Flexion to price $125 million seven-year convertible notes at 3.125%-3.625%, up 30%

By Stephanie N. Rotondo

Seattle, April 25 – Flexion Therapeutics Inc. is offering $125 million of seven-year convertible senior notes with the initial yield talked at 3.125% to 3.625% and an initial conversion premium of 30%, according to a market source.

Pricing is expected after Wednesday’s close.

Wells Fargo Securities LLC, BMO Capital Markets and RBC Capital Markets are the bookrunners on the Rule 144A deal.

There is an $18.75 million over-allotment option.

The issue is non-callable for three years and is provisionally callable after that, but only if the stock hits a 130% price hurdle.

Conversions will be settled in cash, stock, or a combination.

Proceeds will be used for the commercialization and manufacture of Zilretta – also known as FX006 – if approved, and product pipeline development, as well as working capital and general corporate purposes. Flexion may also use some of the funds to in-license, acquire or invest in complementary businesses, technologies, products or assets.

Flexion is a Burlington, Mass.-based specialty pharmaceutical company focused on the development and commercialization of novel, local therapies for the treatment of patients with musculoskeletal conditions, beginning with osteoarthritis.

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