Flex Pharma, Inc.
- Company Name
- Flex Pharma, Inc.
- Stock Symbol
- Class Period
- November 6, 2017 to June 12, 2018
- Motion Deadline
- August 18, 2018
- Southern District of New York
The complaint charges Flex Pharma and certain of its officers with violations of the Securities Exchange Act of 1934. Flex Pharma is a biotechnology company that develops products and treatments for nocturnal leg cramps, cervical dystonia, spinal cord spasticity and multiple sclerosis.
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 as a treatment for amyotrophic lateral sclerosis (“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 Charcot-Marie-Tooth disease (“CMT”). CMT, also known as hereditary motor and sensory neuropathy or peroneal muscular atrophy, comprises a group of disorders that affect peripheral nerves.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and prospects, including that Flex Pharma had overstated the viability and approval prospects for its product candidate FLX-787 for the treatment of ALS and CMT. As a result of this information being concealed from the market during the Class Period, Flex Pharma securities traded at artificially inflated prices, with its stock price reaching a high of more than $7 per share.
Then on June 13, 2018, Flex Pharma announced that it planned to halt both the COMMEND and COMMIT trials, citing oral tolerability concerns observed in both studies. The Company further announced that it would restructure its organization to reduce costs, including reducing its workforce by approximately 60%, and that its Board was exploring “strategic alternatives, including the potential sale or merger of the company.” On this news, the price of Flex Pharma stock fell $3.14 per share, or more than 75%, to close at $1.04 per share on June 13, 2018.