2450 Holcombe Blvd., Suite X, Houston, TX 77021

(Address of principal executive offices)(Zip Code)

Item 1. Business

Overview

LSD1 is an enzyme that is, in part, responsible for epigenetic regulation of gene expressiongenes that support cancer growth. According to B. Majello, et al. in “Expanding the Role of the Histone Lysine-Specific Demethylase LSD1 in Cancer”, LSD1 dysregulation is called ‘epigenetics’. Asa key driver in multiple malignancies. LSD1 induces a cancer phenotype through its enzymatic activity and through its role as a scaffolding protein in epigenetic complexes. LSD1 is over-expressed in various cancers, and higher levels of LSD1 are often diseases driven by gene dysregulation, epigenetics isassociated with poor prognosis in several types of cancer, making LSD1 inhibition an area of interest forin cancer treatment. Our lead epigenetic-based technology, seclidemstat (“SP-2577”), may treat cancers by restoring correct gene expression.research.

Phase 1/2 Clinical Trials

Salarius isWe are conducting a multi-site, open-label Phase 1/2 trial of SP-2577 for treatment of patients with relapsed/refractory Ewing sarcoma or Ewing-related sarcoma (also referred to as FET-translocated sarcoma).sarcoma. Patients must have histologic confirmation of Ewing sarcoma or Ewing-related sarcoma that is refractory or recurrent and must have received one prior course of therapy for the disease. Among other inclusion criteria, patients must be 12 years or older and have a life expectancy of greater than 4 months.

The primary objectives of this clinical trial are to study the safety and tolerability of SP-2577. Secondary objectives include pharmacokinetic assessment, food effects on drug pharmacokinetics, determination of the maximum tolerated dose (“MTD”) and assessment of preliminary signs of anti-tumor activity. Additionally, the trial will explore the use of circulating tumor cells (“CTCs”), cell-free DNA (“cfDNA”), Hemoglobin F and changes in molecular signatures of the tumor as pharmacodynamic markers of disease burden, drug effect and tumor response.

In February 2021, Salariuswe announced that itwe reached the recommended phase 2 dose and would initiate the dose expansion portion of the trial. Ewing sarcoma patients will be treated in combination with topotecan/cyclophosphamide. FET-translocated sarcoma patients will be treated with single-agent SP-2577.

In June 2021 we announced the initiation of an Investigator Initiated Trial studying SP-2577 in combination with advancedazacitidine for the treatment of patients with myelodysplastic syndromes (MDS) or recurrent, histologically or cytologically confirmed, solid malignancy that is either metastatic or unresectable. Thischronic myelomonocytic leukemia (CMML). The Phase 1/2 trial is currently in dose escalation.

In October, 2022, in combination with anti-cancerresponse to the Company voluntarily pausing the Phase 1/2 trial of seclidemstat as a treatment in hematological malignancies.

Listed below are the strategic agreements that may have an increased chanceimpact on our results of benefiting from SP-2577 treatment. Salarius is currently conducting preclinical work to identify mutations that may increase patient response to SP-2577’s therapeutic effects.operations:

On August 3, 2011, Salariuswe entered into an Exclusive License Agreement with the University of Utah Research Foundation (the “University of Utah”), for the exclusive license with respect to patent rights protecting SP-2577 and related compounds. The patent rights were for a provisional patent. The term of agreement is until the last-to-expire of the patent rights licensed under the agreement, which is expected to be as late as 2037, unless otherwise terminated by law or by the parties pursuant to the agreement.

In further consideration of the rights granted by the University of Utah, Salariuswe agreed to pay all past patent expenses incurred in filing and prosecuting the patent application, and pay all future patent expenses incurred including filing, prosecuting, enforcing and maintaining the patent right.

Either party has a right to terminate the agreement for a breach of or default under the agreement following a 60-day cure period. If Salariuswe ceases to carry on itsour business with respect to the patent right granted under the agreement, the University of Utah has a right to terminate the agreement upon 60 days’ notice. In addition, Salariuswe may terminate the agreement at any time upon ninety days’ notice to the University of Utah.

In June 2016, Salariuswe entered into a Cancer Research Grant Contract with Cancer Prevention and Research Institute of Texas (“CPRIT”). The grant contract was for an amount up to $18.7 million to fund the development of LSD-1 inhibitor. The grant was subsequently amended to remove $2.6 million related to a discontinued prostate cancer

program. This is a 3-year grant award which originally expired on May 31, 2019. However, theThe grant now expires on May 31, 2023. The Company was approvedhas applied for an extension with a contract end date ofuntil November 30, 2021.

Upon commercialization of SP-2577, and if Salarius’our revenue is above a specified dollar threshold, Salarius iswe will be required to pay a single digit percentageup to 3%-5% of such revenue during the revenue term until CPRIT receives an amount equal to a single digit multiple of the total grant award. The revenue term is determined on a country by country basis as revenue during the period beginning on the date of the first commercial sale of a product or service until there no longer exists any exclusivity for a commercial product or service in such country, which may be as late as 2037. In the event CPRIT receives such specified percentage of the total grant award from Salariusus during the revenue term, Salariuswe will continue to pay CPRIT a reduced revenue sharing percentage during the remainder of the revenue term. Additionally, if Salarius iswe are required to obtain a license under the intellectual property rights of one or more third parties in order to sell commercial products in any given country, then the revenue sharing percentages may be reduced.

The agreement may be terminated by the mutual consent of the parties or by Salariusus at itsour discretion. CPRIT may also terminate the agreement upon an event of default, which includes Salarius’our failure to conduct the project within

The portfolio was purchased for an aggregate purchase price of $1,500,000 and the delivery of 40,000 shares of our common stock. We also agreed to pay to Seller (i) milestone payments upon the occurrence of certain events and (ii) royalty payments. All cost related to the transaction were immediately expensed in 2022 as acquired in-process research and development expenses since SP-3164 has not own or operateyet achieved regulatory approval and, absent obtaining such approval, has no alternative future use. A member of the Company’s Board of Directors also serves as a consultant to the Seller and is employed by an affiliate of the Seller.

The Company currently has no manufacturing facilities, for the production of SP-2577 or other product candidates that Salarius develops, nor does it have plans to develop its own manufacturing operations in the foreseeable future. Salarius currently depends on third-party contract manufacturers for all its required raw materials, active pharmaceutical ingredients,a sales and finished product candidates for its clinical trials. Salarius currently employs internal resources and third-party consultants to manage Salarius’ manufacturing contractors.

Intellectual Property

As of December 31, 2020, Salarius2022, we had a SP-2577 worldwide portfolio of 71 patents and patent applications of which 64 were issued or allowed and 7 are pending applications. This portfolio includes (i) composition of matter and methods of use patents on Salarius’our lead candidate, SP-2577. TheseTransaction have claims that cover the composition of matter of SP-3164 with a patent term expiration of January 14, 2034. The patents and patent applications related to SP-2577 are owned by the University of Utah Research Foundation and are exclusively licensed to Salarius.us.

In the United States, Salarius’our anticipated first target market, Salarius haswe have two composition of matter patents (US#8,987,335 and US#9,266,838) and two methods of use patents (US#9,642,857, US#9,555,024) protecting SP-2577 and related compounds which will expire in 2032.

In addition to patent protection, Salarius seekswe seek to rely on trade secret protection, trademark protection and know-how to expand itsour proprietary position around itsour chemistry, technology and other discoveries and inventions that Salariuswe consider important to Salarius’our business. SalariusWe also seeksseek to protect itsour intellectual property in part by entering into confidentiality agreements with Salarius’our employees, consultants, scientific advisors, clinical investigators and other contractors and by requiring Salarius’our employees, commercial contractors, and certain consultants and investigators, to enter into invention assignment agreements that grant itus ownership of any discoveries or inventions made by them. Further, Salarius seekswe seek trademark protection in the United States and internationally where available and when Salarius deemswe deem appropriate.

SP-2577: LSD1 Inhibition and Competitive Differentiation

a Lethal Prostate Cancer Gene Network Independently of its Demethylase Function” with SP-2509, an analogue of SP-2577. Compared to LSD1 inhibitors in clinical development, SP-2577 binds to LSD1 in a different manner, which Salariuswe hypothesizes may grant it therapeutic advantages over the competition. To further justify this hypothesis, Salariuswe compared the abilityaffect of SP-2577, and an irreversible LSD1 inhibitor, specifically GSK-LSD1 (analogue to GSK’sGSK's former clinical candidate), to affect cancerCC-90011 (Celgene's reversible, enzymatic inhibiting clinical candidate), and ORY-1001 (Oryzon's irreversible, enzymatic-inhibiting clinical candidate)  on cell growthviability in vitro. SP-2577 was able to better inhibit cell growth across 32 cancer cell types compared to GSK-LSD1.GSK-LSD1, 20 cell types compared to CC-90011, and 40 cell lines compared to ORY-1001. 

