Flexion (FLXN) Could Trade to $34 Following Data - RBC

RBC Capital Outperform Flexion Therapeutics price target of $44.00

RBC Capital analyst, Randall Stanicky, commented on Flexion Therapeutics' (NASDAQ: FLXN) positive data and believes there is a realistic scenario supporting a $34 share price near term. No change to Outperform rating or $44 PT. Note that the company is holding a conference call at 9AM ET - dial-in (855) 770-0022 ID# 51030771.

FLXN reported positive results from its Pivotal Phase III trial for Zilretta yesterday post close. Zilretta hit its primary end point against placebo and versus IR TCA showed stat sig through week 12 on WOMAC and KOOS.

Zilretta Phase III data read positive demonstrating that FLXN has an approvable product with differentiation versus IR TCA. Results indicated that on the primary endpoint, statistical significance was achieved from weeks 1 through 16 against placebo (primary endpoint at week 12 p<0.0001), showing much stronger analgesia than anticipated. The secondary endpoint results against TCA on WOMAC A (pain), WOMAC B (stiffness) and WOMAC C (function) and the KOOS subscale achieved statistical significance through week 12, though the daily pain rating scale (NRS) did not achieve significance from weeks 2 to 12.

FLXN will meet with FDA and expects a 2H2016 NDA filing. The key question is whether FDA will take the Phase IIb and Phase III in totality to support the NDA. If the aggregated data is deemed enough then a 2H2016 filing could be expected.

The analyst has previously pointed to ~0.7x peak post favorable data as a supportable level which would imply value towards $735 million in cap or ~$34 per share. Specialty pharma comps have traded towards 1x peak on NDA filing with average take-outs in the ~1.5-2x range. There are two things to consider here (i) The market is applying higher discount rates to smid cap specialty stocks, at least near-term although FLXN is now in a much better risk profile. (ii) Clarity is needed on whether FDA will accept the aggregated data for NDA filing which is the next important catalyst near-term.

For an analyst ratings summary and ratings history on Flexion Therapeutics click here. For more ratings news on Flexion Therapeutics click here.

Shares of Flexion Therapeutics closed at $10.90 yesterday.

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