Flex Pharma Reports Year End 2017 Financial Results

Published: Mar 07, 2018

BOSTON--(BUSINESS WIRE)-- Flex Pharma Inc. (NASDAQ: FLKS), a clinical-stage biotechnology company that is developing innovative and proprietary treatments in Phase 2 randomized, controlled trials for cramps and spasticity associated with severe neurological diseases such as multiple sclerosis (MS), Charcot-Marie-Tooth (CMT) and amyotrophic lateral sclerosis (ALS) under FDA Fast Track designation, today reported financial results for the year ended December 31, 2017 and provided an update on its clinical development and corporate activities.

"Late last year we achieved an important milestone with the positive data set from a small ALS study which provides the first clinical evidence that FLX-787 is active in patients with underlying neurological disease,” stated Bill McVicar, Ph.D., President and CEO of Flex Pharma. “The next 12 months will be transformational for Flex as we expect to report results from a number of larger clinical trials -- first an exploratory spasticity study in MS, followed by two Phase 2 studies in ALS and Charcot-Marie-Tooth patients, with our current cash position taking us to mid 2019.”

Business Highlights

  • Clinical Efforts
    • On November 28, 2017, the Company announced that it had completed enrollment in its Phase 2 exploratory spasticity study in MS patients in Australia. The randomized, placebo-controlled, blinded, cross-over study is designed to evaluate the safety and efficacy of FLX-787, the Company’s single molecule, chemically synthesized, dual A1/V1 transient receptor potential (TRPA1/V1) ion channel activator, in patients who suffer from spasticity, cramps and spasms as a consequence of MS. The Company expects to report topline results from this study by the end of the first quarter of 2018.
    • On November 6, 2017, the Company announced positive topline data for FLX-787 from its randomized, double-blinded, placebo-controlled, cross-over Australian trial in ALS patients with frequent muscle cramps. In eight patients who completed the trial per protocol, FLX-787 demonstrated a statistically significant (p<0.05) percentage reduction from baseline in both cramp-associated pain intensity and stiffness, relative to placebo control, based on daily patient assessments by the Numerical Rating Scale (NRS). Strong and consistent trends were demonstrated on multiple other endpoints, including: percentage reduction in the number of cramps from baseline (p=0.08), increase in cramp free days from baseline (p=0.09), and improvements on both the Patient (PGIC; p=0.06) and Clinician (CGIC; p=0.06) Global Impression of Change. FLX-787 was generally well tolerated.
    • In October 2017, the Company initiated a Phase 2 randomized, controlled, double-blinded, parallel design trial in the United States in patients with Charcot-Marie-Tooth, referred to as the COMMIT trial. The COMMIT trial will evaluate FLX-787 in CMT patients who suffer from painful, debilitating cramps. Patients will be evaluated for changes in cramp frequency as the primary endpoint, with a number of secondary endpoints. The Company expects to report topline data from this study in early 2019.
    • In August 2017, the Company initiated a Phase 2 randomized, controlled, double-blinded, parallel design trial in the US in patients with motor neuron disease (MND), focused on ALS, referred to as the COMMEND trial. The COMMEND trial will evaluate FLX-787 in MND patients who suffer from painful, debilitating cramps. The FDA has granted FLX-787 Fast Track designation for the treatment of severe muscle cramps associated with ALS. The Company expects to report topline results from this study by early 2019.
    • In July 2017, the US Food and Drug Administration (FDA) granted Fast Track designation for the development of FLX-787 to treat severe muscle cramps in patients with ALS. There are currently no drugs approved in the United States for this condition. Fast Track designation is intended to accelerate the clinical development and review of drugs to treat serious conditions that address an unmet medical need.
    • In April 2017, the Company's investigational new drug (IND) application for FLX-787 for patients with ALS became effective allowing the Company to commence its U.S. Phase 2 COMMEND clinical trial of FLX-787 in ALS patients.
  • Consumer
    • For the year ended December 31, 2017, the Company recorded approximately $1.3 million in total revenue for its consumer product, HOTSHOT®, and approximately $283,000 for the fourth quarter of 2017. Launched in June 2016, HOTSHOT is a 1.7 fluid ounce sports shot that is scientifically proven to prevent and treat muscle cramps by stopping them where they start: at the nerve.
    • Year-over-year HOTSHOT unit volume growth for the fourth quarter of 2017 was 10%.
    • HOTSHOT has the potential to expand its recovery claims to address muscle soreness and muscle pain based upon a recent In-Home study, conducted among 288 endurance and non-endurance athletes using HOTSHOT over a two-week period before or after a workout. The vast majority of endurance and non-endurance athletes surveyed reported that muscle soreness and muscle pain can be reduced effectively by using HOTSHOT.
    • In January 2018, the Company announced that it engaged an investment bank to assist with the consideration of strategic alternatives for its consumer business segment.
  • Leadership and Board of Directors
    • In October 2017, Roger Tung, Ph.D. was appointed to Flex Pharma’s Board of Directors. Dr. Tung is the scientific co-founder of Concert Pharmaceuticals, where he serves as President and Chief Executive Officer. Prior to Concert, Dr. Tung was a founding scientist at Vertex, a pharmaceutical company. Dr. Tung has more than 30 years of experience in the global pharmaceutical and biotechnology industries.
    • In July 2017, the Flex Pharma Board of Directors appointed William (Bill) McVicar, Ph.D., as President and Chief Executive Officer of Flex Pharma. Dr. McVicar joined Flex Pharma in April 2017 as President of Research & Development. Dr. McVicar has a track record of clinical development and operational success with nearly 30 years of experience, most recently serving as Chief Scientific Officer at Inotek. Prior to Inotek, he served as Vice President of Development Operations at Sepracor, where he oversaw the development, FDA review, and approval of multiple NDAs and SNDAs, including BROVANA®, XOPENEX MDI®, and XOPENEX’s pediatric approval, which were each approved in a single 10-month review cycle. Prior to Sepracor, Dr. McVicar held various positions of increasing responsibility at Sandoz, Novartis and Rhone Poulenc Rorer.

