Image source: Flickr user Steven Depolo.

What: Shares of Flexion Therapeutics (FLXN) gained more than 22% in early morning trading today after announcing that its lead drug candidate, Zilretta (FX006), met its primary endpoint in a late-stage trial for moderate to severe osteoarthritis (OA) knee pain. Specifically, at week 12 in a large, randomized study, the drug reportedly generated significant and durable pain relief when pitted against patients taking placebo.  

So what: According to Flexion, Zilretta stands to serve a target market of over 12 million patients in the U.S. alone, implying that the drug has the potential to generate at least several hundred million in peak sales if approved. 

Now what: Based on these highly significant late-stage results, Flexion now plans on submitting a New Drug Application for Zilretta in the second half of 2016. So, with a Fast Track designation from the U.S. Food and Drug Administration in hand, Zilretta could be on the market by early 2017, if all goes as planned.

Having said that, Zilretta's forthcoming regulatory review is far from a slam dunk, given that it missed the same primary endpoint in a smaller mid-stage trial last September. That's why I don't personally plan on picking up any shares of this small-cap biopharma just yet.