Flex Pharma Shutters Phase II ALS Program and Cut 60% of Workforce
Boston-based Flex Pharma announced in a Corporate Update that it is closing an ongoing Phase II clinical trial of FLX-787 in amyotrophic lateral sclerosis (ALS) and Charcot-Marie-Tooth (CMT). In addition, it is shifting its strategy to focus on other approaches, including the possible sale or merger of the company. As part of a cost reduction strategy, it plans to cut its workforce by as much as 60 percent.
“In the past few months we have reported positive efficacy data in two serious and distinctly different neurological disease: multiple sclerosis (MS) and ALS,” said Bill McVicar, president and chief executive officer of Flex, in a statement. “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.”
In 2016, FLX-787 failed a trial to prevent nocturnal leg cramps.
The board of directors has formed a Strategic Committee that will work with management to develop strategic alternative, which as mentioned earlier, include a possible sale or merger. Wedbush PacGrow has been hired to act as strategic financial advisor.
Now, the company will focus on evaluating the potential of FLX-787 in dysphagia (difficulty swallowing) and continue its HOTSHOT consumer business. The company’s revenue comes from its drink, HOTSHOT, for cramps.
It expects to lay off up to 60 percent of staff. The company employs about 20 full-time staff and two part-time staff as of March.
On May 2, Flex released its first-quarter 2018 financial results. As of March 31, it had cash, cash equivalents and marketable securities of $23.9 million, which is estimated would fund operations to the middle of the year. Total revenue for the quarter was about $179,000. R&D expenses for the quarter were $4.7 million, which included costs of the FLX-787 clinical trials, personnel costs, FLX-787 production costs, and paying external consultants. Selling, general and administrative expenses for the quarter were $3.7 million. Net loss for the quarter was ($8.2) million or (0.46) per share, including $0.9 million of stock-based compensation expense.
Company shares dropped 68 percent to $1.31 in premarket trading today.
The company was founded about in 2014 by Christoph Westphal. Prior to that, he was the chief executive officer of Verastem. In 2014, the company raised $40 million in equity funding, then turned around with an initial public offering that sold shares at $15. In April of that year, shares sold for as high as $22.56. Westphal was the company’s biggest shareholder as of an April 23, 2018 SEC filing, holding about 22 percent of the stock, with his venture firm, Longwood Funds, holding another 18 percent. He shifted from chief executive officer in June 2017 to chairman and resigned from the company’s board in March 2018.