What happened

Shares of Flexion Therapeutics (NASDAQ:FLXN) were flying 11.4% higher as of 11:22 a.m. EST on Friday. The big jump came after the biopharmaceutical company announced after the market closed on Thursday that the Food and Drug Administration had approved updates to the product label for Zilretta that should help to boost sales of the drug in treating osteoarthritis (OA) knee pain.

So what

Zilretta first won FDA approval in 2017. But that approval included some language on the product label that Flexion felt presented hurdles in marketing the drug. The FDA decision announced on Thursday addresses several issues, including:

  • Replacing language that said Zilretta was "not intended for repeat administration" with a statement that the "efficacy and safety of repeat administration of Zilretta have not been demonstrated."
  • The addition to the label of a study description and safety data from Flexion's phase 3 clinical study for repeat administration of Zilretta.
  • Removal of a statement on the label describing a secondary exploratory endpoint. Flexion felt this statement was misleading.
  • The addition of some nonclinical toxicology data to the label.
Businessman holding card that has "FDA approved" printed on it

Image source: Getty Images.

CEO Michael Clayman said, "We are very pleased with the new product label as it achieves our primary goal of removing unclear language pertaining to repeat administration, which we believe was potentially confusing to patients, physicians, and payers alike."

He added: " ... we are gratified by the inclusion of safety data from our repeat administration trial ... . We believe the updated label supports our goal of seeing Zilretta become the leading intra-articular therapy for managing OA knee pain"

Now what

Flexion's experience with marketing Zilretta underscores that FDA approval of a drug isn't the only important regulatory decision that can impact pharmaceutical stocks. The label language that the FDA allows matters a lot, too.

With the FDA's approval of an updated label, we'll now see just how big a difference it makes on sales of Zilretta. Flexion expects full-year 2019 sales of between $70 million and $75 million for the drug. Sales for 2020 should be significantly higher.