The following table summarizes stock option activity for employees and non-employees for the ninethree months ended September 30, 2017:March 31, 2020:
|
| | | | | |
| September 30, 2017 | | September 30, 2016 |
Options to purchase common stock | 2,701,922 |
| | 2,320,247 |
|
Unvested restricted common stock | 430,439 |
| | 1,452,243 |
|
Total | 3,132,361 |
| | 3,772,490 |
|
11. Segment Information
The Company operates as two reportable segments:
The Consumer Operations segment, which reflects the total revenue and costs and expenses related to HOTSHOT and the Company's consumer operations.
The Drug Development segment, which reflects the costs and expenses related to the Company's efforts to develop innovative and proprietary drug products to treat muscle cramps and spasticity associated with severe neurological conditions.
The Company discloses information about its reportable segments based on the way that the Company's Chief Operating Decision Maker, who the Company has identified as the Chief Executive Officer, and management, organize segments within the Company for making operating decisions and assessing financial performance. The Company evaluates the performance of its reportable segments based on revenue and operating income or loss. The accounting policies of the segments are the same as those described herein as well as those described in Note 2 to the audited consolidated financial statements in the 2016 Form 10-K. Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to "Corporate". No asset information has been provided for the Company's reportable segments as management does not measure or allocate such assets on a reportable segment basis.
Information for the Company's reportable segments for the three months ended September 30, 2017 and 2016 are as follows:
|
| | | | | | | | | | |
Three Months Ended September 30, 2017 | Consumer Operations | Drug Development | Corporate | Consolidated |
Total revenue | $ | 413,601 |
| — |
| — |
| $ | 413,601 |
|
Interest income, net | $ | — |
| — |
| 77,339 |
| $ | 77,339 |
|
Loss from operations | $ | 2,323,919 |
| 4,683,533 |
| 2,402,000 |
| $ | 9,409,452 |
|
|
| | | | | | | | | | |
Three Months Ended September 30, 2016 | Consumer Operations | Drug Development | Corporate | Consolidated |
Total revenue | $ | 599,074 |
| — |
| — |
| $ | 599,074 |
|
Interest income, net | $ | — |
| — |
| 97,726 |
| $ | 97,726 |
|
Loss from operations | $ | 2,690,601 |
| 5,550,853 |
| 2,493,766 |
| $ | 10,735,220 |
|
Information for the Company's reportable segments for the nine months ended September 30, 2017 and 2016 are as follows:
|
| | | | | | | | | | |
Nine Months Ended September 30, 2017 | Consumer Operations | Drug Development | Corporate | Consolidated |
Total revenue | $ | 991,671 |
| — |
| — |
| $ | 991,671 |
|
Interest income, net | $ | — |
| — |
| 227,535 |
| $ | 227,535 |
|
Loss from operations | $ | 7,072,225 |
| 12,472,149 |
| 7,088,292 |
| $ | 26,632,666 |
|
|
| | | | | | | | | | |
Nine Months Ended September 30, 2016 | Consumer Operations | Drug Development | Corporate | Consolidated |
Total revenue | $ | 711,759 |
| — |
| — |
| $ | 711,759 |
|
Interest income, net | $ | — |
| — |
| 308,877 |
| $ | 308,877 |
|
Loss from operations | $ | 8,461,803 |
| 15,517,670 |
| 7,922,492 |
| $ | 31,901,965 |
|
|
| | | | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis should be read in conjunction with the unaudited financial information and the notes thereto included herein, as well as our audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2019, filed with the SEC on March 23, 2020. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under "Risk"Part I - Item 1A - Risk Factors" discussed in our Annual Report on Form 10-K for the year ended December 31, 2016,2019, for the year ended December 31, 2019, filed with the SEC on March 23, 2020, in other subsequent filings with the SEC, and elsewhere in this Quarterly Report on Form 10-Q. These statements, like all statements in this report, speak only as of the date of this Quarterly Report on Form 10-Q (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments.
Introduction
Our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying condensed consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:
Overview - A discussion of our business and overall analysis of financial and other highlights in order to provide context for the remainder of MD&A.
Results of Operations - An analysis of our financial results comparing the three and nine months ended September 30, 2017 to the three and nine months ended September 30, 2016.
Liquidity and Capital Resources - An analysis of changes in our condensed consolidated balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity.
Critical Accounting Policies and Significant Judgments and Estimates - A discussion of critical accounting policies and those that require us to make subjective estimates and judgments.
Overview
We are a clinical-stage biotechnology company that isfocused on developing innovative and proprietaryeffective treatments for muscle crampscancer with high, unmet medical need caused by dysregulated gene expression. Epigenetics refers to the regulatory system that affects gene expression and spasticityour lead epigenetic enzyme technology was licensed from the University of Utah Research Foundation in 2011.
