCA; a steroid) for osteoarthritis of the knee. The proposed advantages over a standard TCA injection are 1) increased magnitude and duration of pain relief, and 2) decreased availability of TCA to the bloodstream, which improves the safety profile. So far so good, FX006 is better than standard TCA using various metrics and times post-injection as endpoints:

poster presentation

June 2015 peer-reviewed publication

Near-term catalysts are the release of Ph2b topline data sometime this month, and Ph3 data in Q1 2016. Ph2b seems to have a low bar and therefore excellent chance for success, as FX006 has shown equivalence or superiority to TCA in other trials but this one (Ph2b) is only assessing two doses of FX006 vs. placebo. Details of that trial are linked below, including the primary outcome, which is "Change from Baseline to Week 12 in the weekly mean of the average daily (24-hour) pain intensity score." The 40 mg dose was the most effective in earlier trials, with 10 mg ineffective and 60 mg not providing additional efficacy over 40 mg. TCA is administered at 40 mg.

Clinical Trial NCT02116972

Phase 3 has already completed enrollment (3 months early), and info including the primary and secondary endpoints linked below. Study will evaluate 40 mg FX006 vs. placebo and 40 mg TCA. The primary outcome is "Change from Baseline to Week 12 in the weekly mean of the average daily (24-hr) pain intensity score for FX006 relative to placebo".

Clinical Trial NCT02357459

Of note, the safety profile of FX006 looks good and similar to TCA. Company has a high cash burn rate (>$12M last quarter) but $127M in cash plus a recent financing for an additional $30M as discussed in the most recent 10Q and earnings call:

10Q

Earnings Call

Notable quotes include:

From 10Q: "As of June 30, 2015, we had cash, cash equivalents and marketable securities of $127.4 million and working capital of $122.7 million. Based upon our current operating plan, we believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital requirements at least into 2017, including through completion of our pivotal Phase 2b and Phase 3 clinical trials for FX006 and the submission of an NDA for FX006."

From earnings call (discussing $30M financing): "Some of the key features of the debt facility are that it is non-dilutive, it has no warrants attached."

Finally, institutions and analyst info. Today Northland Securities reiterated their outperform rating and $40 target given yesterday's news of Fast Track Status for FX006. RBC and BMO are also bullish with near $40 targets: Analyst ratings

$FLXN has 92% institutional ownership with an increase of 41% quarter over quarter, and a 9% increase in hedge fund buys according to WhaleWisdom.