What happened

Shares of Flexion Therapeutics (NASDAQ:FLXN) jumped nearly 30% last month, according to data provided by S&P Global Market Intelligence. After shares declined by nearly 55% in 2018, the pharma company started off the new year on the right foot thanks to a rosy report of preliminary full-year 2018 operating results and initial guidance for full-year 2019.

Investors are eagerly looking forward to the continued growth of the company's first marketed drug, Zilretta. The treatment for osteoarthritis-related knee pain delivered an estimated $22.5 million in its first full year on the market in 2018. Flexion Therapeutics expects the franchise to reach annual sales of $65 million to $80 million in 2019.

A businessman pointing to a green column chart showing growth.

Image source: Getty Images.

So what

Wall Street analysts have been disappointed and perplexed by the slow pace of sales for Zilretta since it launched. Flexion Therapeutics says the sluggish start has been due to a lack of easy-to-use reimbursement codes for doctors. That makes the drug more difficult to prescribe for patients with Medicare and certain private insurance that doesn't cover treatment otherwise.

Management expects that problem to fade away now that a new reimbursement code went into effect for Zilretta on the first day of this year. However, while Flexion Therapeutics expects a healthy ramp-up in product revenue in 2019, the sharp departures between the drug's actual performance and Wall Street's expectations remain. Analysts were looking for $28 million in full-year 2018 revenue (vs. the $22.5 million actually delivered) and $129 million in full-year 2019 revenue (vs. as much as $80 million in initial guidance), according to FiercePharma.

Check out the latest Flexion earnings call transcript.

Now what

It's good to see signs of life from Flexion Therapeutics, but investors will need to remain patient throughout 2019. The large range for Zilretta sales guidance -- $65 million to $80 million -- seems to indicate there's still a good deal of uncertainty internally about the near-term pace of revenue growth. If the drug can only muster sales toward the lower end of the range, then Wall Street might not hesitate to continue punishing the stock.

Editor's Note: This article has been updated to reflect that initial sales guidance for Zilretta is between $65 million and $80 million in 2019 (versus $65 million to $90 million as originally stated). The Fool apologizes for the error.