We are focused on strategies addressing dysregulated gene expression, epigenetic strategies for cancer treatment. Epigenetics refers to the system that regulates gene expression through conformational changes to the chromatin rather than changes to the DNA sequence itself. Our 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 genes leading to disease progression. High levels of LSD1 expression are often associated with severe neurological conditionsaggressive cancer phenotypes and exercise-associated muscle cramps.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. 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 a single agent dose escalation followed by a dose expansion study. The trial can enroll up to 50 relapsed or refractory Ewing sarcoma patients. The primary objectives of the study are to assess the safety and tolerability of SP-2577. Secondary objectives include assessing preliminary efficacy of SP-2577.
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 August 2017,the second quarter of 2019, we initiated a second company-sponsored Phase 2 clinical1 trial to study SP-2577 in Advanced Solid Tumors. The Advanced Solid Tumor (“AST”) trial is 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 preclinical work with SP-2577 in this area.
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 $14,160,516 as of March 31, 2020. 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.
The lack of revenue from product sales to date and recurring losses from operations since our inception raise substantial doubt about our ability to continue as a going concern. Our financial statements are prepared using Generally Accepted Accounting Principles in the United States of our lead drug product candidate, FLX-787, in patients with motor neuron disease, or MND, primarily with amyotrophic lateral sclerosis, or ALS, who suffer from cramps. We also initiated an additional Phase 2 clinical trial in October 2017 in patients with Charcot-Marie-Tooth disease, or CMT, who suffer from cramps. FLX-787 is currently in an exploratory Phase 2 spasticity study in Australia in patients with multiple sclerosis, or MS. In 2016, we launched our consumer product, HOTSHOT®,America (“GAAP”) applicable to preventa going concern, which contemplates the realization of assets and treat exercise-associated muscle cramps, or EAMCs.
FLX-787, HOTSHOT and our other product candidates are based on the potential mechanismsatisfaction of action we describe as chemical neurostimulation, which is the process by which a chemical signal, acting topically, induces a neuronal sensory signal that produces a beneficial effect. Our product candidates activate certain receptors in primary sensory neurons, which then act via neuronal circuits to reduce hyperexcitability, which can resultliabilities in the repetitive firingnormal course of alpha-motor neurons inbusiness. Our financial statements do not include any adjustments relating to the spinal cord, thereby preventing or reducing the frequencyrecoverability and intensityclassification of muscle crampsrecorded asset amounts and spasms.
HOTSHOT is our consumer beverage that prevents and treats EAMCs. We market HOTSHOTclassification of liabilities should we be unable to endurance athletes, who drink it before, during and after exercise to prevent and treat muscle cramps. The majority of HOTSHOT sales are generated through our branded website and third-party websites. We also engage in sales and marketing efforts incontinue as a limited number of geographic areas with strong endurance sports markets.
going concern.
We operate as the following two reportable segments:
the Consumer Operations segment, which reflects the total revenue and costs and expense for HOTSHOT and our consumer operations, and
the Drug Development segment, which reflects the costs and expenses relatedexpect to our efforts to develop innovative and proprietary drug products to treat muscle cramps and spasticity associated with severe neurological conditions.
We disclose information about our reportable segments based on the way that we organize segments within the Company for making operating decisions and assessing financial performance. See Note 11 to our condensed consolidated financial statements for certain financial information related to our reportable segments.
We have incurred an operating loss since our inception and we anticipate that we will continue to incur significant expenses and increasing operating losses for at least the next several years. Our net loss was $9.3 millionyears as we initiate and $26.4 millioncontinue the clinical development of, and seek regulatory approval for, our product candidates, add personnel necessary to continue to operate as a public company upon closing of the threemerger, and nine months ended September 30, 2017, respectively,work to develop an advanced clinical pipeline of product candidates. We expect that our operating losses will fluctuate significantly from quarter-to-quarter and $10.6 millionyear-to-year due to timing of clinical development programs and $31.6 millionefforts to achieve regulatory approval.
As of March 31, 2020, we had cash and cash equivalents of $9,646,940, which includes $0 for the threefunds received from Cancer Prevention and nine months ended September 30, 2016, respectively. Our accumulated deficit was $103.1 million asResearch Institution of September 30, 2017. To date,Texas ("CPRIT"). As of March 31, 2020, CPRIT fund matching requirements had been fully met. As of March 31, 2020, we have financedreceived an aggregate of $9.6 million from the CPRIT grant and there was $9.1 million of funds available for us to draw upon meeting certain requirements. The Company has applied for an extension with a proposed contract end date of November 30, 2020.
