Roth restarts Flex Pharma at buy

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Roth Capital Partners reinitiated coverage of Flex Pharma (NASAQ:FLKS) with a “buy” rating and $14 price target. The stock closed at $3.37 on Sept. 6.

Flex is developing FLX-787, an innovative anti-cramp drug in amyotrophic lateral sclerosis (ALS), Charcot-Marie-Tooth disease (CMT) and multiple sclerosis (MS).

“We believe CMT, on which we base our price target, has the highest chance of success,” writes analyst Michael Higgins, who expects Phase 2 data in MS in the first quarter of 2018, with data from ALS and CMT in the third quarter of 2018.

In the second quarter of 2016, Flex launched HOTSHOT, a consumer beverage for exercise-associated muscle cramps that works via the same mechanisms as FLX-787, he added.

Mr. Higgins said that while the MS trial is a cross-over design, the ALS and CMT trials use a parallel design, with longer run-in and treatment periods, higher doses and more patients compared to NLC studies, which he believes should mitigate previous difficulties in detecting efficacy.

“Considering that spasticity, which has not yet been tested, could respond differently from cramps to FLX-787, plus the lower intra-patient variability of cramps in CMT vs. ALS and the peripheral-only location of CMT dysfunction, we believe CMT is currently the most attractive indication,” he added.