Flexion Files for IPO, Seeks $86M to Develop Osteoarthritis Drugs
(Corrected, 2/12/14 at 12:11 pm ET) Flexion Therapeutics today became the latest biotech to jump into the IPO queue, looking to public investors to help bankroll the development of its osteoarthritis drugs.
The Burlington, MA-based company filed its IPO prospectus with the Securities and Exchange Commission late Wednesday, outlining plans to raise as much as $86.25 million by selling its shares to public investors. BMO Capital Markets and Wells Fargo Securities will underwrite the offering. Flexion would trade on the Nasdaq under the ticker symbol “FLXN” should it go through with the IPO.
(Correction below) Flexion has already raised about $75 million in equity financing from private investors. Versant Ventures owns 29.8 percent of the company’s stock. Sofinnova Partners (19.25 percent), Pfizer (17.32 percent), 5AM Ventures (15.52 percent), and Novo A/S (11.20 percent) also hold big pieces of equity. (An earlier version of this story listed Sofinnova Ventures instead of Sofinnova Partners).
Flexion was originally formed in 2007 by Eli Lilly veterans Michael Clayman and Neil Bodick. The initial idea was to snap up drugs shelved by Big Pharma, run them through efficient trials to quickly see if they should be developed or not, and then partner or sell the drugs to an acquirer.
That concept, however, never held up. Flexion wasn’t getting the kind of lucrative licensing deals it was hoping for, and didn’t want to bear the majority of the risk for the drugs it acquired. So instead, Flexion switched gears. It took a drug it had already acquired from AstraZeneca (now called FX005) and used it to turn itself into an osteoarthritis specialist.
Flexion now has three drug candidates in its portfolio targeting the disorder. Those three are FX006, a long-lasting form of the steroid triamcinolone; FX005, which inhibits a protein known as p38 MAP kinase that is implicated in inflammation; and FX007, which curbs pain by blocking a different kinase involved in inflammatory diseases.
The most advanced of the three is FX006. Flexion wrapped up a mid-stage clinical study of FX006 in mid-2013. But while it touted successful top-line results from the trial in June and said that it expected to begin pivotal Phase III trials in early 2014, its prospectus indicated that it plans to do two follow-up mid-stage trials later this year to “further identify” a safe and well-tolerated dose of the drug before testing it in a late-stage study.
It’s unclear what the development path of FX005 is—following a proof-of-concept study, Flexion found troubling signs that the drug appeared to cause articular cartilage damage and fluid buildup in the knee. Flexion said in the prospectus that further development of FX005, “if any,” would involve “substantially lower” doses than the one it was tested at in the proof-of-concept study.
Flexion said it expects to file an investigational new drug application for FX007 in the first half of 2014 for permission to begin its first clinical trial with the drug.