Flex Pharma (FLKS) Shares Try to Recover Post FLX-787 Nightmare; Cantor Weighs In

Flex Pharma (NASDAQ:FLKS) hit bottom yesterday, or so investors can hope, as they gaze happily upon the near 55% stock price bounce that the tiny biotech stock is enjoying today.

Wednesday turned out to be a nightmare for FLKS investors, after the company announced that it’s discontinuing its ongoing Phase 2 clinical trial investigations of FLX-787 in amyotrophic lateral sclerosis (ALS) and Charcot-Marie-Tooth (CMT) due to oral tolerability concerns observed in both studies, sending shares down 75%.

Flex Pharma CEO Bill McVicar provided some color: “In the past few months we have reported positive efficacy data in two serious and distinctly different neurological diseases: multiple sclerosis (MS) and ALS. We believe that these clinical data demonstrate the clear potential of FLX-787 as a symptomatic therapy to reduce painful cramps and spasms in these patient populations […] However, recent observations of oral intolerability at the current dose and formulation, in a subset of patients, in both studies, indicate that more formulation and dose-ranging studies are required, which is challenging for the Company based upon our current resources.”

As a result, FLKS is restructuring and exploring strategic alternatives, and in the interim will continue to operate the HOTSHOT business and evaluate FLX-787 in dysphagia.

Cantor analyst Mara Goldstein commented: “The question of what the shares are worth, we think, will come down to cash on hand ($24 million at the end of 1Q18) and runway. Prior to today’s news, cash was anticipated to last to mid-2019, hence with the current reduction, we estimate the company could extend runway to 2020.”

“We see little opportunity for the shares at this point given that the consumer business (HOTSHOT) was already under strategic review. FLKS will continue to assess FLX-787 in dysphagia, though we have little expectation given the (1) indication and (2) questions around oral tolerability,” the analyst continued.

As such, Goldstein reiterates a Neutral rating on FLKS stock, while putting her price target under review. (To watch Goldstein track record, click here)

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