Clinical trial data and FDA decisions can cause biotech stocks to pop or drop, and that makes it critical for biotech investors to keep a close eye on Flexion Therapeutics (NASDAQ:FLXN), Keryx Biopharmaceuticals (NASDAQ:KERX), and Zogenix (NASDAQ:ZGNX) All three stocks have important news coming soon that could make or break investors, so let's take a closer look at what's at stake for them.

Better pain prevention

Flexion Therapeutics has developed a long-lasting corticosteroid that may significantly improve pain in patients suffering from osteoarthritis of the knee.

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Chronic knee pain is a significant market opportunity because it's inadequately treated in millions of patients. Once over-the-counter pain relievers no longer control knee pain, patients progress to quarterly corticosteroid shots, which often stop preventing pain before the next scheduled shot. Rescue pain medication, including opiates, can also be prescribed, and that exposes patients to addiction risks. Eventually, patients may end up undergoing knee replacement surgery to relieve their pain, which is something no one wants.

To improve upon patient treatment, Flexion Therapeutics developed Zilretta, a quarterly, long-lasting corticosteroid injection that reduced pain until its next scheduled dose.

The company has already filed for FDA approval of Zilretta, and if it's granted, management thinks it can charge $2,000 per year for it. Since there are 5 million patients currently receiving corticosteroid shots, and Zilretta may reduce their pain better and cut their reliance on opiates, an FDA green light could turn this drug into a nine-figure top seller. The go/no-go decision is expected on Oct. 6.

New hope in epilepsy

Dravet syndrome is a rare form of childhood-onset epilepsy that's very hard to treat. Most Dravet syndrome patients take a cocktail of anti-epileptic medications, yet they still suffer significant numbers of seizures per month. Since there's an important need for new treatment options, Zogenix is researching low-dose fenfluramine, or ZX008, to see if it works better than other treatment options. 

You may recall that fenfluramine was the "fen" in the obesity drug phen-fen, which was removed from the market in the 1990s because it increased cardiovascular risks. In seizure patients, however, there's evidence that low-dose fenfluramine can be safe and more effective than other anti-seizure approaches. A small study in 2012 showed that 67% of patients taking low-dose fenfluramine were seizure free for at least one year, and nine of 12 patients saw a 75% or greater reduction in monthly seizures.

The five-year follow-up data was similarly encouraging, with 90% of patients having an average seizure frequency of one or less per month. Three of 10 patients were seizure free for the entire five-year observation period.

Those are pretty amazing numbers, but the trial was too small to draw any long-term conclusions about this drug's efficacy and safety. But data should be available soon that could help usher this drug to market. Results from a phase 3 Dravet syndrome study are expected this quarter, and results from a second Dravet syndrome trial are anticipated in early 2018.

If ZX-008 delivers the goods in these trials, then a filing for FDA approval could come shortly thereafter, potentially clearing the way for ZX-008's commercialization in 2019. The opportunity in Dravet syndrome is admittedly pretty small; however, a success in Dravet syndrome could add conviction to the thinking that ZX-008 can treat other, more common forms of epilepsy. For instance, Zogenix already plans to begin enrolling Lennox Gastaut syndrome patients in a phase 3 trial later this year, and in the U.S., there are about 15,000 LGS patients. With the potential to reshape Dravet syndrome, and perhaps, win more widespread use later on, this data is incredibly important to Zogenix investors.

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Aiming for a significantly bigger pool of patients

Right now, Keryx Biopharmaceuticals' Auryxia is approved for use in chronic kidney disease patients on dialysis, however, the FDA is expected to weigh in soon on its use in patients who aren't on dialysis, and if approved, Auryxia's sales could climb significantly higher.

Since winning FDA approval in 2014, Auryxia has been slow to carve market share away from other treatments called phosphate binders that remove phosphorous from the body to increase calcium levels. Auryxia's sales were only $14.1 million in the second quarter, which is a far cry south of the 248 million euros hauled in by the commonly used phosphate binders Renagel and Renleva, which are manufactured by Sanofi.

Despite the comparatively lackluster sales, there's evidence that doctors are warming up to Auryxia. Second-quarter sales were 71% higher than they were a year ago, and that's got Keryx Biopharmaceuticals forecasting full-year sales of at least $62 million. The sales increase may hint that doctors would applaud a label expansion that allows its use in more patients. 

The FDA's decision is slated for Nov. 6, and if approved, Auryxia will become available to 1.6 million patients with stage 3 to 5 CKD and iron deficiency anemia. The size of that patient population is big enough to suggest that a green light could finally catapult Auryxia's sales over the nine-figure threshold. 

Undeniably, an OK would be good news for investors, but it could still be a while before revenue eclipses this company's spending. Keryx Biopharmaceuticals spent $25 million on selling, general, and administrative expenses last quarter, up from $20.2 million in Q2 2016, and another $9 million on R&D, up from $7 million last year. With an operating loss of $23.9 million in Q2, expanding Auryxia's use is arguably critical to supporting this company's share price.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.