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•	Clinical Efforts

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In January 2017, the Company announced that it is prioritizing its clinical programs in the severe neurological diseases of ALS, MS and peripheral neuropathies such as Charcot-Marie Tooth. The Company intends to initiate additional Phase 2 studies in ALS and CMT in the US this year with FLX-787, its transient receptor potential (TRP) ion channel activator, formulated as an oral disintegrating tablet.

•	In 2016, exploratory Phase 2 efficacy studies were initiated in MS and ALS patients in Australia with FLX-787, the Company’s TRP ion channel activator. The randomized, controlled, blinded, cross-over studies are designed to evaluate the safety and efficacy of FLX-787 in patients who suffer from cramps, spasms and/or spasticity as a consequence of ALS and MS.

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The Company’s results in its initial study of NLC was selected for late-breaking oral and poster presentations at the American Academy of Neurology (AAN) 68th Annual Meeting held in Vancouver, B.C., Canada in April 2016.  Only 14 abstracts were selected as late-breaking presentations at the AAN annual meeting.   Details from the study, titled “Orally-administered TRPV1 and TRPA1 activators reduce Night Leg Cramps in a randomized, blinded, placebo-controlled, crossover human trial,” were presented during the Emerging Science Session.

•	Over the past year, Flex Pharma presented positive human efficacy data from randomized, controlled studies at several scientific and medical meetings, including the AAN, Experimental Biology, the American College of Sports Medicine (ACSM), the Society for Neuroscience, and the Americas Committee for Treatment and Research in Multiple Sclerosis (ACTRIMS).

•	In October 2016, the Company announced a strong statistical trend of FLX-787 in an exploratory human nocturnal leg cramps (NLC) study in reducing muscle cramp frequency (p=0.06) during the initial two-week parallel design of the study versus placebo as compared to the baseline run-in period. This analysis was based upon data from patients

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•	Consumer Launch

•	For the year ended December 31, 2016, the Company recorded approximately $1.0 million in total revenues for its consumer product, HOTSHOT, and approximately $299,000 for the fourth quarter of 2016. Launched in June 2016, HOTSHOT is a new 1.7 fluid ounce sports shot that is scientifically proven to prevent and treat muscle cramps by stopping them where they start: at the nerve.

•	In February 2017, Tim Reed, the reigning IRONMAN 70.3® champion, became an official brand ambassador for HOTSHOT. Reed started racing with HOTSHOT a year ago and, in 2016, had the most successful year of his career with wins at the IRONMAN 70.3 Asia Pacific Championship, IRONMAN® Australia and the IRONMAN 70.3 World Championship.

•	In December 2016, James Develin, a fullback who played on the 2015 and 2017 championship professional football team and a Brown University graduate, became an official brand ambassador for HOTSHOT. Develin was first introduced to HOTSHOT through his team nutritionist and became an avid user after trying it following several long practices.

•	In August 2016, four HOTSHOT brand ambassadors - marathoners Shalane Flanagan and Amy Cragg, and steeplechasers Evan Jager and Colleen Quigley - competed at the Rio Olympics. Evan Jager captured the silver medal in his event.

•	HOTSHOT became available on Amazon.com in October 2016.

•	Expanded Board of Directors and Scientific Advisory Board

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In August 2016, W. Larry Kenney, Ph.D., Professor of Physiology and Kinesiology at Penn State University, joined the Company’s Scientific Advisory Board. As the Marie Underhill Noll Chair in Human Performance and Professor of Physiology and Kinesiology at Penn State University, Dr. Kenney is focused on research involving human physiological responses and adaptations to exercise and extreme environments. Dr. Kenney served as President of the American College of Sports Medicine from 2003-2004. He serves on the American Council of Exercise Scientific Advisory Panel, Nike’s Science Advisory Board, and chaired the Gatorade® Sports Science Institute for several years.

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In March 2016, Michelle Stacy, former President of Keurig Inc., joined the Board of Directors of Flex Pharma. As the former president of Keurig, Inc. and former vice president and general manager with Gillette/P&G, Ms. Stacy brings a wealth of experience leading consumer businesses and building global brands. During her five-year tenure at Keurig Inc., a division of Keurig Green Mountain, the company's revenue grew from $493 million in FY2008 to $4.3 billion in FY2013.

•	Cash Position: As of December 31, 2016, Flex Pharma had cash, cash equivalents and marketable securities of $61.1 million. During the three months ended December 31, 2016, cash, cash equivalents and marketable securities decreased by $6.3 million. For the year ended December 31, 2016, cash, cash equivalents and marketable securities decreased $32.6 million.

•	Total Revenue: Total revenue for the three months ended December 31, 2016, was approximately $299,000, including approximately $291,000 of net product revenue and approximately $8,000 of other revenue. Total revenue for the year ended December 31, 2016 was approximately $1.0 million, including approximately $990,000 of net product revenue and approximately $21,000 of other revenue.

•	Cost of Product Revenue: Cost of product revenue for the three months ended December 31, 2016 was approximately $134,000. Cost of product for the twelve months ended December 31, 2016 was approximately $663,000 and included inventory write offs of approximately $282,000.

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R&D Expense: Research and development expense for the three months ended December 31, 2016 was $4.2 million and $20.4 million for the year ended December 31, 2016. Research and development expense for these time periods primarily included costs associated with the Company’s clinical studies of FLX-787, IND-supporting activities, personnel costs (including salaries and stock-based compensation costs), and external consultant costs.

•	SG&A Expense: Selling, general and administrative expense for the three months ended December 31, 2016 was $3.9 million and $19.9 million for year ended December 31, 2016. Selling, general and administrative expense for these periods primarily included personnel costs

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Net Loss and Cash Flow: Net loss for the three months ended December 31, 2016 was ($7.9) million, or ($0.48) per share and included $1.2 million of stock compensation expense. For the year ended December 31, 2016, net loss was ($39.5) million, or ($2.43) per share and included $6.6 million of stock-based compensation expense. As of December 31, 2016, Flex Pharma had 16,773,798 shares of common stock outstanding. The net loss for the fourth quarter of 2016, as well as for the year ended December 31, 2016, was primarily driven by the Company’s operating expenses related to its research and development efforts, costs associated with the development and launch of the Company’s consumer brand and HOTSHOT, and general and administrative costs.

•	Annual ROTH Conference, March 13-15, 2017 in Laguna Niguel, CA

•	Oppenheimer Healthcare Conference, March 21-22, 2017 in New York, NY

•	Jefferies Healthcare Conference, June 6-9, 2017 in New York, NY

•	JMP Securities Life Sciences Conference, June 20-21, 2017 in New York, NY

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(1)

As of December 31, 2016, the Company had issued approximately 5.4 million shares of restricted stock that are subject to vesting. Of these shares, approximately 4.2 million shares had vested at December 31, 2016 and are outstanding for purposes of computing weighted average shares outstanding. The remaining shares will be included in the weighted average share calculation as such shares vest over approximately the next 1.2 years.