Good day, ladies and gentlemen, and welcome to the First Quarter 2016 Flex Pharma Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference is being recorded. I'd now like to introduce your host for today's conference, Ms. Elizabeth Woo, SVP, Investor Relations and Corporate Communications. Ms. Woo, you may begin.

Thank you, Andrea. Good morning. Thank you for joining us to discuss Flex Pharma's first quarter 2016 financial results as well as our recent progress and outlook. Earlier today, we issued a press release announcing recent business highlights and detailing our first quarter 2016 results. You can find these documents on our website at flex-pharma.com. Today, we will be making certain forward-looking statements about future expectations, plans, events, and circumstances, including statements about our strategy, future operations, and the development of our consumer and drug product candidates, plans for future potential product candidates and studies and our expectations regarding our capital allocation and cash resources. These statements are based on our current expectations, and you should not place undue reliance on these statements. Actual results may differ materially due to our risks and uncertainties, including those detailed in the Risk Factor section of our 10-K filed with the SEC and other filings we make with the SEC from time to time. Flex Pharma disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise. We'll provide a brief overview then open it up for Q&A. And joining us on the call today is Dr. Christoph Westphal, Chairman and CEO of Flex Pharma; Dr. Tom Wessel, Chief Medical Officer; Marina Hahn, President of Consumer; Kathie Lindemann, Chief Operating Officer. And I’ll now pass the call to Flex Pharma CEO, Christoph Westphal.

Thanks, Elizabeth. Thank you for joining us today. Flex has made significant progress in recent months. Several lines of research supports the role of Chemical Neuro Stimulation, the process by which a small molecule chemical signal acting topically is translated into an electrical signal in the nervous system for the benefit of healthy athletes and patients alike. This novel and important discovery by Nobel Laureate Dr. Rod MacKinnon and Dr. Bruce Bean appears to be generally applicable method to treating disorders of cramping and spasms stemming from alpha motor neuron hyper-excitability. With this platform, we are developing solutions for both patients and consumers from the healthiest of humans, the endurance athlete to the millions who suffer regularly from nocturnal leg cramps to patients affected by severe neuromuscular conditions such as multiple sclerosis, motor neuron diseases such as amyotrophic lateral sclerosis and several other serious diseases. Our efforts in the clinical and consumer arms of the business continue to advance. Clinical results in nocturnal leg cramps. In February, we reported statistically significant positive human efficacy in our randomized control blinded clinical study of NLC with our proprietary extract formulation. The results from our NLC study were selected for presentation at April 2016 American Academy of Neurology Annual Meeting as one of only 14 abstract for the late breaking emerging science presentations. Tom Wessel, our Chief Medical Officer, presented these data and will provide further detail in his comments. The positive effects were seen across a broad range of enrolled subjects; in addition, a subset of patients showed pronounced benefit. We believe these statistically significant human efficacy data generated in this study are clinically meaningful and support using specific transient receptor potential, or TRP, ion channel activation to reduce nocturnal leg cramps. This approach may provide a promising new treatment in the…

Thanks, Christoph. 2016 is a year of significant clinical activity for the Flex R&D team since we achieved our key goals in 2015. We have demonstrated statistically significant efficacy results in individuals with nocturnal leg cramps which exceeded our own internal expectations and we have identified our lead drug candidate, a single molecule chemically synthesized potent TRPA1, V1 ion channel activator. These achievements have positioned us to initiate three human efficacy studies in NLC, MS, and ALS this year with single agent molecules. In early February we announced that our prototype extract formulation beverage demonstrated statistically significant efficacy results across multiple endpoints in treating subjects with nocturnal leg cramps that we believe are clinically meaningful and compare well to the efficacy of Quinine. These results were presented at a late breaking abstract at the recent American Academy of Neurology Meeting as one of only 14 selected abstracts in a data bliss presentation. As a young company we are thrilled to have been chosen for two consecutive years now for podium presentations at this most important neurology conference. My presentation of these NLC results at AAN two weeks ago was met with much interest among practicing neurologists. Neurologists recognized the lack of therapeutic options for cramps to spasms and spasticity associated with many neurological diseases. The choices available to treat these common symptoms are imperfect. Anticonvulsant medications and other drugs have significant side effects and here in the United States Quinine is no longer available. In our randomized control blinded crossover study, we included healthy subject, 50 to 77 years of age who experienced nocturnal leg cramps at least four nights I believe, 50 subjects completed this study and we observed statistically significant effect on several important endpoints, cramp frequency, cramp-free days, physician-rated global the compression of change, CGI of change,…