Government Regulation and Product Approvals

The process required before a drug may be marketed in the United States generally include the following:

The FDA may order the temporary or permanent discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The study protocol and informed consent information for patients in clinical trials must also be submitted to an IRB, for approval of each site at which the clinical trial will be conducted. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements, or may impose other conditions. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health (“NIH”) for public dissemination on their www.clinicaltrials.gov website.

Post-approval studies, or Phase 4 clinical trials, may be conducted after initial marketing approval. These studies may be required by the FDA as a condition of approval and are used to gain additional experience from the treatment of patients in the intended therapeutic indication. The FDA also has express statutory authority to require post-market clinical studies to address safety issues.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post- approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under risk evaluation and mitigation strategy ("REMS")a REMS to ensure that the benefits of the drug outweigh the potential risks. A REMS can include a medication guide, a communication plan for healthcare professionals and elements to assure safe use, such as special training and certification requirements for individuals who prescribe or dispense the drug, requirements that patients enroll in a registry and other measures that the FDA deems necessary to assure the safe use of the drug. The requirement for a REMS can materially affect the potential market and profitability of the drug. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained, FDA determines the risk outweighs the benefits of the product or other problems are identified following initial marketing.

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs. Such supplements are typically reviewed within 10 months of receipt.receipt or 6 months of receipt for priority efficacy supplements.

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drug candidates intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that costs of research and development of the drug for the indication can be recovered by sales of the drug in the United States. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Although there may be some increased communication opportunities, orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a drug candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including a full NDA, to market the same drug for the same indication for seven years, except in very limited circumstances, such as if the second applicant demonstrates the clinical superiority of its product or if FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition for which the drug was designated. Orphan drug exclusivity does not prevent the FDA from approving a different drug

As in the United States, designation as an orphan drug for the treatment of a specific indication in the European Union, must be made before the application for marketing authorization is made. Orphan drugs in Europe enjoy economic and marketing benefits, including up to 10 years of market exclusivity for the approved indication unless another applicant can show that its product is safer, more effective or otherwise clinically superior to the orphan designated product.

The FDA and foreign regulators expect holders of exclusivity for orphan drugs to assure the availability of sufficient quantities of their orphan drugs to meet the needs of patients. Failure to do so could result in the withdrawal of marketing exclusivity for the orphan drug.

Any product submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. AnyA product is eligible for priority review if it has the potentialis intended to provide safetreat a serious condition and, effective therapy where no satisfactory alternative therapy exists or there isif approved, would provide a significant improvement in the treatment, diagnosissafety or prevention of a disease compared to marketed products.effectiveness. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug product designated for priority review in an effort to facilitate the review. Salarius hasreview on a 6 month, rather than the standard 10 month, timeline. We have received FDA designation as a potential treatment for a rare pediatric disease for the use of SP-2577 in Ewing’s Sarcoma. Should SP-2577 prove to be efficacious in this disease with a positive benefit/risk ratio, Salarius expectswe expect to receive a Priority Review Voucher. The Priority Review Voucher is transferable and may be sold.

Fast Track designation, priority review, accelerated approval and breakthrough therapy designationBreakthrough Therapy Designation do not change the standards for approval, but may expedite the development or approval process by allowing for approval based on a surrogate endpoint likely to predict clinical benefit of the underlying drug, rather than through a direct measure of clinical benefit.process. Even if Salarius receives one of thesewe receive Fast Track or Breakthrough designations for its product candidates, the FDA may later decide that its product candidates no longer meet the conditions for qualification. In addition, these designations may not provide Salariusus with a material commercial advantage.

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, REMS or other surveillance to monitor the effects of an approved product, or restrictions on the distribution or use of the product. In addition, quality-quality control, drug manufacture, packaging and labeling procedures must continue to conform to cGMPscGMP after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the FDA subjects’ entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs.cGMP. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMPs.cGMP. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information, imposition of post-market studies or clinical trials to assess new safety risks or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

In order to market any product outside of the United States, Salariuswe would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of Salarius’our products. Whether or not Salarius obtainswe obtain FDA approval for a product, Salariuswe would need to obtain the necessary approvals by the comparable foreign regulatory authorities before Salariuswe can commence clinical trials or marketing of the product in foreign countries and jurisdictions.

Although Salariuswe currently doesdo not have any products on the market, Salarius’our current and future business operations may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which Salarius conducts itswe conduct our business. Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security, price reporting and physician sunshine laws. Some of Salarius’our pre-commercial activities are subject to some of these laws.

The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer or a party acting on its behalf to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration in cash or in kind that is intended to induce or reward the referral of business, including the purchase, order, or lease of any, good, facility, item or service for which payment may be made under a federal healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers and beneficiaries on the other.

Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have interpretedfound that the statute’s intent requirement to mean thatAnti-Kickback Statute may be violated if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the Anti-Kickback Statute has been violated.program business. In addition, a person or entity does not need to haveliability may be established without actual knowledge of the statute or specific intent to violate it in order to have committed a violation.it. Violations of this law are punishable by up to fiveten years in prison, and can also result in criminal fines, civil money penalties and exclusion from participation in federal healthcare programs.

Moreover, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be broader in scope and may apply regardless of payor, in additionmade to items and services reimbursed under Medicaidcertain healthcare providers; laws that require drug manufacturers to report information related to clinical trials, or information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state programs. Additionally,laws that restrict the ability of manufacturers to the extentoffer co-pay support to patients for certain prescription drugs; and state laws and local ordinances that anyrequire identification or licensing of Salarius’ products are sold in a foreign country, Salarius may be subject to similar foreign laws.sales representatives.

The ACA imposed, among other things, new annual reporting requirementsU.S. federal Physician Payment Sunshine Act, implemented as the Open Payments Program, requires manufacturers of drugs, devices, biologics, and medical supplies for covered manufacturers forwhich payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to direct or indirect payments and other transfers of value provided to physicians and teaching hospitals (and certain other practitioners as of 2022), as well as certain ownership and investment interests held in the company by physicians and their immediate family members.

If Salarius’our operations are found to be in violation of any of such laws or any other governmental regulations that apply to Salarius, Salariusus, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, contractual damages, reputational harm, diminished profits and future earnings, the curtailment or restructuring of Salarius’our operations, exclusion from participation in federal and state

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could affect Salarius’our future results of operations. There have been and continue to be a number of initiatives at the United States federal and state levels that seek to reduce healthcare costs.

In particular, the ACAPatient Protection and Affordable Care Act, as amended, (the “ACA”) has had, and is expected to continue to have, a significant impact on the healthcare industry. The ACA was designed to expand coverage for the

uninsured while at the same time containing overall healthcare costs.costs, among other objectives. With regard to pharmaceutical products, among other things, the ACA revised the definition of “average manufacturer price” for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices and imposed a significant annual fee on companies that manufacture or import certain branded prescription drug products. Substantial new provisions affecting compliance have also been enacted, which may require SalariusIt is unclear how efforts to modify Salarius’ business practices with healthcare providers and entities, and a significant number of provisions are not yet, or have only recently become, effective.

Moreover, the Drug Supply Chain Security Act, enacted in 2013, imposes new obligations on manufacturers of pharmaceutical products, among others, related to product tracking and tracing, which will be phased in over several years beginning in 2016. Among the requirements of this legislation, manufacturers will be required to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records regarding the drug product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers will also be required to verify that purchasers of the manufacturers’ products are appropriately licensed. Further, under this new legislation, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death.

