Flexion's pivot proves pain-free
Dr. Mike Clayman, president and CEO, Flexion Therapeutics
For all the recent talk about pivots — to video, to paid models, to a new overarching ideology — most of the time such moves are an acknowledgment that things aren't going all that swell. However, when Flexion Therapeutics turned its original business model on its ear in late 2013, the company savvily maneuvered its way into a category that was, and is, ripe for disruption.
Dr. Mike Clayman, who cofounded Flexion in 2007 with fellow former Eli Lilly exec Dr. Neil Bodick, had earned his developmental bona fides as the leader of Lilly's Chorus unit, which sought to progress novel molecules to clinically meaningful proof-of-concept with greater efficiency. With backing from the mother ship — $20 million per year — Chorus managed to “save” nine or 10 molecules whose development had proven too costly or unwieldy to continue.
“It was a problem nobody had solved,” Clayman recalls. “What Chorus represented was a way of cost-effectively extending development's reach.”
Outsiders took notice. As Clayman tells it, Brad Bolzon at health-focused VC firm Versant Ventures suggested the Chorus model was translatable to other neglected molecules at other pharma companies. A few short years later, backed by Versant and other investors, the fledgling Flexion was meeting with R&D leaders at other companies — and offering to assume the expense of developing their orphaned drugs.
“We would go to large pharma companies and posit that they had molecules languishing on their shelves,” Clayman explains. “In essence, what we'd hear from the head of R&D was, ‘Wait — for no money on my part, I can see clinical data that will help me decide if I want to bring this [molecule] back into my portfolio?'”
The other companies reserved the right to buy back the drugs for Flexion's costs plus a premium; if they declined that right, Flexion could sell or develop the molecule on its own.
While Flexion gained access to some 150 molecules, pharma companies started to become “less generous about what they would pay for proof-of-concept,” Clayman says. In what he describes as a moment of reckoning, Clayman and Bodick went to Flexion's board and proposed a major-league pivot: Reinventing the company as a developer of pain therapies for musculoskeletal conditions such as osteoarthritis.
Following what Clayman characterizes as an “emotional experience,” the new Flexion was born. He believed the space was ripe for innovation, given the growing patient population (an estimated 15 million OA diagnoses in 2016) and widespread dissatisfaction with the palliative effects of the steroids used to treat the condition.
It might not have known it then, but Flexion already had the asset that would become its first approved drug in hand.
Fast forward to this past October, when the molecule, now known as Zilretta, received FDA approval for OA-related knee pain. With a 103-rep strong sales squad on hand, Zilretta is poised to change the face of OA treatment. Estimates for annual sales range wildly (from $600 million to $1.4 billion), but Zilretta projects as a very substantial product, and that's before Flexion explores its potential in the treatment of hip and shoulder pain.
Much of the credit for the company's on-the-fly pivot goes to Clayman. Formerly an assistant professor at the University of Pennsylvania's School of Medicine and recipient of the National Institutes of Health's prestigious Physician Scientist Award, Clayman earns high marks for the human touch he brings. “Fun” has found its way into Flexion's core values.
“We hire as much for cultural fit as for deep experience,” he says. “If you're not mindful [of how growth can impact culture], you might turn around and find you've become a company you don't like.”
Clayman says the company's next 18 months are all about Zilretta, with further pipeline construction next up.
“We're reasonably confident, but pretty humble,” he adds. “Anyone who states they knew all along that things would work out the way that they did was either not in the industry too long or fundamentally delusional.”