Thanks, Tom. Good morning everyone. We have made great strides in the development of our cornerstone consumer product and we are prepared to launch within the next few weeks. We have created a truly unique consumer brand based upon the breakthrough scientific insights by Nobel Prize winning neuroscientist and Endurance athlete Dr. Rod MacKinnon. As Tom just mentioned, our sports beverage is the first and only consumer product that we are aware of that has demonstrated statistically significant efficacy in mitigating muscle cramps in rigorous double-blinded scientific studies. Flex Pharma’s goal is to take athletes beyond the traditional mindset that exercise associated muscle cramps are caused by a problem with the muscle. Drawn on Dr. MacKinnon’s Nobel Prize winning research, the product is designed to stimulate sensory fibers and consequently reduce hyper-excitability in motor neurons in the spinal cord leading to a rapid reflex like suppression in muscle cramping. This novel mechanism of Chemical Neuro Stimulation is allowing us to define a whole new category in sport nutrition, neuromuscular performance. Through our itsthenerve prelaunch campaign and website we have been educating consumers about our product facility in synchronizing communication between the nerves and muscles allowing the muscles to function properly, thereby improving neuromuscular performance. Let me share with you a few highlights of where we are. Our product optimized for efficacy and tolerability is scientifically proven to prevent and treat muscle cramps. We have continued to receive positive feedback from our Alpha athletes who have been training with our very typical product. Our packaging is powerful, our pricing strategy is in place, our selling strategy is clear, our supply chain is ready, our marketing plan is based on building the cult. The product messaging and name to be revealed at launch is provocative, bold, and irreverent. The proprietary packaging is…

Thank you, Marina. We recently completed the first full scale production run of our sports beverage, it is low calorie, natural, and certified USDA organic non-GMO, gluten free, and Kosher. As Christoph mentioned, our products has also been certified for sports by NSF which tests more than 230 prohibited and banned substances. The NSF certification is particularly important because it allows professional athletes to take our products, pro-teams from the NFL, NHL, MLB, and NBA, have been sampling the product and we continue to have more head trainers reach out to us. As you know, we have been seating a beta version of our consumer products with athletes establishing credibility with the endurance sports community and building demand with our target consumers. This sampling program with endurance athletes, Olympians, and professional teams is providing momentum for the official launch of our consumer products. The program Beta for Alphas has received strong interest. Alpha athletes are asking for more products and many testimonials have been posted on our blog. Our website itsthenerve.com has over 30,000 subscribers and we will be communicating with this motivated group about the upcoming launch over the next month. As Marina mentioned, our launch campaign will be supported by endorsements from endurance athletes that are highly respected among their peer group such as beloved IRONMAN Triathlete, Crowie Alexander, and Olympic Marathon contenders Shalane Flanagan and Amy Cragg, two of the three women who will be representing the U.S. in Rio in that event. At our Boston Marathon Expo Booth Shalane Flanagan shared her experience with our products and signed autographs for the long line of fans that was 50 plus feet for over an hour. Many other athletes have sampled our product and reported various additional benefits such as reduced muscle soreness and we continue to explore…

Thank you, Kathie, and Andrea we are ready to open up the call for Q&A, joining us on Q&A will be John McCabe, our VP of Finance. So when you are ready Andrea please queue up the questions.

Thank you. [Operator Instructions]. Our first question comes from the line of Joe Pantginis with ROTH Capital Partners. Your line is open.

Good morning everyone thanks for taking the question and thanks for the detailed update. Two questions if you don’t mind, first I would like to focus on the NLC study. So may be Tom with regard to the subset of patients that you mentioned that had very high responses, is there anything that you can point to with regard to the phenotypes of these patients or their neurological status or the level of their underlying disease to point to why they might have responded better?

