Flex Pharma Down On Workforce Reduction, Ends Phase II Study

Flex Pharma Inc. (NASDAQ:FLKS) announced that the company is ending the phase II studies for its pipeline candidate FLX-787 in two indications. The company discontinued the ongoing phase II studies of FLX-787 in amyotrophic lateral sclerosis (ALS) and Charcot-Marie-Tooth (CMT) due to oral tolerability concerns observed in both studies.

The concerns were observed in a subset of patients being treated, with the oral disintegrating tablet formulation at 30 mg, taken three times a day. Shares of the company fell by 75% following the news.

Though FLX-787 had shown positive efficacy data in multiple sclerosis (MS) and ALS, but recent observations of oral intolerability at the current dose and formulation, in patients in both studies, indicate that more formulation and dose-ranging studies are required. However, this is challenging for the company considering the availability of its current resources.

The company’s Board of Directors and management are assessing strategic alternatives, including the potential sale or merger of the company. The company will continue to operate with a reduced internal team that will focus on assessing the potential of FLX-787 in dysphagia (difficulty swallowing) and operating the HOTSHOT consumer business, while the strategic review is ongoing.

Flex Pharma stated that it plans to reduce its workforce by approximately 60%. The layoffs will be implemented by the end of this month. As a result, the company expects to realize annualized cost savings beginning in the third quarter of 2018. The company expects to incur one-time costs of approximately $0.8 million to $1.1million under the restructuring plan.

Shares of the company have decreased 70.2% year to date, compared with the industry’s decline of 6.9%.

Zacks Rank & Stocks to Consider

Flex Pharma has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the same space are Illumina, Inc. (NASDAQ:ILMN) ) and Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) and ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) . While Illumina sports a Zacks Rank #1 (Strong Buy), Aeglea and ANI Pharmaceuticals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Illumina’s earnings per share estimates have moved up from $4.60 to $4.86 for 2018 and from $5.34 to $5.60 for 2019 over the past 30 days. The company delivered a positive earnings surprise in all the trailing four quarters with an average beat of 23.17%. The stock has rallied 31.5% so far this year.

Aeglea’s loss per share estimates have narrowed from $1.93 to $1.67 for 2018 and from $3.86 to $3.57 for 2019 over the past 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 19.32%. The stock has rallied 86.5% so far this year.

ANI Pharmaceuticals’earnings per share estimates have moved up from $5.54 to $5.79 for 2018 and from $5.72 to $5.80 for 2019 over the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 8.69%. The stock has rallied 2.8% so far this year.

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