Merger and Acquisition - The Merger Agreement allows for adjustments in the Exchange Ratio based on the Parent Cash Amount and Company Cash Amount, which could lead to Salarius stockholders owning approximately 14.1% of the combined company if the Parent Cash Amount is $0 and the Company Cash Amount is $2.0 million[113]. - Salarius anticipates a Parent Cash Amount of approximately $0, which may lead to additional dilution for stockholders, with a floor of 10% ownership in the combined company[115]. - The Merger may not be completed if there is a Material Adverse Effect on either Salarius or Decoy, which could negatively impact Salarius' stock price and future business[123]. - The combined company may need to raise additional capital sooner than planned, which could lead to significant dilution for stockholders and restrictive covenants on operations[130]. - If the Merger is not completed, Salarius may face liquidity issues and could consider dissolution and liquidation, impacting stockholder returns[132]. - Stockholders of both Salarius and Decoy will have reduced ownership and voting interest in the combined company following the Merger[128]. - The Merger Agreement includes provisions that may discourage third parties from submitting alternative takeover proposals, potentially limiting strategic options for Salarius[118]. - Salarius is required to recommend the conversion of all outstanding shares of its Series A Preferred Stock into Common Stock, which may not be approved by stockholders[119]. - The combined company may become involved in securities class action litigation following the Merger, which could divert management's attention and resources[122]. - The merger is expected to result in Decoy stockholders owning approximately 85.9% of the combined entity[343]. - The company has agreed to call a special stockholder meeting to approve the conversion of preferred stock into common stock and a new equity incentive plan[344]. Financial Performance - As of December 31, 2024, Salarius had cash and cash equivalents totaling $2.4 million and an accumulated deficit of $81.9 million[134]. - For the twelve months ended December 31, 2024, Salarius reported net losses of $5.5 million[134]. - Salarius' stockholders' equity was approximately $2.3 million as of June 30, 2024, and after selling 564,730 shares, it regained compliance with the Stockholders' Equity Requirement[140]. - As of December 31, 2024, Salarius had total stockholders' equity of approximately $1.5 million and did not have net income in any period during the last two fiscal years[141]. - Salarius' common stock is currently trading below the $1.00 minimum bid price requirement, risking delisting from Nasdaq[143]. - The net loss for 2024 was $5,575,777, compared to a net loss of $12,542,693 in 2023, representing a decrease in loss of approximately 55.5%[274]. - Total current assets decreased from $6,519,673 in 2023 to $2,987,562 in 2024, a decline of approximately 54.2%[272]. - Total liabilities increased from $1,299,241 in 2023 to $1,511,279 in 2024, an increase of approximately 16.3%[272]. - The total stockholders' equity decreased from $5,287,282 in 2023 to $1,511,695 in 2024, a decline of approximately 71.5%[272]. - Interest income decreased from $352,251 in 2023 to $158,539 in 2024, a decline of approximately 55.0%[274]. - The company issued equity securities netting $1,526,460 in 2024, compared to $6,920,529 in 2023, a decrease of about 78.0%[278]. - The company has suffered recurring losses from operations since its inception, with substantial doubt existing regarding its ability to fund operations through one year from the issuance date of the financial statements[291]. Operational Challenges - Salarius has never generated any revenue from product sales and does not anticipate doing so in the foreseeable future[150]. - The company may face significant costs associated with commercializing any approved product candidates, including royalty and milestone payments to third parties[151]. - Salarius' ability to maintain liquidity is uncertain, raising substantial doubt about its ability to continue as a going concern[138]. - The failure to secure necessary financing or complete the Merger could lead to delays or abandonment of future clinical development plans[135]. - Salarius currently does not have the funds to advance its planned clinical trials, which are costly and time-consuming[154]. - The successful development of Salarius' product candidates is uncertain, as clinical trials may fail to demonstrate safety and efficacy[156]. - Salarius has not received approval from regulatory authorities to market any product candidate in any jurisdiction, which could impair its ability to generate revenue[167]. - Difficulty in enrolling patients for clinical trials is a common hurdle that could delay or prevent the trials[157]. - Salarius' product candidates may cause undesirable side effects, which could delay or prevent regulatory approval[155]. - Reliance on government funding for Salarius' programs may add uncertainty to its research and commercialization efforts[168]. - Salarius currently relies on third parties for clinical trials and manufacturing, which poses risks if these parties fail to comply with regulatory requirements or provide sufficient product quality[194][196]. - The company does not have the infrastructure to manufacture its clinical supplies internally and plans to continue relying on external vendors for production[197]. - Salarius' current manufacturing costs are not commercially feasible, which could adversely affect the viability of its product candidates[198]. Intellectual Property and Regulatory Risks - Salarius relies on a combination of patents, trade secret protection, and confidentiality agreements to protect its intellectual property, which is critical for its business[174]. - The patent position of Salarius is highly uncertain, and there is no assurance that its patent applications will result in issued patents[177]. - Salarius' commercial success is dependent on its ability to develop and market product candidates without infringing third-party patents, which may delay or prevent commercialization efforts[186]. - The company is aware of numerous third-party patents in the area of epigenetic enzyme inhibitors, which could affect its ability to manufacture or market its product candidates without obtaining licenses[187]. - Salarius may not have sufficient patent term protections for its product candidates, which could expose the company to competition from generic medications after patent expiration[180]. - The company relies on patent term extensions under the Hatch-Waxman Act, but there are no assurances that such extensions will be granted or for how long[181]. - Changes in U.S. patent law and recent Supreme Court rulings have created uncertainties regarding the value and enforceability of patents, potentially impacting Salarius' ability to protect its products[183]. Capital and Funding - The company is evaluating additional capital options, including the sale of equity securities and new collaborations, but cannot assure success in these endeavors[285]. - Salarius announced a merger agreement with Decoy Therapeutics, which involves a two-step merger process, with Decoy becoming a wholly owned subsidiary of Salarius[284]. - The company implemented multiple cost-savings plans to extend its expected cash runway into the later part of the second quarter of 2025[283]. - Grants receivable balances were $0 as of December 31, 2024 and December 31, 2023, with the Company receiving $1.5 million from the Cancer Prevention and Research Institute of Texas on February 15, 2023[314]. - The Company was awarded a grant of up to $16.1 million from CPRIT for the development of LSD 1 inhibitor, which expired during 2023[316]. - The Company entered into a Securities Purchase Agreement in May 2023, raising approximately $6 million from the sale of common stock and warrants[325]. - The company has a federal net operating loss carryforward of $39.8 million with an indefinite life, while R&D credits of $3.5 million will begin to expire in 2039[336]. Stock and Shareholder Information - The weighted-average number of common shares outstanding increased from 408,078 in 2023 to 962,210 in 2024, an increase of about 135.5%[274]. - Future sales of a significant number of shares could depress the market price of Salarius' common stock, impacting its ability to raise capital[199]. - The company does not intend to pay dividends in the foreseeable future, with returns to investors expected only from potential increases in stock price[200]. - As of December 31, 2024, approximately 560,839 warrants remained outstanding, a decrease from 1,355,598 in 2023[331]. - The Company has 9,844 shares remaining available for the grant of stock options under the 2015 Equity Incentive Plan as of December 31, 2024[333]. - The company granted 21,125 stock options in 2024, with an average exercise price of $3.02, compared to 0 options in 2023[334]. - The total unrecognized compensation cost related to unvested stock options was approximately $0.1 million as of December 31, 2024, down from $0.3 million in 2023[334].
Salarius Pharmaceuticals(SLRX) - 2024 Q4 - Annual Report