Flex Pharma today said that its lead drug has a big problem that is forcing the little biotech to scrap mid-stage studies and hunker down — slashing 60% of its workforce as it searches for a way out of the dilemma.
The problem, not disclosed until now, is that the cramping drug FLX-787 is not tolerable to a subset of patients at 30 mg. Now they need to go back and do some basic formulation and dosing work to fix the issue — but with a beaten down share price, the company doesn’t have the cash to do it alone.
It has even less room to move today, with its stock cratering 75%, wiping out the bulk of the $75 million market cap it started the day with. The stock is down to about $1, a far cry from the $16 it priced at in 2015, when Christoph Westphal took the company he founded public, touting the involvement of Nobel Prize-winning neuroscientist and athlete Rod MacKinnon.
The company also developed a consumer anti-cramping product called HotShot, another strategy that Westphal has employed in the past, with mixed success. Westphal — best known for selling Sirtris to GSK for $720 million — left the CEO job at Flex a year ago. He also briefly ran GSK’s venture group, SR One, then set up Verastem, which wound up hitting a brick wall of its own before going in a new direction.
Flex will now operate with a skeleton crew while they go out in search of a deal, and they’d be happy to consider a buyout offer.
“In the past few months we have reported positive efficacy data in two serious and distinctly different neurological diseases: multiple sclerosis (MS) and ALS. 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,” stated Bill McVicar, who took the helm after Westphal left.
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