Fourth Quarter & Full Year 2017 Financial Results

  • Cash Position: As of December 31, 2017, Flex Pharma had cash, cash equivalents and marketable securities of $33.3 million. During the three months ended December 31, 2017, cash, cash equivalents and marketable securities decreased by $5.6 million. For the year ended December 31, 2017, cash, cash equivalents and marketable securities decreased $27.8 million.
  • Total Revenue: Total revenue for the three months ended December 31, 2017, was approximately $283,000. Total revenue for the year ended December 31, 2017 was approximately $1.3 million, including approximately $1.3 million of net product revenue and approximately $14,000 of other revenue.
  • Cost of Product Revenue: Cost of product revenue for the three months ended December 31, 2017 was approximately $133,000 and included inventory write offs of approximately $8,000. Cost of product for the twelve months ended December 31, 2017 was approximately $507,000 and included inventory write offs of approximately $42,000.
  • R&D Expense: Research and development expense for the three months ended December 31, 2017 was $4.3 million and $17.0 million for the year ended December 31, 2017. Research and development expense for these time periods primarily included costs associated with the Company’s clinical studies of FLX-787, personnel costs (including salaries and stock-based compensation costs), FLX-787 production costs and external consultant costs.
  • SG&A Expense: Selling, general and administrative expense for the three months ended December 31, 2017 was $4.0 million and $18.5 million for year ended December 31, 2017. Selling, general and administrative expense for these periods primarily included personnel costs (including salaries and stock-based compensation costs), sales, marketing and fulfillment costs related to HOTSHOT, legal and professional costs and external consultant costs.
  • Net Loss and Cash Flow: Net loss for the three months ended December 31, 2017 was ($8.0) million, or ($0.46) per share and included $1.0 million of stock compensation expense. For the year ended December 31, 2017, net loss was ($34.4) million, or ($1.99) per share and included $4.2 million of stock-based compensation expense. As of December 31, 2017, Flex Pharma had 17,797,178 shares of common stock outstanding. The net loss for the fourth quarter of 2017, as well as for the year ended December 31, 2017, was primarily driven by the Company’s operating expenses related to its research and development efforts, costs associated with HOTSHOT, and general and administrative costs.

Financial Guidance

Based on its current operating plans and cash, cash equivalents and marketable securities position, Flex Pharma expects to have sufficient capital to fund its operations to mid 2019.

Upcoming Events and Presentations

  • Annual ROTH Conference, March 12-14, 2018 in Laguna Niguel, CA

Conference Call and Webcast

The company will host a conference call and webcast today at 9:00 a.m. ET to provide an update on the company and discuss full year 2017 financial results. To access the conference call, please dial (855) 780-7202 (U.S. and Canada) or (631) 485-4874 (International) five minutes prior to the start time. A live webcast may be accessed in the Investors section of the company’s website at www.flex-pharma.com. Please log on to the Flex Pharma website approximately 15 minutes prior to the scheduled webcast to ensure adequate time for any software downloads that may be required. A replay of the webcast will be available on Flex Pharma’s website for three months.

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