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iXBRL+

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2020  

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                 TO                

Commission file number: 001-36287

 

Flexion Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

26-1388364

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

10 Mall Road, Suite 301

Burlington, Massachusetts

 

01803

(Address of Principal Executive Offices)

 

(Zip Code)

(781) 305-7777

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $0.001 par value per share

FLXN

NASDAQ

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes      No

As of November 1, 2020, the registrant had 49,315,130 shares of Common Stock ($0.001 par value) outstanding.

 

 

 

 

FLEXION THERAPEUTICS, INC.

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

3

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 (Unaudited)

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 (Unaudited)

4

 

Condensed Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)

5

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (Unaudited)

7

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

8

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

36

 

Item 4. Controls and Procedures

37

PART II. OTHER INFORMATION

 

 

Item 1. Legal Proceedings

38

 

Item 1A. Risk Factors

38

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

69

 

Item 3. Defaults Upon Senior Securities

69

 

Item 4. Mine Safety Disclosures

69

 

Item 5. Other Information

69

 

Item 6. Exhibits

70

 

Signatures

71

 

 

2


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Flexion Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited in thousands, except share amounts)

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

128,637

 

 

$

82,253

 

Marketable securities

 

 

56,709

 

 

 

54,407

 

Accounts receivable, net

 

 

27,899

 

 

 

37,115

 

Inventories

 

 

17,953

 

 

 

16,529

 

Prepaid expenses and other current assets

 

 

5,867

 

 

 

5,371

 

Total current assets

 

$

237,065

 

 

$

195,675

 

Property and equipment, net

 

 

19,303

 

 

 

13,662

 

Right-of-use assets

 

 

6,999

 

 

 

8,223

 

Total assets

 

$

263,367

 

 

$

217,560

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,233

 

 

$

15,258

 

Accrued expenses and other current liabilities

 

 

19,951

 

 

 

19,610

 

Deferred revenue

 

 

10,000

 

 

 

 

Operating lease liabilities

 

 

1,472

 

 

 

1,351

 

Current portion of long-term debt

 

 

12,222

 

 

 

 

Total current liabilities

 

$

50,878

 

 

$

36,219

 

Long-term operating lease liability, net

 

 

6,457

 

 

 

7,609

 

Long-term debt, net

 

 

48,472

 

 

 

40,176

 

2024 convertible notes, net

 

 

160,360

 

 

 

153,413

 

Other long-term liabilities

 

 

295

 

 

 

251

 

Total liabilities

 

$

266,462

 

 

$

237,668

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2020

   and December 31, 2019 and 0 shares issued and outstanding at September 30, 2020

   and December 31, 2019

 

 

 

 

 

 

Stockholders' deficit

 

 

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized; 49,305,545 and

   38,361,476 shares issued and outstanding, at September 30, 2020 and

   December 31, 2019, respectively

 

 

49

 

 

 

38

 

Additional paid-in capital

 

 

759,520

 

 

 

648,391

 

Accumulated other comprehensive (loss) income

 

 

(6

)

 

 

62

 

Accumulated deficit

 

 

(762,658

)

 

 

(668,599

)

Total stockholders' deficit

 

 

(3,095

)

 

 

(20,108

)

Total liabilities and stockholders' deficit

 

$

263,367

 

 

$

217,560

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


Flexion Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product revenue, net

 

$

23,664

 

 

$

21,786

 

 

$

59,242

 

 

$

49,303

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

5,130

 

 

 

2,872

 

 

 

12,887

 

 

 

6,032

 

Research and development

 

 

10,092

 

 

 

20,938

 

 

 

43,733

 

 

 

52,488

 

Selling, general and administrative

 

 

27,312

 

 

 

32,136

 

 

 

81,341

 

 

 

97,461

 

Total operating expenses

 

 

42,534

 

 

 

55,946

 

 

 

137,961

 

 

 

155,981

 

Loss from operations

 

 

(18,870

)

 

 

(34,160

)

 

 

(78,719

)

 

 

(106,678

)

Other (expense) income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

62

 

 

 

721

 

 

 

584

 

 

 

2,563

 

Interest expense

 

 

(5,125

)

 

 

(4,652

)

 

 

(14,848

)

 

 

(12,537

)

Other (expense) income

 

 

(457

)

 

 

(141

)

 

 

(581

)

 

 

395

 

Total other (expense) income

 

 

(5,520

)

 

 

(4,072

)

 

 

(14,845

)

 

 

(9,579

)

Loss before income taxes

 

 

(24,390

)

 

 

(38,232

)

 

 

(93,564

)

 

 

(116,257

)

Income tax expense

 

 

248

 

 

 

 

 

 

495

 

 

 

 

Net loss

 

$

(24,638

)

 

$

(38,232

)

 

 

(94,059

)

 

 

(116,257

)

Net loss per common share, basic and diluted

 

$

(0.50

)

 

$

(1.00

)

 

$

(2.16

)

 

$

(3.06

)

Weighted average common shares outstanding, basic and diluted

 

 

49,298

 

 

 

38,125

 

 

 

43,563

 

 

 

38,043

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains from available-for-sale securities, net of tax of $0

 

 

(9

)

