The Good, The Bad, And The Upcoming Q3 Results For Flex Pharma

Flex Pharma Inc FLKS provided regulatory and clinical updates for FLX-787, the company’s pharmaceutical transient receptor potential [TRP] ion channel agonist. Commenting on Flex Pharma’s Q3 results, H.C. Wainwright’s Andrew S. Fein said in a report that any visibility on sales, population and stores would likely be “a disproportionately strong stock catalyst.”

Analyst Fein maintained a Buy rating on the company, with a price target of $40.

FLX-787 Regulatory, Clinical Updates

• Regulatory update: The FDA provided recommendation for a parallel design over the crossover design, while indicating that “cramp frequency could be an acceptable primary efficacy endpoint.”
• Clinical update: The exploratory study of FLX-787 in nocturnal leg cramps [NLC] failed to demonstrate statistical significance over placebo in pre-specified endpoints of muscle cramp frequency and cramp-free nights

The Bad

“We believe that an exploratory study is just that: an exploratory study. Thus, in our view, the impact of the study news on company shares yesterday may have been somewhat overdone,” Fein wrote.

While saying that the latest updates could “provide fodder for skeptics,” the analyst mentioned that an exploratory study should not be subjected to the same “microscopic focus typically reserved for an advanced trial.”

The Good

The success of FLX-787 would influence Flex Pharma’s fundamental strength and long-term prospects. Fein considers the latest update a long-term positive since “it rights the ship for FLX-787 early on in its clinical journey with the right design (parallel), right dose (10-30mg range given before bedtime?), for the right endpoint (muscle cramp frequency) with open dialogue with the FDA.”

Q3 Results

The analyst expects Flex Pharma to report product revenue of $60K, below the Street’s current expectation of $100K and the $113K posted by the company in Q2.

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