On October 12, 2018, Pomerantz was appointed Lead Counsel in a class action lawsuit filed against Flex Pharma, Inc. and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 18-cv-05493, is on behalf of a class consisting of investors who purchased or otherwise acquired Flex Pharma securities between November 6, 2017 through June 12, 2018, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
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 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”).
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.