Flexion heads to the discount aisle for a $450M+ merger with Pacira
Once riding high with its non-opioid drug for knee pain, Flexion was at the center of the M&A rumor mill for a 10-figure buyout. Years later, that shine has worn off — and now Flexion will hand over the keys in a significantly smaller acquisition.
Pacira BioSciences will acquire Flexion for $8.50 per share in a deal valued at $450 million, a steep discount for a biotech that once commanded attention from the likes of drug giant Sanofi, the companies said Monday.
The acquisition would value Flexion at around $650 million as Pacira plans to issue an $8 contingent value right with the buyout that would vest in tranches at a set of five milestones outlined in the deal, mostly tied to future sales of lead product Zilretta, Pacira said. Those milestones include:
- $1 per share if total calendar year net sales of Zilretta hit $250 million
- $2 per share if Zilretta sales hit $375 million
- $3 per share if Zilretta sales hit $500 million
- $1 per share if candidate FX201 gets an FDA approval
- $1 per share if candidate FX301 gets an FDA approval.
The CVR expires on Dec. 31, 2030, the companies said, and the acquisition is expected to close in Q4.
Riding a wave of interest after its initial approval for Zilretta, an injected corticosteroid suspension for knee osteoarthritis, back in 2017, Flexion was once grist for M&A rumors, even reportedly working together with Sanofi on a buyout worth more than $1 billion. But as time passed — and Zilretta sales flagged — the company’s once-lofty valuation came back down to Earth.
Even still, Pacira, the maker of products like bupivacaine injection Exparel for post-surgical pain, saw enough value in Flexion’s pipeline to ink a deal, looking for a worthwhile complement to its own product base. Here’s how Pacira CEO Dave Stack explained his company’s rationale:
This acquisition is a major milestone in our strategy to build a robust offering of novel, non-opioid treatments to improve patient care along the neural pain pathway while simultaneously providing us with a complementary commercial asset in Zilretta for the treatment of OA knee pain. We believe the Flexion portfolio further solidifies Pacira as a leader in opioid-sparing pain management as we continue to redefine the role of opioids as a last resort rescue medication. Importantly, this acquisition creates diversification and growth to our topline while providing what we would expect to be meaningful synergies that should result in substantial near- and long-term accretion to our cash flows and earnings.
Zilretta, for its part, cleared just $28.2 million in Q2 of this year — a 15% growth clip from the same time period last year, but still a far cry from the numbers outlined in the CVR. But Flexion does have a Phase III trial for Zilretta in shoulder osteoarthritis coming up and thinks it has some room to work across other therapeutic areas. Meanwhile, FX201, a gene therapy for knee osteoarthritis, and FX301, a topical funapide formulation, are currently cycling through Phase I.
Pacira management is planning to host a call with analysts at 8:30 am ET. This story will be updated.