We believe that our $9.6 million in cash and cash equivalents currently on hand are sufficient to fund our anticipated operating and capital requirements through at least 12 months from the date this quarterly report on Form 10-Q is filed, however we will continue to require substantial additional capital to continue our clinical development activities. Accordingly, we will need to raise substantial additional capital to continue to fund our operations with net proceeds from the private placementas a whole. The amount and timing of our preferred stockfuture funding requirements will depend on many factors, including the pace and results of our development, regulatory and commercialization efforts. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our initial public offering. We expectability to continue incurring significant researchdevelop and development expenses related to the development ofcommercialize our drug product candidates and significant selling, general and administrative expenses as we continue to commercialize HOTSHOT. As a result, we will need additional capital to fund our future operations.
Recent DevelopmentsWe intend, when required, 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 favorable terms or on terms acceptable to us.
Management
Special Note About Coronavirus (COVID-19)
The COVID-19 pandemic is significantly affecting the United States, global economies, and Boardbusinesses worldwide. While the potential magnitude and duration of Directors Update
In June 2017, we announced that William McVicar, Ph.D.the economic and social impact of the COVID-19 pandemic is difficult to assess or predict, the impact on the global financial markets may, in the future, reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. The COVID-19 pandemic could also have a material and negative impact on our liquidity, capital resources (including our ability to secure additional financing if and when needed), our recently appointed Presidentbusiness and operations, and our workforce, as well as those of Researchthe third parties with which we do business or upon which we rely. While, the situation is fluid and Development, had been appointedwe do not yet know the full extent of potential delays or impacts on us or on healthcare systems or the global economy in general, Salarius has worked to adapt to the unexpected and challenging circumstances resulting from the COVID-19 pandemic and at this time we are experiencing minimal COVID-19 disruptions to our interim Presidentclinical programs, our manufacturing capabilities, or our financing capabilities. However, we may experience disruptions in the future that have and Chief Executive Officer and in July 2017, we announced that Dr. McVicar had been appointedcould further adversely impact our business operations as well as our permanent Presidentpreclinical studies and Chief Executive Officer. Dr. McVicar replaced Christoph Westphal, M.D., Ph.D., who is a director on our Boardclinical trials.
Although at Inotek Pharmaceuticals Corporation, most recently as its Executive Vice President and Chief Scientific Officer.
In October 2017,this time we announced that Roger Tung, Ph.D. had been addedare experiencing minimal disruption to our Board of Directors. Dr. Tung is the scientific co-founder of Concert Pharmaceuticals, where he serves as President and Chief Executive Officer. Prior to Concert, Dr. Tung was a founding scientist at Vertex, a pharmaceutical company.
Regulatory Update
In July 2017, we announced that the U.S. Food and Drug Administration, or FDA, granted Fast Track designation for the development of FLX-787 to treat severe muscle cramps in patients with ALS. Fast Track designation allows for a more frequent dialogue throughout the drug development and review process with the Neurology Division at the FDA onclinical trials, our drug development plan, data requirements and clinical trial design.
ALS Clinical Trials Update
In August 2017, we announced the initiation of aongoing Phase 1/2 clinical trial in the United States, referred to as the COMMEND trial. The COMMEND trial is designed to evaluate FLX-787 in patients with MND, focused on ALS, who suffer from cramps. This randomized, controlled, double-blinded, parallel design trial will include a run-in period to establish a baseline in cramp frequency. Patients will then be randomized to 30 mg of FLX-787 administered three times a day, or to a control, for 28 days. Patients will be evaluated for changes in cramp frequency as the primary endpoint, with a number of secondary endpoints. We expect to report topline results from this clinical trial in the third quarter of 2018.
Due to the challenge of enrolling ALS patients in Australia, and a greater priority placed on the completion of the COMMEND trial, in July 2017 we announced that we had stopped our ongoing ALS exploratory study in Australia after 12 patients had been randomized.
In November 2017, we announced topline data from the ALS study in Australia. The study was a randomized, blinded, placebo-controlled Phase 2 clinical trial that originally planned tocan enroll up to 60 subjects with ALS50 relapsed or primary lateral sclerosis, or PLS, with frequent muscle cramps in Australia. The trial included a 14-day run-in period
with no treatment to establish baseline characteristics, followed by treatment periods during which patients received FLX-787 or placebo in the first 14-day treatment period before “crossing-over” to the other treatment for an additional 14-day treatment period. Patients were given 19 mg of FLX-787, formulated as an orally disintegrating tablet, ODT, or placebo control, two or three times daily. The exploratory study was designed to evaluate a number of endpoints relating to cramping frequency, cramp-associated pain, spasticity, stiffness, global impression of change by the patient and the clinician, quality of life, sleep and safety.