Sales of Salarius’our product candidates, once approved, will depend, in part, on the extent to which the costs of Salarius’our products will be covered by third-party payors, such as government health programs, private health insurers and managed care organizations. Third-party payors generally decide which drugs they will cover and establish certain reimbursement levels for such drugs. In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government (through the Medicare or Medicaid programs) provides reimbursement for such treatments. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use itsour products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of itsour products. Sales of Salarius’our product candidates, and any future product candidates, will therefore depend substantially on the extent to which the costs of Salarius’our product candidates, and any future product candidates, will be paid by third-party payors. Additionally, the market for Salarius’our product candidates, and any future product candidates, will depend significantly on access to third-party payors’ formularies without prior authorization, step

Third-party payors are developing increasingly sophisticated methods of controlling healthcare costs and increasingly challenging the prices charged for medical products and services. Additionally, the containment of healthcare costs has become a priority of federal and state governments and the prices of drugs have been a focus in this effort. The United States government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls and transparency requirements, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit Salarius’our net revenue and results. If these third-party payors do not consider Salarius’our products to be cost-effective compared to other therapies, they may not cover Salarius’our products once approved as a benefit under their plans or, if they do, the level of reimbursement may not be sufficient to allow Salariusus to sell itsour products on a profitable basis. Decreases in third-party reimbursement for Salarius’our products once approved or a decision by a third-party payor to not cover itsour products could reduce or eliminate utilization of Salarius’our products and have an adverse effect on itsour sales, results of operations and financial condition. In addition, state and federal healthcare reform measures have been and will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for Salarius’our products once approved or additional pricing pressures.

Facilities

Employees and Human Capital Resources

Legal Proceedings

Salarius isWe are not currently a party to any legal proceedings the outcome of which Salarius believes,we believe, if determined adversely to Salarius,us, would individually or in the aggregate, have a material adverse effect on itsour business, financial condition, or results of operations. From time to time, Salariuswe may become involved in legal proceedings arising in the ordinary course of business.

Corporate Information and Web Site Access to SEC Filings

Item 1A. Risk Factors

We have devoted substantially all our financial resources to identify, acquire, and develop our product candidates, including conducting clinical trials and providing general and administrative support for our operations. To date, we have financed our operations primarily through the sale of equity securities. The amount of our future net losses will depend, in part, on the rate of our future expenditures and ability to obtain funding through equity or debt financings,

strategic collaborations, or grants. Biopharmaceutical product development is a highly speculative and competitive undertaking and involves a substantial degree of risk. We expect losses to increase as we complete Phase 1 development and advance into Phase 2 development of our lead product candidates. It may be several years, if ever, before we complete pivotal clinical trials and have a product candidate approved for commercialization. We expect to invest significant funds into the research and development of our current product candidates to determine the potential to advance these product candidates to regulatory approval. We expect to be required to expend a significant amount of funds before we know if we have a clinically successful product candidate.

Even if we obtain regulatory approval to market a product candidate, our future revenue will depend upon the size of any markets in which our product candidates may receive approval, and our ability to achieve sufficient market

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future and our expenses will increase substantially if and as we:

Further, the net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.

Salarius hasWe have no products approved for commercialization and hashave never generated any revenue. Salarius’Our ability to generate revenue and achieve profitability depends on itsour ability, alone or with strategic collaborators, to successfully complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize one or more of itsour product candidates. Salarius doesWe do not anticipate generating revenue from product sales for the foreseeable future. Salarius’Our ability to generate future revenue from product sales depends heavily on itsour success in many areas, including but not limited to:

Even if one or more of the product candidates that Salarius developswe develop is approved for commercial sale, Salarius anticipateswe anticipate incurring significant costs associated with commercializing any approved product candidate. Portions of itsour current pipeline of product candidates have been in-licensed from third parties, which make the commercial sale of such in-licensed products potentially subject to additional royalty and milestone payments to such third parties. SalariusWe will also

have to develop, contract for or acquire manufacturing capabilities to continue development and potential commercialization of itsour product candidates. SalariusWe will need to develop or procure itsour drug product in a commercially feasible manner in order to successfully commercialize any future approved product; if any. Additionally, if Salarius iswe are not able to generate revenue from the sale of any approved products, Salariuswe may never become profitable.

SalariusWe received substantial funding during the fourth quarter of 2020 and first quarter of 2021year ended December 31, 2022 including a warrant inducement program ($3.6 million), At the Market offering ($6.3 million), warrant exercises ($1.5 million), CPRIT funding ($1.7 million) and a public offering of common stock ($23.0 million).reimbursement from CPRIT. Other than the CPRIT funding, these raises caused significant dilution to stockholders who owned Salariusour shares of Common Stock prior to these capital raises. To the extent that Salarius raiseswe raise additional capital through the sale of equity, convertible debt or other securities convertible into equity the ownership interest of Salarius’our stockholders will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect rights of Salarius’our equity holders. Debt financing, if available at all, would likely involve agreements that include covenants limiting or restricting Salarius’our ability to take specific actions, such as incurring additional debt, making capital expenditures, making additional product acquisitions, or declaring dividends. If Salarius raiseswe raise additional funds through strategic collaborations or licensing arrangements with third parties, Salariuswe may have to relinquish valuable rights to itsour product candidates or future revenue streams or grant licenses on terms that are not favorable to Salarius. Salariusus. We cannot be assured that itwe will be able to obtain additional funding when necessary to fund itsour entire portfolio of product candidates to meet itsour projected plans. If Salarius iswe are unable to obtain funding on a timely basis, Salariuswe may be required to delay or discontinue one or more of itsour development programs or the commercialization of any product candidates or be unable to expand itsour operations or otherwise capitalize on potential business opportunities, which could materially harm Salarius’our business, financial condition, and results of operations.

Salarius hasWe have also historically received funds from state and federal government grants for research and development including CPRIT. The grants have been, and any future government grants and contracts Salariuswe may receive may be, subject to the risks and contingencies set forth below under the risk factor titled “Reliance on government funding for Salarius’our programs may add uncertainty to itsour research and commercialization efforts with respect to those programs that are tied to such funding and may impose requirements that limit itsour ability to take specified actions, increase the costs of commercialization and production of product candidates developed under those programs and subject itus to potential financial penalties, which could materially and adversely affect itsour business, financial condition and results of operations.” Although Salariuswe might apply for government contracts and grants in the future, itwe cannot assure you that itwe will be successful in obtaining additional grants for any product candidates or programs. Failure to receive additional government grants in the future may substantially harm Salarius’our business.

SalariusWe may seek a breakthrough therapy designation from the FDA for some of itsour product candidates that reach the regulatory review process. A breakthrough therapy is defined as a drug or biological product that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biological product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs or biological products that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA could also be eligible for accelerated approval.

Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if Salarius believeswe believe one of itsour product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation.

The receipt of a breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of Salarius’our product candidates qualify and are designated as breakthrough therapies, the FDA may later decide that the drugs or biological products no longer meet the conditions for designation and the designation may be rescinded.

If a product candidate is intended for the treatment of a serious condition and nonclinical or clinical data demonstrate the potential to address unmet medical need for this condition, a product sponsor may apply for FDA Fast Track designation. SalariusWe recently received Fast Track designation for a product candidate. However, Fast Track designation does not ensure that Salariuswe will receive marketing approval or that approval will be granted within any particular time frame. SalariusWe may not experience a faster development or regulatory review or approval process with Fast Track designation compared to conventional FDA procedures. In addition, the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from Salarius’our clinical development program. Fast Track designation alone does not guarantee qualification for the FDA’s priority review procedures.

If any of Salarius’our product candidates are approved, Salariuswe will be subject to ongoing regulatory requirements with respect to manufacturing, labeling, packaging, storage, marketing, advertising, promotion, sampling, record-keeping, conduct of post-marketing clinical trials, and submission of safety, efficacy and other post-approval information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities.

Manufacturers and manufacturers’ facilities are required to continuously comply with FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP, regulations and corresponding foreign regulatory manufacturing requirements. As such, Salariuswe and itsour contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any NDA or marketing authorization application.

Any regulatory approvals that Salarius receiveswe receive for itsour product candidates may be subject to limitations on the approved indicated uses for which the product candidate may be marketed or to the conditions of approval, or

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, the regulatory agency may impose restrictions on that product or Salarius,us, including requiring withdrawal of the product from the market. If Salarius failswe fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

Any government investigation of alleged violations of law would be expected to require Salariusus to expend significant time and resources in response and could generate adverse publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect itsour ability to develop and commercialize itsour products and theour value of Salarius and itsour operating results would be adversely affected.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs or otherwise change or reform the provision of healthcare products and services to the patient population. For example, in March 2010, the Patient Protection and Affordable Care Act (“ACA”), as amended by the Health Care and Education Reconciliation Act (the “Health Care Reform Law”),ACA was passed,enacted, which substantially changeschanged the way health care is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The Health Care Reform Law,ACA, among other things, addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected, increasesincreased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extendsextended the rebate program to individuals enrolled in Medicaid managed care organizations, establishesestablished annual fees and taxes on manufacturers of specified branded prescription drugs, and promotesestablished a new Medicare Part D coverage gap discount program. Certain provisions of the ACA have been subject to judicial challenges, as well as efforts to modify them or alter their interpretation or implementation. It is unclear how efforts to challenge or modify the ACA or its implementing regulations, or portions thereof, will affect our business.

