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Flex Pharma Shares Plunge After Biotech Ends 2 Clinical Trials, Announces 60% Workforce Cut

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Flex Pharma Shares Plunge After Biotech Ends 2 Clinical Trials, Announces 60% Workforce Cut
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Flex Pharma Inc (NASDAQ: FLKS) shares are slumping on above-average volume Wednesday following a release from the company announcing the scrapping of two clinical trials and the exploration of strategic options.

The stock was plummeting 67.5 percent at the time of publication. 

What Happened

Flex Pharma is ending the ongoing Phase 2 clinical trials of its lead product candidate FLX-787, which was being investigated for both amyotrophic lateral sclerosis, or ALS, and Charcot-Marie-Tooth disorder, or CMT. 

The company attributed the decision to concerns about oral tolerability of the pipeline candidate in a subset of patients treated with an oral disintegrating formulation in 30mg strength taken three times daily. 

Why It's Important

The announcement comes as a shock, as the company had reported positive efficacy data for FLX-787 in multiple sclerosis and ALS in recent months that demonstrated potential as a symptomatic therapy to alleviate painful cramps and spasms. 

What's Next

Flex Pharma's board has constituted a strategic committee to evaluate strategic options, including a potential sale or merger of the company. The biotech is eliminating 60 percent of its workforce by June 30; while the restructuring will cost the company $800,000 to $1.11 million in one-time costs, it expects to reap annualized cost savings beginning in the third quarter. 

Flex Pharma said it will operate with a reduced internal team to assess the potential of FLX-787 in dysphagia as well as the HOTSHOT consumer business.

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