In the eight patients who completed the trial per protocol, FLX-787 demonstrated a statistically significant (p<0.05) percentage reduction from baseline in both cramp-associated pain intensity and stiffness, relative to placebo control, based on daily patient assessments by Numerical Rating Scale (NRS). Strong and consistent trends were demonstrated on multiple endpoints, including: percentage reduction in the number of cramps from baseline (p=0.08), increase in cramp free days from baseline (p=0.09), and improvements on both the Patient (PGIC; p=0.06) and Clinician (CGIC; p=0.06) Global Impression of Change. FLX-787 was generally well tolerated.
In the patients completing both cross-over periods per protocol:
FLX-787 showed a median 31% reduction in cramps from baseline versus 0.1% reduction for patients while on placebo control;
Patients had a median 4.4 cramp free days versus 0 for placebo control;
Patients evaluated themselves as improved with FLX-787 treatment 50% of the time versus 12.5% with placebo control (PGIC); and
Clinicians blinded to treatments evaluated 50% of patients as improved with FLX-787 versus 0% for placebo control (CGIC).
In a post-hoc analysis, we analyzed the Period 1 and Period 2 results of all patients randomized in the trial and believe the cross-over results are not driven by a cross-over bias or unblinding effect.
Clinically-assessed baseline spasticity levels as measured by either the Modified Ashworth or Tardieu scales were minimal acrossrefractory Ewing sarcoma patients and were not consistent with the observed patient-reported spasticity treatment differences.
We believe the data from our Australian study provides the first clinical evidence that FLX-787 has an effect in patients with underlying neurological disease and demonstrates the utility of chemical neurostimulation in treating symptoms arising from motor neuron hyperexcitability.
Additional Clinical Development Update
In October 2017, we announced the initiation of a Phase 2 clinical trial in patients that suffer from cramps associated with CMT, referred to as the COMMIT trial. The COMMIT trial is designed to evaluate FLX-787 in patients with CMT who suffer from cramps. This randomized, controlled, double-blinded, parallel design trial in the United States will include a run-in period to establish a baseline in cramp frequency. Patients will then be randomized to 30 mg of FLX-787 administered three times a day or to a control, for 28 days. Patients will be evaluated for changes in cramp frequency as the primary endpoint, with a number of secondary endpoints. We expect to report topline results from this clinical trial in the third quarter of 2018.
In November 2017, we announced that we were expanding the development of FLX-787 to additional indications, such as dysphagia, or difficulty swallowing, in patients with severe neurological disorders, as well as cramping in renal dialysis. We plan to begin clinical development in each indication during 2018.
Components of Operating Results
Revenue
Revenue is comprised of net product revenue and other revenue. Net product revenue includes sales of HOTSHOT finished goods to e-commerce customers, specialty retailers and sports teams, including professional and collegiate teams. Other revenue consists of payments made by customers for expedited shipping and handling. Revenue is recognized when persuasive evidence of an arrangement exists, delivery of the product has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. For sales through September 30, 2016, we issued refunds to e-commerce customers, upon request, within 21 days of shipment. When we began selling HOTSHOT on a third-party e-commerce website in October 2016, the refund period and related deferral period
increased, as we began offering refunds to e-commerce customers, upon request, within 30 days of delivery, for purchases subsequent to September 30, 2016. As we currently do not have adequate history to accurately estimate refunds, all e-commerce sales, and their related costs, are deferred and revenue is recognized once the refund period lapses. Specialty retailers and sports teams are not offered a right of return or refund and revenue is recognized at the time products are delivered to these customers. Discounts provided to customers are accounted for as a reduction of net product revenue. Total revenue is presented net of any taxes collected from customers and remitted to governmental authorities.
When purchasing via our branded website, customers may purchase HOTSHOT in packs of 6 or 12 bottles and are offered a first-time purchase discount for a 6 pack. We expect that a significant portion of our total revenue will continue to be generated through our branded website. We also sell HOTSHOT via third-party e-commerce websites, including a retailer that offers international shipping. Generally, we realize higher revenue per bottle from our own e-commerce sales as opposed to third-party website, sports teams and specialty retailer sales. HOTSHOT is generally sold to specialty retailers and sports teams in multi-pack cases.
Future sales of HOTSHOT are expected to vary from quarter to quarter and will be impacted by the number of visitors attracted to our branded website and third-party websites, those that purchase, seasonality and the amount of repeat sales that we are able to generate through e-commerce. Future sales will also be impacted by the amount of revenue that we are able to generate through retail channels. Our inability to generate sufficient revenues would have a material adverse impact on our operations.