So we’re still analyzing that, we do not have a distinct responder profile and we believe that there is actually a quite inform response across the whole population related to the frequency of cramp at baseline. We think that this bodes very well for future development, we know from other CNS drugs that there are certainly subsets that have these pronounced responses and I direct you to the Lancet paper that was published in 1997 on nocturnal leg cramps looking at Quinine to familiarize yourself with some of the responder analyses that are commonly applied to such datasets.

That’s helpful, thank you. And if I could just switch gears quickly to the commercial side, so heard you say I believe you completed your first full scale production run. Is it possible without giving anyway, any competitive secrets away, any insight into your capacity and your how you’re looking to distribute the drug once you the drink once you have it ready to go, what’s your distribution channels look like?

We have our distribution set up and for the ecom we will be using Amazon prior fulfillment. But we have produced sufficient quantities to meet our high sales scenarios to ensure we have enough bottles on hand to even if we deem that in excess. We want to make sure we have plenty of product on hand, no stock of cocktail, an important product.

Thank you. Our next question comes from the line of Mara Goldstein with Cantor Fitzgerald.

Thank you. Thanks for taking the question. If I could just go back to the question around the subset, I mean there was discussion early in the call about our subset were having a pronounced benefit. So may be if you could just elaborate a little bit on what you mean by pronounced benefit. Was this some element of particular outcomes measurements that were looked at but do they have do with cramp frequency or was it secondary, if you can kind of help us out with that that would be great. And then just dovetailing on that how does that help you inform the next phase of the clinical development program in these three separate indications once we get the populations?

Yes, absolutely. So in the Quinine field traditional measure has been to look at the frequency of cramping over two-week period and as was found in the Quinine studies there are some individuals that will respond very, very well and others modestly and others not so much. So this is a common effect seen across the board with many CNS drugs and that’s really what we have observed as well. As we kind of pointed out earlier, there is a subset that seems to have a very pronounced response, so we have 12% of our patients in our NLC study that had a 75% reduction in cramp frequency and there was zero on the placebo side. So that’s a very good indicator that we’re having similar efficacy across the board. I think that in the future NLC studies this may very well be a clinical endpoint that the FDA could agree to however it’s been a long time since the FDA has discussed these types of endpoints with sponsors. So I expect that there will be a vigorous discussion about this endpoint and other endpoints that could be applied in NLC studies.

Okay. And if I could just ask on the trials that have contemplated in the different patient population, is it expected that the outcome measurements will be the same?

No, you’re talking about the MS and ALS studies?

Right.

Obviously there are sort of endpoints in two different domains that we’re looking at very carefully. The frequency and severity of cramps and spasms these are slightly different in nature from the cramps that occur in athletes and nocturnal leg cramps, patients which are neurologically healthy patients or neurologically healthy individuals. And then the other aspect that we’re particularly interested in because this is a vexing problem in the clinic is the control of spasticity. So certainly spasticity is that additional dimension that we’re really focusing on and we’re hopeful that we will see some effects there because as we know spasticity is an expression of neuronal hyper-excitability as well. And Mara, you can look at the Ampyra approval minutes from the FDA that obviously Tom led that as Chief Medical Officer for the kind of endpoints that are interest to us.

Okay, I appreciate that. And if I could just ask also the oral dissolve tablet, Tom I think you said anticipating commercial formulation, so should we take it that the formulation that will be used in the next round of clinical studies will not be faced with the go-to-market formulation?

Well we’re getting as close as we possibly can to the commercial population in formulation. So obviously we’ve made big strides in the last few months to define what is really the appropriate dose and what is the best possible ODT tablets that we can utilize, I’m not saying that this is going to be the final formulation but we’ve made great strides in that direction and we anticipate starting both the NLC study and the ALS study with such an oral dissolving tablet.

And Mara it’s a great question, you will appreciate of course, we have this unique opportunity to show efficacy in humans the electrically-induced cramp model with what could one day be our commercial product on the regulated side. And so, it’s really quite a unique advantage this company has compared to most other companies.

Yes okay thank you. I will stop there and get back in the queue; I will let somebody else ask a question.

Thanks Mara, please do reenter the queue though.

Thank you. And our next question comes from the line of Chris Howerton with Jefferies. Your line is open.