In addition, other legislative changes have been proposed and adopted in the United States since the Health Care Reform LawACA was enacted and Salarius expectswe expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand or lower pricingmore rigorous coverage criteria and in additional downward pressure on the price that we receive for itsour product candidates, if commercialized, and could seriously harm our future revenues. Any reduction in reimbursement from Medicare, Medicaid, or additional pricing pressures.other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenues, attain profitability, or successfully commercialize our product candidates.

If Salarius obtainswe obtain FDA approval for any of itsour product candidates and beginsbegin commercializing those products in the United States, itsour operations may be subject to various federal and state fraud and abuse laws, including, without

Because of the breadth of theseEfforts to ensure that our collaborations with third parties, and our business generally, will comply with applicable United States and healthcare laws and the narrowness of the statutory exceptions and safe harbors available, itregulations will involve substantial costs. It is possible that some of Salarius’governmental authorities will conclude that our business activities could be subject to challenge under onepractices may not comply with current or more of such laws. In addition, recent health care reform legislation has strengthened these laws. For example, the Health Care Reform Law, amongfuture statutes, regulations or case law involving applicable fraud and abuse or other things, amends the intent requirement of the federal anti-kickbackhealthcare laws and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover, the Health Care Reform Law provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and its resultstheir provisions are open to a variety of operations.interpretations.

In addition to the funding Salarius haswe have received to date, it intendswe intend to continue to apply for federal and state grants to receive additional funding in the future. Contracts and grants funded by the U.S. government, state governments and their related agencies include provisions that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to:

In addition to those powers set forth above, the government funding Salariuswe may receive could also impose requirements to make payments based upon sales of itsour products, if any, in the future.

SalariusWe may not have the right to prohibit the U.S. government from using specified technologies developed by it,us, and Salariuswe may not be able to prohibit third-party companies, including itsour competitors, from using those technologies in providing products and services to the U.S. government. The U.S. government generally takes the position that it has the right to royalty-free use of technologies that are developed under U.S. government contracts. These and other provisions of government grants may also apply to intellectual property Salarius licenseswe license now or in the future.

In addition, government contracts and grants normally contain additional requirements that may increase Salarius’our costs of doing business, reduce itsour profits, and expose itus to liability for failure to comply with these terms and conditions. These requirements include, for example:

If Salarius failswe fail to maintain compliance with any such requirements that may apply to itus now or in the future, Salariuswe may be subject to potential liability and to termination of Salarius’our contracts.

Salarius’Our research and development activities and itsour third-party manufacturers’ and suppliers’ activities involve the controlled storage, use, and disposal of hazardous materials, including the components of itsour product candidates and other hazardous compounds. SalariusWe and itsour manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at Salarius’our and itsour manufacturers’ facilities pending their use and disposal. SalariusWe cannot eliminate the risk of contamination, which could cause an interruption of itsour commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling, and disposal of these materials and specified waste products. Although Salarius believeswe believe that the safety procedures utilized by itus and itsour third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, Salariuswe cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, Salariuswe may be held liable for any resulting damages and such liability could exceed itsour resources and state or federal or other applicable authorities may curtail Salarius’our use of specified materials and/or interrupt itsour business operations. Furthermore, environmental laws and regulations are complex, change frequently, and have tended to become more stringent. SalariusWe cannot predict the impact of such changes and cannot be certain of itsour future compliance. Salarius doesWe do not currently carry biological or hazardous waste insurance coverage.

Presently, Salarius haswe have rights to the intellectual property, through licenses from third parties and under patents and patent applications that Salarius owns,we own, to modulate only a subset of the known epigenetic enzyme targets. Because Salarius’our programs may involve a range of targets, including targets that require the use of proprietary rights held by third parties, the growth of itsour business may depend in part on Salarius’our ability to acquire, in-license or use these proprietary rights. In addition, Salarius’our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. SalariusWe may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that it identifies.we identify. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that Salariuswe may consider attractive. These established companies may have a competitive advantage over Salariusus due to their size, cash resources and greater clinical development and commercialization capabilities.

For example, Salarius haswe have previously and may continue to collaborate with academic institutions worldwide to accelerate itsour pre-clinical and clinical research or development under written agreements with these institutions. Typically, these institutions provide an option to negotiate a license to any of the institution’s rights in technology

resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, Salariuswe may be unable to negotiate a license within the specified time frame or under terms that are acceptable to it.us. If Salarius iswe are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking Salarius’our ability to pursue itsour program.

In addition, companies that perceive Salariusus to be a competitor may be unwilling to assign or license rights to it. Salariusus. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow it

Salarius hasWe have sought to protect itsour proprietary position by filing patent applications in the United States and abroad related to itsour product candidates that are important to itsour business. This process is expensive and time consuming, and Salariuswe may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that Salariuswe will fail to identify patentable aspects of itsour research and development output before it is too late to obtain patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which legal principles remain unsolved. The patent applications that Salarius ownswe own or in-licenses may fail to result in issued patents with claims that cover itsour product candidates in the United States or in other foreign countries. There is no assurance that all potentially relevant prior art relating to itsour patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover Salarius’our product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, Salarius’our patents and patent applications may not adequately protect itsour intellectual property, provide exclusivity for itsour product candidates, or prevent others from designing around Salariusour claims. Any of these outcomes could impair Salarius’our ability to prevent competition from third parties, which may have an adverse impact on itsour business.

Salarius,We, independently or together with itsour licensors, hashave filed several patent applications covering various aspects of itsour product candidates. SalariusWe cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or licensed to Salariusus after patent issuance could deprive Salariusus of rights necessary for the successful commercialization of any product candidates that Salariuswe may develop. Further, if Salarius encounterswe encounter delays in regulatory approvals, the period of time during which Salariuswe could market a product candidate under patent protection could be reduced.

If Salariuswe cannot obtain and maintain effective protection of exclusivity from itsour regulatory efforts and intellectual property rights, including patent protection or data exclusivity, for itsour product candidates, Salariuswe may not be able to compete effectively and itsour business and results of operations would be harmed.

Patents have a limited term. In the United States, the statutory expiration of a patent is generally 20 years after it is filed. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Even if patents covering itsour product candidates are obtained, once the patent life has expired for a product candidate, Salariuswe may be open to competition from generic medications. In addition, upon issuance in the United States any patent term can be adjusted based on specified delays caused by the applicant(s) or the U.S. Patent and Trademark Office (“USPTO”).

As is the case with other biotechnology companies, Salarius’our success is heavily dependent on patents and the ability to enforce and protect these patients. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in specified circumstances and weakened the rights of patent owners in specified situations. In addition to increasing uncertainty with regard to Salarius’our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken Salarius’our ability to obtain new patents or to enforce Salarius’our existing patents and patents that itwe might obtain in the future. Some of Salarius’our patent claims may be affected by the recent U.S. Supreme Court decision in Association for Molecular Pathology v. Myriad Genetics. In Myriad, the Supreme Court held that unmodified isolated fragments of genomic sequences, such as the DNA constituting the BRCA1 and BRCA2 genes, are not eligible for patent protection because they constitute a product of nature. The exact boundaries of the Supreme Court’s decision remain unclear as the Supreme Court did not address other types of nucleic acids.

On December 16, 2014, the USPTO issued guidance to patent examiners titled 2014 Interim Guidance on Patent Subject Matter Eligibility (Fed. Reg. 79 (241): 74618-33. These guidelines instruct USPTO examiners on the ramifications of the Prometheus and Myriad rulings and apply the Myriad ruling to natural products and principles including all naturally occurring nucleic acids. In addition, the USPTO continues to provide updates to its guidance and this is a developing area. The recent USPTO guidance could make it impossible for Salariusus to pursue similar patent claims in patent applications Salariuswe may prosecute in the future.

Salarius’Our patent portfolio contains claims of various types and scope, including chemically modified mimics, as well as methods of medical treatment. The presence of varying claims in Salarius’our patent portfolio significantly reduces, but may not eliminate, itsour exposure to potential validity challenges under Myriad or future judicial decisions. However, it is not yet clear what, if any, impact this recent Supreme Court decision or future decisions will have on the operation of Salarius’our business.