 

 

(99

)

 

 

(68

)

 

 

208

 

Total other comprehensive (loss) income

 

 

(9

)

 

 

(99

)

 

 

(68

)

 

 

208

 

Comprehensive loss

 

$

(24,647

)

 

$

(38,331

)

 

$

(94,127

)

 

$

(116,049

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


Flexion Therapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Deficit

(Unaudited in thousands)

 

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

Stockholders'

 

 

 

 

Shares

 

 

Par Value

 

 

Paid-in-

Capital

 

 

Comprehensive

Income (Loss)

 

 

Accumulated

Deficit

 

 

(Deficit)

Equity

 

Balance at December 31, 2019

 

 

 

38,361

 

 

$

38

 

 

$

648,391

 

 

$

62

 

 

$

(668,599

)

 

$

(20,108

)

Issuance of common stock for equity

   awards, net of shares withheld for taxes

 

 

 

201

 

 

 

1

 

 

 

8

 

 

 

 

 

 

 

 

 

 

 

9

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

4,651

 

 

 

 

 

 

 

 

 

 

 

4,651

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,802

)

 

 

(36,802

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(56

)

 

 

 

 

 

 

(56

)

Balance at March 31, 2020

 

 

 

38,562

 

 

$

39

 

 

$

653,050

 

 

$

6

 

 

$

(705,401

)

 

$

(52,306

)

Issuance of common stock net of issuance costs

 

 

 

10,615

 

 

 

10

 

 

 

96,754

 

 

 

 

 

 

 

 

 

 

 

96,764

 

Issuance of common stock for equity

   awards, net of shares withheld for taxes

 

 

 

11

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

1

 

Employee stock purchase plan

 

 

 

82

 

 

 

 

 

 

 

891

 

 

 

 

 

 

 

 

 

 

 

891

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

3,787

 

 

 

 

 

 

 

 

 

 

 

3,787

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,619

)

 

 

(32,619

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

(3

)

Balance at June 30, 2020

 

 

 

49,270

 

 

$

49

 

 

$

754,483

 

 

$

3

 

 

$

(738,020

)

 

$

16,515

 

Issuance of common stock for equity

   awards, net of shares withheld for taxes

 

 

 

36

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

 

 

 

 

78

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

4,959

 

 

 

 

 

 

 

 

 

 

 

4,959

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,638

)

 

 

(24,638

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

 

 

 

 

(9

)

Balance at September 30, 2020

 

 

 

49,306

 

 

$

49

 

 

$

759,520

 

 

$

(6

)

 

$

(762,658

)

 

$

(3,095

)

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

Other

 

 

 

 

 

 

Total

 

 

 

 

Shares

 

 

Par Value

 

 

Paid-in-

Capital

 

 

Comprehensive

Income (Loss)

 

 

Accumulated

Deficit

 

 

Stockholders'

Equity

 

Balance at December 31, 2018

 

 

 

37,946

 

 

$

38

 

 

$

628,944

 

 

$

(77

)

 

$

(518,826

)

 

$

110,079

 

Issuance of common stock for equity

   awards

 

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

3,853

 

 

 

 

 

 

 

 

 

 

 

3,853

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,538

)

 

 

(41,538

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

182

 

 

 

 

 

 

 

182

 

Balance at March 31, 2019

 

 

 

37,993

 

 

$

38

 

 

$

632,797

 

 

$

105

 

 

$

(560,364

)

 

$

72,576

 

Issuance of common stock for equity

   awards

 

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee stock purchase plan

 

 

 

106

 

 

 

 

 

 

 

1,040

 

 

 

 

 

 

 

 

 

 

 

1,040

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

4,217

 

 

 

 

 

 

 

 

 

 

 

4,217

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,487

)

 

 

(36,487

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

125

 

 

 

 

 

 

 

125

 

Balance at June 30, 2019

 

 

 

38,107

 

 

$

38

 

 

$

638,054

 

 

$

230

 

 

$

(596,851

)

 

$

41,471

 

Issuance of common stock for equity

   awards

 

 

 

45

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

 

 

8

 

Employee stock purchase plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

4,025

 

 

 

 

 

 

 

 

 

 

 

4,025

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,232

)

 

 

(38,232

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(99

)

 

 

 

 

 

 

(99

)

Balance at September 30, 2019

 

 

 

38,152

 

 

$

38

 

 

$

642,087

 

 

$

131

 

 

$

(635,083

)

 

$

7,173

 

 

5


The accompanying notes are an integral part of these condensed consolidated financial statements.

6


Flexion Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited in thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(94,059

)

 

$

(116,257

)

Adjustments to reconcile net loss to cash used in operating activities

 

 

 

 

 

 

 

 

Depreciation

 

 

1,295

 

 

 

733

 

Amortization of right-of-use assets

 

 

1,224

 

 

 

942

 

Stock-based compensation expense

 

 

13,397

 

 

 

12,095

 

Non cash interest expense

 

 

518

 

 

 

459

 

Accretion of discount on marketable securities

 

 

(18

)

 

 

(1,155

)

Loss on disposal of fixed assets

 

 

262

 

 

 

 

Loss from debt extinguishment