Great, thanks for taking the questions. I guess just a follow up on Mara’s previous question in terms of dosing and potency, what can we kind of learn in terms of the legacy formulation of TRP stem and then the FLX-787 single molecule that you used in electrically-induced model and then the dissolving tablets that might used at the studies a bit, kind of similar in concentration or is that changed overtime?

It’s a great question, I mean it’s pretty amazing what Tom and his team has done over the last year we have gone from a mixture that 50 milliliters of completely undefined from a pharmaceutical perspective to a tiny little pill with low-double-digit milligram single GMP purified molecule with confidence that we can have human efficacy with it. So it’s been quite a path from and a very different product.

Thanks guys. So it’s just I guess it’s fair to say that active molecule is probably about the same delivery in total quantity but currently the concentration has increased as you get well small and smaller?

Yes I think what we’ve gone from is a mixture of a number of different potentially active molecules at quite low doses to a single purified molecule at a low dose. So it’s actually, I think on both of those activities we have improved it.

Got it, okay. All right and then just a quick one in terms of operating expenses moving forward now with the launch coming up probably towards the end of this month. See if you can provide any guidance in terms of trajectory of stents and may be anything else on that anything? Thanks.

Hi Chris, this is John. So well I’d say is our quarterly burn could be lumpy but we have cash to take us through the middle of 2018. So that’s the extent of the guidance that we are going to provide at this point.

Okay. All right. Well thanks for taking my questions and congrats and good luck on the pre-launch.

Thanks, Chris.

Thank you. [Operator Instructions]. Our next question comes from the line of Mike King with JMP Securities. Your line is open.

Hi guys, good morning. Thanks for taking the question and thanks for all the candor. Lot of my questions have been answered, I just was wondering couple of questions on Quinine. Has anybody ever elucidated with actual mechanism of action is of Quinine in the setting of NLC?

We’re really not sure but we think it probably acts as the motor in place in the muscle itself.

It’s given a very large doses as you’re probably aware, which is probably the issue with the side effect.

Okay. Do we know what if it has any activity on TRP channels at all?

There is not good data arguing that is a potent or selective TRP agonist. And of course we believe that our drugs act topically in the oral settings and are non-systemic and in fact we have evidence that there is no systemic exposure in humans at the doses we’re talking about. So you would have to argue this is probably quite a different approach and mechanism.

Okay. Thanks for that. And then just as far as our scripts or sales of Quinine tracked at U.S. markets. And if so do you know can we get a sense of perhaps end market demand for Quinine?

In the UK, it’s over 4.5 million prescriptions a year that the fifth population of the United States with well over 4 million prescriptions a year. In the United States prior to being banned it was well over 2 million prescriptions a year, so anyway you look at it; it is a very, very large market.

Must be a lot of insomnia in the UK. And just finally the when you begin single tablet formulation, will we be made aware of sort of the selectivity of that molecule or will you keep that under wrapped for a bit until IP issues and all that other good stuff. Thank you.

Yes no it’s such a great but we expect the TRPA1 and V1 agonist and we know you are a intelligent student of the literature. So I’m sure you can have a pretty good intuition as to which class of molecule it is in. We have method of treatment claims that we believe will protect us into the 2030s. So it is a very long patent life ban for an agent that we think could get approved in the United States in the near-term. And so we probably won’t say the exact nature of that molecule for a bit here but at some point you will see patents related to this of course have been off transactions.

Thank you. And we have a follow-up question from the line of Mara Goldstein with Cantor Fitzgerald. Your line is open.

Thanks very much. Can you just remind us what the shelf life of the consumer beverage is?

12 months but we will be extending that to 18.

Thank you. This concludes today’s Q&A session. I would now like to turn the call back over to Christoph Westphal, CEO, for any closing remarks.

Great, thank you so much. At Flex Pharma, as we work to define the positive impact of Chemical Neuro Stimulation on reducing cramps and spasms in several important settings, we are excited to be creating a leading neuromuscular company built on our strong foundation with excellent people and great science. And I would just like to invite everyone who is on the phone today to go to itsthenerve.com, you can sign up and obviously we’re getting near to launch here. Thank you very much for joining us this morning.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.