What happened

After the company hosted an investor's day on July 10, shares in Flexion Therapeutics (NASDAQ:FLXN) jumped 12.8% last month, according to S&P Global Market Intelligence.

So what

Flexion Therapeutics doesn't have any medications on the market yet, but that could change later this year when the U.S. Food and Drug Administration issues a go/no-go decision on Zilretta, the company's treatment for chronic knee pain caused by osteoarthritis. 

Hands rubbing a knee

IMAGE SOURCE: GETTY IMAGES.

Unlike opioids, Zilretta doesn't pose addiction risks, and unlike corticosteroid shots, Zilretta maintains its efficacy until the next quarterly dose.

Zilretta is a long-lasting formulation of a commonly used corticosteroid, and in trials it reduced pain by a median 50% over a 12-week period. If approved, it could reduce patients' need for rescue medications, including opiates, and help delay the need for total knee replacement.

If granted a green light, the company intends to price Zilretta at about $500 per dose, or $2,000 annually. Given that up to 5 million patients are currently getting quarterly corticosteroid shots that deliver uneven pain relief, Zilretta's market opportunity could be big.

Now what

About 14 million people suffer from osteoarthritis of the knee, and roughly 40% of osteoarthritis patients are prescribed opiate pain relievers.

Evidence suggests that opiate prescriptions can contribute significantly to opiate addiction. As a result, doctors are increasingly seeking out solutions that can control pain, without increasing the need for drugs like oxycodone.

Assuming the FDA likes the data Flexion Therapeutics has put together in its application, doctors may embrace Zilretta, putting it on target to achieve nine figures annually in sales. A decision is expected on Oct. 6.

The opportunity may eventually become even bigger than that, though. Management plans to initiate Zilretta studies in osteoarthritis of the hip and shoulder later this year, potentially opening up the drug's use in millions more people.

Todd Campbell owns shares of Flexion Therapeutics. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.