Flexion Selects First Four Programs And Gets $9 Million From Pfizer Venture Fund

Modeled on Lilly's Chorus unit, Flexion purports to bring candidates to proof-of-concept quicker and cheaper than a Big Pharma typically can.

Flexion Therapeutics raised its profile on Jan. 29, announcing that it has licensed in four clinical-stage compounds from a trio of drug makers and also added $9 million to its Series A financing through an investment by Pfizer Venture Investments. According to CEO Mike Clayman, the various deals came together over recent months but the company decided to announce them all at once.

Founded in November 2007 with $3 million in seed funding, Flexion seeks to take advantage of large pharma's excess discovery capabilities by licensing potential high-value specialty compounds and developing them through proof-of-concept and beyond. It's no coincidence that the company's business plan resembles that of Eli Lilly's Chorus unit - Flexion principals Clayman and Neil Bodick founded Chorus before striking out on their own.

A lean and mean six-person operation, the Woburn, Mass., firm claims it can get to proof-of-concept in one to two-and-a-half years, and at a fraction of the cost a Big Pharma would incur, using a streamlined development process that skips several intermediate steps until after a molecule has been tested successfully in man (Also see "Flexion Exploits Big Pharma as Discovery Supplier " - In Vivo, 1 Jan, 2010.).

"It's not uncommon for pharma to be investing in commercial and in formulation for a new molecule before ever testing it in man. Our attitude is we do as little formulation work as is necessary to get to a credible answer," Clayman said in an interview. "It turns out there are a lot of toxicology studies that are absolutely necessary in order to register a new product but they're not necessary to safely and appropriately advance a molecule to proof-of-concept."

One such example, he added, would be two-year carcinogenicity trials that are often included as part of a compound's preclinical program. It makes little sense for a company to do that work before it knows it is going move the candidate on to Phase III and likely to registration, he said, and it is absolutely impossible for a company of Flexion's size.

Streamlined headcount, reduced development costs

In addition to cutting down development time, Flexion also asserts it can develop a drug to POC for between $3 million and $5 million, as opposed to the $15 million to $40 million a pharma typically would exhaust taking a compound through Phase II.

The simple math, Clayman said, is that a smaller team means product development has lower fixed costs. But he adds "a smaller organization is inherently more efficient in decision-making."

"In a larger organization, if you want to get a 'tox' study done to support your advancement into the clinic, that's three committee meetings and full presentations and X number of weeks or months," he said. At Flexion, such a decision only entails a discussion between the 'tox' person and the CMC (chemistry, manufacturing and control) person, with those two then taking their idea to Bodick, the chief medical officer.

Flexion selected its four compounds after reviewing about 130 candidates. One each was licensed from AstraZeneca and Merck Serono, along with two from an undisclosed partner. The pipeline includes FX002 in Phase II for autoimmune disease, FX004 in Phase II for tinnitus, FX003 in Phase I for ulcerative colitis, and Phase I-ready FX005, an intra-articular injection for osteoarthritis.

That all of Flexion's programs are in the anti-inflammatory space not planned, Clayman said, but just the outcome of the lengthy candidate review.

"Our initial approach was to be therapeutic-area agnostic, so we looked at a lot of different molecules and a lot of different therapeutic areas. By the criteria that we were applying to the molecules that we selected, it turned out to be molecules for inflammatory disease," he explained. "Having migrated in that direction, it's a theme that we will continue to embrace as we look for other opportunities."

Flexion's main criteria were potential specialty products with relatively straightforward regulatory paths - locally acting as opposed to systemic, like FX005. The company prefers small molecules to biologics because production costs are lower, Clayman said, and it frequently looks for compounds that already have been tested in "lots and lots of people" and developing them for a new indication.

"[Then] the likelihood of seeing surprising safety signals as you're doing your development for the new indication is small," he said. "We can't afford to be in the situation where we develop a molecule and generate very interesting proof of concept data and have to seriously worry about an untoward safety signal in Phase III derailing the program."

Clawback rights attached to one deal

Flexion's original model supposed that pharma companies would be more eager to part with their shelved compounds if they held "clawback" rights, but Clayman said only one of its four programs has such a provision. He was unable to disclose which of the candidates it was or any of the financial terms of the various deals.

The company is focused on specialty products so that it won't have to partner them to advance to market, Clayman added. He pointed to the osteoarthritis compound as one Flexion conceivably could commercialize itself. "We are increasingly prepared to advance [our candidates] into their pivotal registrational trials," he said, while not ruling out the possibility of partnering.

The $9 million from Pfizer Venture Investments has been added on to a Series A that initially closed in October, giving Flexion $42 million in cash. Versant Ventures led the $33 million round, with participation from 5AM Ventures and Sofinnova Partners ([See Deal]).

-Joseph Haas ([email protected])