According to the Complaint, Flex Pharma is a biotechnology company that develops clinically proven products and treatments for muscle cramps and spasms. The Company develops medicines for nocturnal leg cramps, cervical dystonia, spinal cord spasticity, and multiple sclerosis. Flex Pharma serves customers in the United States.
On August 1, 2017, Flex Pharma announced the initiation of a Phase 2 trial, referred to as the “COMMEND” trial, to evaluate its product candidate FLX-787 with a focus on treatment for ALS. On October 16, 2017, Flex announced the initiation of a second Phase 2 trial, referred to as the “COMMIT” trial, to evaluate FLX-787 in patients with CMT.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Flex Pharma overstated the viability and approval prospects for its product candidate FLX-787 for the treatment of ALS and CMT; and (ii) as a result, Flex Pharma’s public statements were materially false and misleading at all relevant times.
On June 13, 2018, Flex Pharma announced that it planned to halt both the COMMEND and the COMMIT trials, citing oral tolerability concerns observed in both studies. Flex Pharma further announced that the Company will restructure its organization to reduce costs, including reducing its workforce by approximately 60%, and that Flex Pharma’s Board is exploring “strategic alternatives, including the potential sale or merger of the company.”
On this news, Flex Pharma’s share price fell $3.14, or 75.12%, to close at $1.04 on June 13, 2018.