For Salarius’our U.S. patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patent law. On September 16, 2011, the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The USPTO has promulgated regulations and developed procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, did not come into effect until March 16, 2013. Accordingly, it is not yet clear what, if any, impact the Leahy-Smith Act will have on the operation of Salarius’our business. However, the Leahy-Smith Act

and its implementation could increase the uncertainties and costs surrounding the prosecution of itsour patent applications and the enforcement or defense of itsour issued patents, all of which could have a material adverse effect on Salarius’our business, financial condition or results of operations.

An important change introduced by the Leahy-Smith Act is that, as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention. AUnder such change, a third party that files a patent application in the USPTO after that date, but before Salariuswe could, thereforemay be awarded a patent covering an invention of Salarius’our even if Salariuswe had made the invention before it was made by the third party. This will require Salariusus to be cognizant going forward of the time from invention to filing of a patent application. Furthermore, Salarius’our ability to obtain and maintain valid and enforceable patents depends on whether the differences between itsour technology and the prior art allow itsour technology to be patentable over the prior art. Since patent applications in the United States and most other countries are confidential for a period of time after filing, Salariuswe cannot be certain that it waswe were the first to either

Among some of the other changes introduced by the Leahy-Smith Act are changes that limit where a patentee may file a patent infringement suit and new procedures providing opportunities for third parties to challenge any issued patent in the USPTO. Included in these new procedures is a process known as Inter Partes Review (“IPR”), which has been generally used by many third parties over the past two years to invalidate patents. The IPR process is not limited to patents filed after the Leahy-Smith Act was enacted, and would therefore be available to a third party seeking to invalidate any of Salarius’our U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate Salarius’our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

In addition to the protection afforded by patents, Salarius relieswe rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that Salarius electswe elect not to patent, processes for which patents are difficult to enforce and any other elements of itsour product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. Salarius seeksWe seek to protect itsour proprietary technology and processes, in part, by entering into confidentiality agreements with itsour employees, consultants, scientific advisors, and contractors. SalariusWe also seeks to preserve the integrity and confidentiality of itsour data and trade secrets by maintaining physical security of itsour premises and physical and electronic security of itsour information technology systems. While Salarius haswe have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and Salariuswe may not have adequate remedies for any breach. In addition, itsour trade secrets may otherwise become known or be independently discovered by competitors.

Although Salarius expectswe expect all of itsour employees and consultants to assign their inventions to Salarius,us, and all of itsour employees, consultants, advisors, and any third parties who have access to itsour proprietary know- how, information, or technology to enter into confidentiality agreements, Salariuswe cannot provide any assurances that all such agreements have been duly executed or that itsour trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to itsour trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of Salarius’our trade secrets could impair itsour competitive position and may have a material adverse effect on itsour business, financial condition or results of operations. Additionally, if the steps taken to maintain itsour trade secrets are deemed inadequate, Salariuswe may have insufficient recourse against third parties for misappropriating the trade secret.

Salarius’Our commercial success depends in part on itsour ability to develop, manufacture, market and sell itsour product candidates and use itsour proprietary technology without infringing the patent rights of third parties.

Numerous third-party U.S. and non-U.S. issued patents and pending applications exist in the area of epigenetic enzyme inhibitors and related technologies. Salarius isWe are aware of U.S. and foreign patents and pending patent applications owned by third parties that cover therapeutic uses of epigenetic inhibitors. Salarius isWe are currently monitoring these patents and patent applications. SalariusWe may in the future pursue available proceedings in the U.S. and foreign patent offices to challenge the validity of these patents and patent applications. In addition, or alternatively, Salariuswe may consider whether to seek to negotiate a license of rights to technology covered by one or more of such patents and patent applications. If any patents or patent applications cover itsour product candidates or technologies, Salariuswe may not be free to manufacture or market itsour product candidates, as planned, absent such a license, which may not be available to Salariusus on commercially reasonable terms, or at all.

It is also possible that Salarius haswe have failed to identify relevant third-party patents or applications. For example, applications filed before November 29, 2000 and applications filed after that date that will not be filed outside the

There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the USPTO and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which Salarius iswe are developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that itsour product candidates may be subject to claims of infringement of the patent rights of third parties.

Parties making claims against Salariuswe may obtain injunctive or other equitable relief, which could effectively block itsour ability to further develop and commercialize one or more of itsour product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from itsour business. In the event of a successful claim of infringement against Salarius, Salariusus, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign itsour infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

SalariusWe currently hashave rights to the intellectual property, through licenses from third parties and under patents that Salarius doeswe do not own, to develop and commercialize itsour product candidates. Because itsour programs may require the use of proprietary rights held by third parties, the growth of itsour business will likely depend in part on itsour ability to maintain in effect these proprietary rights. Any termination of license agreements with third parties with respect to itsour product candidates would be expected to negatively impact itsour business prospects.

SalariusWe may be unable to acquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that Salarius identifieswe identify as necessary for itsour product candidates.

The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that Salariuswe may consider attractive. These established companies may have a competitive advantage over Salariusus due to their size, cash resources, and greater clinical development and commercialization capabilities. In addition, companies that perceive Salariusus to be a competitor may be unwilling to assign or license rights to Salarius.us. Even if Salarius iswe are able to license

or acquire third-party intellectual property rights that are necessary for itsour product candidates, there can be no assurance that they will be available on favorable terms.

Salarius collaboratesWe collaborate with academic institutions worldwide to identify product candidates, accelerate itsour research and conduct development. Typically, these institutions have provided Salariusus with an option to negotiate an exclusive license to any of the institution’s rights in the patents or other intellectual property resulting from the collaboration. Regardless of such option, Salariuswe may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to Salarius.us. If Salarius iswe are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking itsour ability to pursue a program of interestthat we wish to Salarius.

If Salarius iswe are unable to successfully obtain and maintain rights to required third-party intellectual property, Salariuswe may have to abandon development of that product candidate or pay additional amounts to the third-party, and itsour business and financial condition could suffer.

While Salariuswe normally seeksseek and gains the right to fully prosecute the patents relating to itsour product candidates, there may be times when patents relating to itsour product candidates are controlled by itsour licensors. If future licensors fail to appropriately and broadly prosecute and maintain patent protection for patents covering any of itsour product candidates, itsour ability to develop and commercialize those product candidates may be adversely affected and Salariuswe may not be able to prevent competitors from making, using, importing, and selling competing products. In addition, even where Salariuswe now hashave the right to control patent prosecution of patents and patent applications Salarius haswe have licensed from third parties, Salariuswe may still be adversely affected or prejudiced by actions or inactions of itsour licensors in effect from actions prior to Salarius assuming control over patent prosecution.

Salarius isWe are a party to intellectual property licenses and supply agreements that are important to itsour business and may enter into additional license agreements in the future. Salarius’Our existing agreements impose, and Salarius expectswe expect that future license agreements will impose on us, various diligence, milestone payment, royalty, purchasing, and other obligations on it.obligations. If Salarius failswe fail to comply with itsour obligations under these agreements, or Salarius iswe are subject to a bankruptcy, itsour agreements may be subject to termination by the licensor, in which event Salariuswe would not be able to develop, manufacture, or market products covered by the license or subject to supply commitments.

Competitors may infringe Salarius’our patents or the patents of itsour licensors. If Salariuswe or one of itsour licensing partners were to initiate legal proceedings against a third party to enforce a patent covering one of itsour product candidates, the defendant could counterclaim that the patent covering itsour product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description, clarity or non- enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.

Interference proceedings provoked by third parties or brought by Salariusus or declared by the USPTO may be necessary to determine the priority of inventions with respect to Salarius’our patents or patent applications or those of itsour licensors. An unfavorable outcome could require Salariusus to cease using the related technology or to attempt to license rights to itus from the prevailing party. Salarius’Our business could be harmed if the prevailing party does not offer Salariusus a license on commercially reasonable terms. Itsour defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract itsour management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on itsour ability to raise the funds necessary to continue itsour clinical trials, continue itsour research programs, license necessary technology from third parties, or enter into development partnerships that would help Salariusus bring itsour product candidates to market.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Salarius’our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of itsour common stock.

Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and itsour intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Competitors may use Salarius’our technologies in jurisdictions where Salarius haswe have not obtained patent protection to develop itsour own products and may also export infringing products to territories where Salarius haswe have patent protection, but enforcement is not as strong as that in the United States. These products may compete with itsour products and itsour patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of some countries, particularly some developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for Salariusus to stop the infringement of itsour patents or marketing of competing products in violation of itsour proprietary rights generally. Proceedings to enforce Salarius’our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert Salarius’our efforts and attention from other aspects of itsour business, could put Salarius’our patents at risk of being invalidated or interpreted narrowly and itsour patent applications at risk of not issuing and could provoke third parties to assert claims against Salarius. Salariusus. We may not prevail in any lawsuits that Salarius initiateswe initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, itsour efforts to enforce itsour intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Salarius developswe develop or licenses.license.

