Flexion Therapeutics (NASDAQ:FLXN) will report earnings after the markets close on August 5. The company is expected to announce negative earnings per share of 70 cents on revenue of $9.9 million. However, Flexion already released preliminary second-quarter net sales for its flagship drug, Zilretta of over $15 million.
Zilretta is Flexion’s flagship osteoarthritis drug. Prior to the lockdown measures that engulfed large parts of the country, sales of Zilretta were growing steadily. Revenue has dipped due to the pandemic. But a closer look shows that the company is seeding Zilretta into orthopedist’s offices even in the midst of those struggles.
Flexion addresses a condition which is likely to see growing demand. The only real question for Flexion at this time is when will sales get back to normal?
An under-the-radar biotech stock
Flexion is a story that’s being overlooked in biotech. And much of that has to do with Covid-19. The novel coronavirus and the disease that stems from it have captured the attention of investors. With dozens of companies coming up with vaccine candidates, investors have rightfully been keeping a close watch on those stocks.
But the reality is that some of the companies that are attempting to develop vaccines or antiviral treatments will fall by the wayside once approved candidates emerge. Flexion by contrast already has a drug that’s on the market that addresses osteoarthritis, a condition that affects a growing number of Americans.
Yet despite being able to manage some impressive things in the middle of a pandemic, FLXN stock is struggling to get the conviction of investors.
An aging country with sore knees is a sufficient catalyst
There are two trends that make the bullish case for FLXN stock. First, America is getting older and will only continue to do so. To say the country is getting older has become one of those facts that gets thrown about so often you begin to wonder if it’s really true. However, just doing a small amount of research for this article confirmed the trend is real.
According to estimates from the U.S. Census Bureau, approximately 16% of the U.S. population was 65 years or older in 2018. The Census Bureau also predicts that by 2035, seniors will outnumber children. The United Nations predicts that, by 2050, 1 out of every 5 people in the United States will be age 65 or older.
And Americans are able to live longer because of advances in science and medicine. As the pandemic is teaching us, our bodies need to have daily movement to maintain a healthy immune system. Today we can treat conditions that would have prevented early generations from having the freedom of movement they would have liked. And that brings me to my second catalyst for Flexion.
As America gets older and heavier, there is a likelihood that individuals will develop osteoarthritis. The National Center for Biotechnology Information (NCBI) published a journal article that spoke to this statistic.
Osteoarthritis (OA) is the most common joint disorder in the United States. Symptomatic knee OA occurs in 10% men and 13% in women aged 60 years or older. The number of people affected with symptomatic OA is likely to increase due to the aging of the population and the obesity epidemic.
The article also says “Pain from OA is a key symptom in the decision to seek medical care and is an important antecedent to disability.”
I tore cartilage in my knee at the age of 24. And I’m learning to live with mild arthritis that will in all likelihood turn into osteoarthritis. So for me this isn’t a theoretical concept. And Flexion is on the forefront of that change.
Is now the time to buy Flexion stock?
Zilretta as it is being currently prescribed may not be enough to move the stock. However, Flexion has applied for an expanded use label for Zilretta. This would allow the drug to be prescribed to treat synovitis, a different condition.
In addition, Flexion has two other drug candidates that are in trial. However, the company has put its clinical trials on hold to clear a path for a Covid-19 vaccine.
But this log jam will eventually get broken up. And in the meantime, Flexion is enjoying increasing sales for Zilretta with its current label. When you consider (and you should) that several companies with Covid-19 vaccine candidates are penny stocks without a product on the market, then you have to like the fact that Flexion has a proven winner in Zilretta and potentially more on the way.
Flexion is not profitable. However, analysts have a consensus buy rating on the stock with a 12-month price target of $22.75, a gain of over 75% from where the stock trades as of this writing.
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