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Flex Pharma meets revenue views but slow product ramp disappoints

March 8, 2017

Thinly traded nano cap Flex Pharma (FLKS -15.6%) is under pressure on more than double normal volume, albeit on turnover of only 162K shares. The company beat Q4 expectations, but the slow sales ramp of muscle cramp-buster HOTSHOT has investors hitting the sell button.

HOTSHOT, launched in June 2016, generated sales of only $299K in Q4 despite being sampled by over 20K athletes and 200 sports teams and the recruitment of “ambassadors” to endorse/promote the product.

The company says HOTSHOT works by stimulating sensory neurons in the mouth, stomach and esophagus which send impulses to the spinal cord that inhibit and overpower repetitive signals coming to and from cramped muscle.

Piper Jaffray’s Joshua Schimmer maintains his Overweight rating but lowered the price target to $12 (300% upside) from $15.


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