Salarius hasWe have relied upon and plans to continue to rely upon third-parties such as CROs, hospitals, etc. to conduct, monitor and manage itsour ongoing clinical programs. Salarius reliesWe rely on these parties for execution of clinical trials and manages and controls only some aspects of their activities. Salarius remainsWe remain responsible for ensuring that each of itsour trials is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and itsour reliance on these third parties does not relieve Salariusus of itsour regulatory responsibilities. SalariusWe and itsour CROs and other vendors are required to comply with all applicable laws, regulations and guidelines, including those required by the FDA and comparable foreign regulatory authorities for all of itsour product candidates in clinical development. If Salariuswe or any of itsour CROs or vendors fail to comply with applicable laws, regulations and guidelines, the results generated in itsour clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require Salarius

us to perform additional clinical trials before approving itsour marketing applications. SalariusWe cannot be assured that itsour CROs and other vendors will meet these requirements, or that upon inspection by any regulatory authority, such regulatory authority will determine that efforts, including any of itsour clinical trials, comply with applicable requirements. ItsOur failure to comply with these laws, regulations and guidelines may require Salariusus to repeat clinical trials, which would be costly and delay the regulatory approval process.

In addition, Salarius doeswe do not currently have, nor does Salariusdo we currently plan to establish the capability to manufacture product candidates for use in the conduct of itsour clinical trials, and Salarius lackswe lack the resources and the capability to manufacture any of itsour product candidates on a clinical or commercial scale without the use of third-party manufacturers. Salarius plansWe plan to rely on third-party manufacturers and their responsibilities will include purchasing from third-party suppliers the materials necessary to produce itsour product candidates for itsour clinical trials and regulatory approval. There are expected to be a limited number of suppliers for the active ingredients and other materials that Salarius expectswe expect to use to manufacture itsour product candidates, and Salariuswe may not be able to identify alternative suppliers to prevent a possible disruption of the manufacture of itsour product candidates for itsour clinical trials, and, if approved, ultimately for commercial sale. Although Salariuswe generally doesdo not expect to begin a clinical trial unless Salarius believes it haswe believe we have a sufficient supply of a product candidate to complete the trial, any significant delay or discontinuity in the supply of a product candidate, or the active ingredient or other material components in the manufacture of the product candidate could delay completion of itsour clinical trials and potential timing for regulatory approval of itsour product candidates, which would harm itsour business and results of operations.

Salarius doesWe do not currently have nor does itwe currently plan to develop the infrastructure or capability internally to manufacture itsour clinical supplies for use in the conduct of Salarius’our clinical trials, and Salarius lackswe lack the resources and the capability to manufacture any of itsour product candidates on a clinical or commercial scale. SalariusWe currently reliesrely on outside vendors to manufacture itsthe clinical supplies of itsour product candidates and planscandidates. We plan to continue relying on third parties to manufacture itsour product candidates on a commercial scale, if approved.

Salarius doesWe do not yet have sufficient information to reliably estimate the cost of the commercial manufacturing of itsour product candidates and itsour current costs to manufacture itsour drug products is not commercially feasible, and the actual cost to manufacture itsour product candidates could materially and adversely affect the commercial viability of itsour product candidates. As a result, Salariuswe may never be able to develop a commercially viable product.

In addition, Salarius’our reliance on third-party manufacturers exposes Salariusus to the following additional risks:

Each of these risks could delay Salarius’our clinical trials, the approval, if any of itsour product candidates by the FDA or the commercialization of itsour product candidates or result in higher costs or deprive Salariusus of potential product revenue. In addition, Salarius relieswe rely on third parties to perform release testing on itsour product candidates prior to delivery to patients. If these tests are not appropriately conducted and test data are not reliable, patients could be put at risk of serious harm and could result in product liability suits.

Salarius hasWe have entered into strategic collaborations and license agreements with the University of Utah, HLBLS, and CPRIT. While Salariuswe may seek to enter into future collaborations for the development and commercialization of itsour product candidates, there can be no assurance that itwe will be able to do so. Even if Salarius iswe are successful in entering into a collaboration with respect to the development and/or commercialization of one or more product candidates, there is no guarantee that the collaboration will be successful and Salariuswe may be unable to realize in full or in part the potential benefits of any of itsour current collaborations.

Collaborations may pose a number of risks, including:

As a result, a collaboration may not result in the successful development or commercialization of Salarius’our product candidates.

Although some of itsour employees may have marketed, launched, and sold other pharmaceutical products in the past while employed at other companies, Salarius hasWe have no experience selling and marketing itsour product candidates and Salariuswe currently hashave no marketing or sales organization. To successfully commercialize any products that may result from itsour development programs, Salariuswe will need to find one or more collaborators to commercialize itsour products or invest in and develop these capabilities, either on itsour own or with others, which would be expensive, difficult and time consuming. Any failure or delay in the timely development of Salarius’our internal commercialization capabilities could adversely impact the potential for success of itsour products.

If commercialization collaborators do not commit sufficient resources to commercialize itsour future products and Salarius iswe are unable to develop the necessary marketing and sales capabilities on itsour own, Salariuswe will be unable to generate sufficient product revenue to sustain or grow itsour business. SalariusWe may be competing with companies that currently have extensive and well-funded marketing and sales operations, particularly in the markets itsour product candidates are intended to address. Without appropriate capabilities, whether directly or through third-party collaborators, Salariuswe may be unable to compete successfully against these more established companies.

We may attempt to form strategic collaborations, create joint ventures or enter into licensing arrangements with third parties with respect to itsour programs that it believeswe believe will complement or augment itsour existing business. SalariusWe may face significant competition in seeking appropriate strategic collaborators, and the negotiation process to secure appropriate terms is time consuming and complex. SalariusWe may not be successful in itsour efforts to establish such a strategic collaboration for any product candidates and programs on terms that are acceptable to it,us, or at all.

Any delays in identifying suitable collaborators and entering into agreements to develop and/or commercialize Salarius’our product candidates could delay the development or commercialization of itsour product candidates, which may reduce their competitiveness even if they reach the market. Absent a strategic collaborator, Salariuswe would need to undertake development and/or commercialization activities at itsour own expense. If Salarius electswe elect to fund and undertake development and/or commercialization activities on itsour own, itwe may need to obtain additional expertise and additional capital, which may not be available to itus on acceptable terms or at all. If Salarius iswe are unable to do so, itwe may not be able to develop itsour product candidates or bring them to market and itsour business may be materially and adversely affected.

Given the small number of patients who have the diseases that Salarius iswe are targeting, itsthe eligible patient population and pricing estimates may differ significantly from the actual market addressable by itsour product candidates. For example, based off data from the National Institute of Health (NIH) and physician collaborators, Salarius believeswe believe that there are approximately 500 Ewing sarcoma patients diagnosed annually in the United States. Because the patient populations in the market for itsour product candidates may be small, Salariuswe must be able to successfully identify patients and acquire a significant market share to achieve profitability and growth, which would negatively affect itsour revenue and operating results.

The development and commercialization of new drug products is highly competitive. Salarius facesWe face competition from major pharmaceutical companies, specialty pharmaceutical companies, biotechnology companies, universities and other research institutions worldwide with respect to oncology therapies and the other product candidates that itwe may seek to develop or commercialize in the future. The list of companies working on some form of cancer treatment is almost limitless with big and small companies working on every aspect of oncology therapies worldwide.

If Salarius’our competitors obtain marketing approval from the FDA or comparable foreign regulatory authorities for their product candidates more rapidly than Salarius,us, it could result in itsour competitors establishing a strong market position before Salarius iswe are able to enter the market.

Many of Salarius’our competitors have materially greater name recognition and financial, manufacturing, marketing, research and drug development resources than it does.we do. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in itsour competitors. Large pharmaceutical companies in particular have extensive expertise in pre-clinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with Salarius’our competitors. Failure of Seclidemstatseclidemstat or other product candidates to effectively compete against established treatment options or in the future with new products currently in development would harm Salarius’our business, financial condition, results of operations and prospects.

Even if Salarius obtainswe obtain the necessary approvals from the FDA and comparable foreign regulatory authorities, the commercial success of Salarius’our products will depend in part on the health care providers, patients, and third-party payors accepting itsour product candidates as medically useful, cost-effective, and safe. Any product that Salarius

Even if a product displays a favorable efficacy and safety profile upon approval, market acceptance of the product remains uncertain. Efforts to educate the medical community and third-party payors on the benefits of the products may require significant investment and resources and may never be successful. If itsour products fail to achieve an adequate level of acceptance by physicians, patients, third-party payors, and other health care providers, Salariuswe will not be able to generate sufficient revenue to become or remain profitable.

Although a substantial amount of Salarius’our effort will focus on the continued clinical testing, potential approval, and commercialization of itsour existing product candidates, the success of Salarius’our business is also expected to depend in part upon itsour ability to identify, license, discover, develop, or commercialize additional product candidates. Because we have limited financial and managerial resources, we must focus on a limited number of research programs and product candidates and on specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future discovery and preclinical development programs and product candidates for specific indications may not yield any commercially viable products. Furthermore, until such time as we are able to build a broader product candidate pipeline, if ever, any adverse developments with respect to our current product candidates would have a more significant adverse effect on our overall business than if we maintained a broader portfolio of product candidates.

Research programs to identify new product candidates require substantial technical, financial, and human resources. SalariusWe may focus itsour efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. Salarius’Our research programs or licensing efforts may fail to yield additional product candidates for clinical development and commercialization for a number of reasons, including but not limited to the following:

If any of these events occur, Salariuswe may be forced to abandon itsour development efforts for a program or programs, or Salariuswe may not be able to identify, license, discover, develop, or commercialize additional product candidates, which would have a material adverse effect on itsour business, financial condition or results of operations and could potentially cause Salariusus to cease operations.

The pricing, coverage, and reimbursement of Salarius’our approved products, if any, must be sufficient to support itsour commercial efforts and other development programs and the availability and adequacy of coverage and reimbursement by third-party payors, including governmental and private insurers, are essential for most patients to be able to afford expensive treatments. Sales of Salarius’our approved products, if any, will depend substantially, both domestically and abroad, on the extent to which the costs of itsour approved products, if any, will be paid for or reimbursed by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or government payors and private payors. If coverage and reimbursement are not available, or are available only in limited amounts, Salariuswe may have to subsidize or provide products for free or Salariuswe may not be able to successfully commercialize itsour products.

In addition, there is significant uncertainty related to the insurance coverage and reimbursement for newly approved products. In the United States, the principal decisions about coverage and reimbursement for new drugs are typically made by Centers for Medicare and Medicaid Services, (“CMS”), an agency within the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new drug will be covered and reimbursed under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for novel product candidates such as Salarius’our and what reimbursement codes itsour product candidates may receive if approved.

Outside the United States, international operations are generally subject to extensive governmental price controls and other price-restrictive regulations, and Salarius believeswe believe the increasing emphasis on cost-containment initiatives in Europe Canada, and other countries has and will continue to put pressure on the pricing and usage of products. In many countries, the prices of products are subject to varying price control mechanisms as part of national health systems. Price controls or other changes in pricing regulation could restrict the amount that Salarius iswe are able to charge for itsour products, if any. Accordingly, in markets outside the United States, the potential revenue may be insufficient to generate commercially reasonable revenue and profits.

Moreover, increasing efforts by governmental and private payors in the United States and abroad to limit or reduce healthcare costs may result in restrictions on coverage and the level of reimbursement for new products and, as a result, they may not cover or provide adequate payment for itsour products. Salarius expectsWe expect to experience pricing pressures in connection with products due to the increasing trend toward managed healthcare, including the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs has and is expected to continue to increase in the future. As a result, profitability of Salarius’our products, if any, may be more difficult to achieve even if they receive regulatory approval.

As of December 31, 2020, SalariusMarch 8, 2023, we had 712 full-time employees and 2 part-time employees. As Salarius’our development and commercialization plans and strategies develop, Salarius expectswe expect to need additional managerial, operational, sales, marketing, financial, legal, and other resources. ItsOur management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these growth activities. SalariusWe may not be able to effectively manage the expansion of itsour operations, which may result in weaknesses in itsour infrastructure, operational mistakes, loss of business opportunities, loss of employees, and reduced productivity among remaining employees. Salarius’Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates. If itsour management is unable to effectively manage itsour growth, itsour expenses may increase more than expected, itsour ability to generate and/or grow revenue could be reduced and Salariuswe may not be able to implement itsour business strategy. Salarius’Our future financial performance and itsour ability to commercialize product candidates and compete effectively will depend, in part, on itsour ability to effectively manage any future growth.

Risks Related to Our Common Stock

The terms of the warrants require us, upon the consummation of any “fundamental transaction” (as defined in the securities), to, among other obligations, cause any successor entity resulting from the fundamental transaction to assume all of our obligations under the warrants and the associated transaction documents. In addition, holders of warrants are entitled to participate in any fundamental transaction on an as-converted or as-exercised basis, which could result in the holders of our common stock receiving a lesser portion of the consideration from a fundamental transaction. The terms of the warrants could also impede our ability to enter into certain transactions or obtain additional financing in the future.

Sales of a substantial number of our shares of common stock in the public markets, or the perception that such sales could occur, including from the exercise of warrants or sales of common stock issuable thereunder, could

cause the market price of our shares of common stock to decline and impair our ability to raise capital through the sale of additional equity securities. A substantial number of shares of common stock are being offered by this prospectus. We cannot predict the number of these shares that might be sold nor the effect that future sales of our shares of common stock, including shares issuable upon the exercise of warrants, would have on the market price of our shares of common stock.

At the present time, we intend to use available funds to finance our operations. Accordingly, while payment of dividends rests within the discretion of our board of directors, we have no intention of paying any such dividends in

Salarius’Our ability to execute itsour business plan and maintain operations depends on the continued and uninterrupted performance of itsour information technology systems. Information technology systems are vulnerable to risks and damages from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of Salarius’our and itsour vendors’ servers are potentially vulnerable to physical or electronic break-ins, including cyber-attacks, computer viruses and similar disruptive problems. These events could lead to the unauthorized access, disclosure and use of non-public information which in turn could lead to operational difficulties and liabilities.

A security breach or privacy violation that leads to disclosure of consumer, customer, supplier, partner or employee information (including personally identifiable information or protected health information) could harm Salarius’our reputation, compel Salariusus to comply with disparate state and foreign breach notification laws and otherwise subject itus to liability under laws that protect personal data, resulting in increased costs or loss of revenue.

The techniques used by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world. As a result, Salariuswe may not be able to address these techniques proactively or implement adequate preventative measures. If itsour computer systems are compromised, itwe could be subject to fines, damages, litigation and enforcement actions, and itwe could lose trade secrets, the occurrence of which could harm itsour business. Despite precautionary measures to prevent unanticipated problems that could affect itsour information technology systems, sustained or repeated system failures that interrupt Salarius’our ability to generate and maintain data could adversely affect itsour ability to operate itsour business. In addition, a data security breach could distract management or other key personnel from performing their primary operational duties.

The interpretation and application of consumer and data protection laws in the United States, Europe and elsewhere are often uncertain, contradictory and in flux. Among other things, foreign privacy laws impose significant obligations on U.S. companies to protect the personal information of foreign citizens. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with Salarius’our data practices, which could have a material adverse effect on Salarius’our business. Complying with these various laws could cause Salariusus to incur substantial costs or require itus to change itsour business practices in a manner adverse to itsour business.

Items 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is on the Nasdaq Capital Market under the symbol “SLRX.”

[As of February 28, 2021,March 20, 2023, we had approximately 140151 record holders of our common stock. Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of individual stockholders represented by these record holders.

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview

Introduction

Our Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.

Overview

We are a clinical-stage biotechnology company focused on developing effective epigenetic-basedtargeted cancer treatments for indications with high unmet medical need. Our technologies correct the dysregulated gene expression of diseased cells and thereby inhibit cancer progression. In certain cancers, the proteins that regulate gene expression become dysregulated and incorrectly turn genes “on” or “off,” which can lead to disease development and progression. We are developing two classes of drugs that address gene dysregulation: epigenetic drugs and targeted protein degraders. Our lead epigenetic enzyme technology was licensed from the University of Utah Research Foundation in 2011. In January 2022 we acquired our lead targeted protein degrader from DeuteRx.

Epigenetics refers to the system that regulates gene expression through conformational changes to the chromatin rather than changes to the DNA sequence itself. Our lead compound, Seclidemstat (“SP-2577”), is a small molecule that inhibits the epigenetic enzyme lysine specific demethylase 1 (“LSD1”). LSD1 is an enzyme that removes mono- and di-methyl marks on histones (core protein of chromatin) to alter gene expression. LSD1’s enzymatic activity can cause genes to turn on or off and thereby affect the cell’s gene expression and overall activity. In addition, LSD1 can act via its scaffolding properties, independently of its enzymatic function, to alter gene expression and modulate cell fate. In healthy cells, LSD1 is necessary for stem cell maintenance and cell development processes. However, in several cancers LSD1 is highly expressed and acts aberrantly to incorrectly silence or activate transcription of genes leading to disease progression. High levels of LSD1 expression are often associated with aggressive cancer phenotypes and poor patient prognosis. Hence, development of targeted LSD1 inhibitors is of interest for the treatment of various cancers. SP-2577 uses a novel, reversible mechanism to effectively inhibit LSD1’s enzymatic and scaffolding properties and thereby treat and prevent cancer progression.

Our first indication of interest for SP-2577 is a devastating bone and soft-tissue cancer called Ewing sarcoma. Ewing sarcoma mostly afflicts adolescents and young adults, with the median age of diagnosis being 15.approximately 15 years of age. The most commonly expressed fusion oncoprotein in Ewing sarcoma is the EWS-FLI fusion protein, which is present in approximately 85% of Ewing sarcoma cases. The LSD1 enzyme associates with EWS-FLI (and other E26 Transformation-Specific (“ETS”) fusion proteins) and is thought to promote tumorigenesis. We believe the SP-2577 molecule helps inhibit EWS-FLI activity by disrupting EWS-FLI from associating with coregulators (including LSD1) that are necessary for its cancer promoting activity. Therefore, we believe that SP-2577 can potentially reverse the aberrant gene expression and thereby possibly prevent Ewing sarcoma cell proliferation and even promote cell death. Preclinical studies of SP-2577 in certain Ewing sarcoma animal models show a significant tumor reduction as well as a significant survival benefit compared to untreated animals. Our ongoing Phase 1/2 clinical trial is designed

As LSD1 can associate with over 60 regulatory proteins other than EWS-FLI, we believe that LSD1 may also play a critical role in progression of various other cancer types. These include both solid tumors and hematologic malignancies. In the second quarter of 2019, we initiated a second company-sponsored Phase 1 trial to study SP-2577 in Advanced Solid Tumors.Tumors and in the first quarter of 2022 the study was completed. The Advanced Solid Tumor (“AST”) trial iswas a single agent dose escalation, dose expansion study enrolling patients with advanced malignancies, excluding Ewing sarcoma or central nervous system tumors.

In addition, recent data from “LSD1 Ablation Stimulates Anti-tumor Immunity and Enables Checkpoint Blockade” by W. Sheng, et al. and “Inhibition of Histone Lysine-specific Demethylase 1 Elicits Breast Tumor Immunity and Enhances

Antitumor Efficacy of Immune Checkpoint Blockade” by Y. Qin, et al. suggests that LSD1 plays a role in tumor immune activity and can sensitize tumors to checkpoint inhibitors. These recent works have sparked interest in combining LSD1 inhibitors with checkpoint inhibitors. We are conducting

Targeted Protein Degradation (TPD) is rapidly growing and attracting a lot of interest from the biggest pharmaceutical companies. SP-3164 is a novel, differentiated targeted protein degrader. Our plan is to develop SP-3164 in high unmet need hematological and solid tumor indications. SP-3164's development in hematological indications leverages the clinical safety and efficacy data demonstrated by avadomide in hematological malignancies (e.g., Diffuse Large B cell Lymphoma, Follicular Lymphoma) across several clinical trials. SP-3164 is the stabilized, active S-enantiomer of avadomide, which exists as a 1:1 ratio of the S and R enantiomers. However, only the S-enantiomer is the active, anticancer species. Therefore, since SP-3164 is the stabilized S-enantiomer, it has the potential to show improved therapy and safety over avadomide. SP-3164's potential has been demonstrated in in vitro studies and in preclinical workmouse models of lymphoma and multiple myeloma. SP-3164 treatment showed robust anticancer activity in cells and tumored mouse models. Encouragingly, in lymphoma preclinical mouse models, treatment with SP-2577SP-3164 combined with a standard of care agent resulted in this area.complete tumor regressions.

We have no products approved for commercial sale and have not generated any revenue from product sales. We have never been profitable and have incurred operating losses in each year since inception. We had an accumulated deficit of $19,428,954$63.8 million as of December 31, 2020.2022. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

We expect to continue to incur significant expenses and increasing operating losses for at least the next several years as we initiate and continue the clinical development of, and seek regulatory approval for, our product candidates, add personnel necessary to continue to operate as a public company, and work to develop an advanced clinical pipeline of product candidates. We expect that our operating losses will fluctuate significantly from quarter-to-quarter and year-to-year due to timing of clinical development programs and efforts to achieve regulatory approval.

As of December 31, 2020,2022, we had cash and cash equivalents of $11.1$12.1 million. As of December 31, 2020, weWe have received an aggregate of $10.4$16.0 million from the CPRIT grant. A portionsince inception of the remaining $8.3 milliongrant. To date, our funding source have been limited to a CPRIT grant was for a castration-resistant prostate study (approximately $2.6 million). We elected not to pursueand the study, and accordingly this amount will no longer be available. In February 2021, we received $0.9 million from CPRIT and there was $4.8 millionsale of funds available for us to draw upon meeting certain requirements.equity securities. We believe that as of December 31, 2020,2022, CPRIT fund matching requirements had been fully met. Additionally, on March 8, 2021during the twelve months ended December 31, 2022, we completedreceived $2.0 million cash from equity offerings.

The lack of revenue from product sales to date and recurring losses from operations since our inception raise substantial doubt as to our ability to continue as a public offering of our shares, with net proceeds of $21.1 million.

We intend to obtain additional capital through the sale of equity securities in one or more offerings or through issuances of debt instruments. We may also consider new collaborations or selectively partnering our technology. However, we cannot provide any assurance that we will be successful in accomplishing any of our plans to obtain additional capital or be able to do so on terms acceptable to us.

The following table sets forth the consolidated results of our operations for the year ended December 31, 20202022 compared to the year ended December 31, 2019.2021.

Grant revenue, which was derived solely from the CPRIT grant, was $5.2$0 during the year ended December 31, 2022 compared to $1.8 million during the year ended December 31, 2020 compared to $3.52021. We reached the maximum amount of the eligible spending that can be reimbursed from CPRIT in 2021. In February 2023, we received $1.5 million during the year endedfrom CPRIT, a collection of an outstanding receivable at December 31, 2019. The increase in revenue from the CPRIT grant was due to an increase in overall expenses which resulted in an increase in the amount of expenses reimbursable under the grant. Given the nature of the development process, grant revenue will fluctuate depending on the stage of development and the timing of expenses.2022.

Research and development expenses were $6.9$15.8 million during the year ended December 31, 20202022 compared to $4.0$8.5 million during the year ended December 31, 2019.2021. This increase of $2.9$7.3 million principally resulted from the purchase of the DeuteRx assets in January 2022, and the development of those assets (the most advanced of which is known as SP-3164) during 2022, that was principally duepartially offset by lower cost related to the manufacturing of our active pharmaceutical ingredient in preparation of forecasted increased enrollment and clinical trial activity and higher personnel and consulting fees offsetting lower clinical trial spending.SP-2577.

General and administrative expenses were $7.1 million for the year ended December 31, 2022 compared to $6.1 million for the year ended December 31, 2020 compared to $7.7 million for2021, the year ended December 31, 2019, a decrease of $1.6 million. During the current period lower professional fees and non-recurring costs associated with our July 2019 merger and transformation into aincrease is mainly driven by higher legal cost, public company more than offset significantly highercost and personnel related expenses and increased director & officers insurance costs.

Liquidity and Capital Resources

Since inception, we have incurred operating losses and we anticipate that we will continue to incur losses for the foreseeable future. To date, we have generated revenue from the CPRIT grant, and have not generated any cash inflows from product sales.

We have known material contractual obligations which will require cash to meet their requirements. These applicable obligations include our lease agreement for our facilities, and our employment contracts. We also plan to deploy cash for other research and development and general and administrative operating expenses. Our ability to continue meeting these contractual obligations will be reliant upon our ability to secure significant additional capital funding.

We do not know when, or if, we will generate any revenue from product sales. We do not expect to generate any revenue from product sales unless and until we obtain regulatory approval for and commercializes any of our product candidates.candidates, all of which are in early stages of development. At the same time, we expect our expenses to increase in connection with our ongoing development and manufacturing activities, particularly as we continue the research, development, manufacture and clinical trials of, and seek regulatory approval for our product candidates.