In the future we may generate revenue from a combination of consumer product sales, drug product sales, governmentencounter delays in enrolling
Although at this time we are experiencing minimal disruption to our clinical trials, our ongoing Phase 1/2 clinical trial can enroll up to 50 relapsed or other third-party funding, marketingrefractory Ewing sarcoma patients and distribution arrangements and other collaborations, strategic alliances and licensing arrangements,in the future we may encounter delays in enrolling new patients due to concerns or a combination of these sources. To the extent any of our drug products are successfully commercialized, we expect that any revenue we generate will fluctuate from quarter to quarterhealthcare resource constraints as a result of the amount and timing of payments thatCOVID-19 pandemic. In addition, although at this time we receive from the salehave experienced no disruptions to manufacturing capabilities, certain aspects of our drug products, the timing and amount of license fees, milestone and other payments. If we fail to complete the development of our drug product candidates in a timely manner, obtain regulatory approval for them, or fail to successfully commercialize these drug products, our results of operations and financial position would be materially adversely affected.
Cost of Product Revenue
We outsource the manufacture of HOTSHOT to a co-packer. Cost of product revenue includes the cost of raw materials utilized to produce HOTSHOT, co-packing fees, repacking fees, in-bound freight charges and warehouse and transportation charges incurred to bring the finished goods to salable condition. All other costs incurred after this condition is met are considered selling costs and included in selling, general and administrative expenses.
Cost of product revenue also includes write-offs of inventory that becomes obsolete, that has a cost basis in excess of its estimated realizable value, or that exceeds projected sales. The amount of inventory write-offs will vary based upon factors such as inventory levels, production levels, projected sales of HOTSHOT and shelf-lives of our inventory components. In the future, if we are not successful in generating sufficient levels of revenue from HOTSHOT or if our other estimates prove to be inaccurate, inventory write-offssupply chain may be required.
Cost of product revenue also includes depreciation expense related to manufacturing equipment purchased to support production,disrupted as well as royalty amounts payable to certain of our founders on HOTSHOT sales.
Researchthird party suppliers and Development Expenses
Our research and development expenses to date include the costs incurred related to the development and testing of our extract formulation and expenses related to the testing and development of our drug product candidates, including FLX-787. Research and development costs include salaries and other compensation-related costs, such as stock-based compensation for research and development employees, costs of clinical studies of our extract formulation and drug product candidates, drug substance production costs, formulation and production costs of clinical supply, including FLX-787, to support clinical studies, costs for consultants who we utilize to supplement our personnel, fees paid to third parties, facilities and overhead expenses, cost of laboratory supplies and other outside expenses.
Research and development activities are central to our business model. Drug product candidates in later stages of clinical development generallymanufacturers have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect to continue incurring
significant research and development expenses related to the development of our drug product candidates. It is difficult to determine, with certainty, the duration and completion costs of our current or future pre-clinical programs and clinical trials of our drug product candidates.
In addition, the probability of success for each drug product candidate will depend on numerous factors, including competition, product safety and efficacy, patent protection, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each programpaused their operations in response to the scientificCOVID-19 pandemic or have otherwise encountered delays in providing supplies and clinical success ofservices. We continue to evaluate the extent to which these delays will impact our drugability to manufacture our product candidates for our clinical trials and conduct other research and development operations and maintain applicable timelines. The ultimate impact of the COVID-19 pandemic on our business operations as well as an assessment of each product candidate's commercial potential.
Research and development expenses also include costs incurred related to our Consumer Operations segment for HOTSHOT, including athlete-based efficacy studies, product formulation work, stabilitypreclinical studies and other efforts.
Selling, Generalclinical trials remains uncertain and Administrative Expenses
Selling, generalsubject to change and administrative expenses include salaries and other compensation-related costs, including stock-based compensation, for personnel in executive, finance and accounting, legal, corporate communications and general administration roles. Other significant costs include professional service fees including legal fees relating to patent and corporate matters, accounting fees, insurance costs, costs for consultants who we utilize to supplement our personnel, travel costs and facility and office-related costs not included in research and development expenses.
Selling, general and administrative expenses also include costs related to our Consumer Operations segment for our consumer brand and HOTSHOT. Prior to the launch of HOTSHOT, these costs included personnel costs, brand development costs, market research costs, product design costs, pre-launch activity costs and other external costs. Since the launch of HOTSHOT, wewill depend on future developments, which cannot be accurately predicted. We will continue to incur costs related to personnel and market research, and are also incurring costs related to our marketing, sales and promotional activities, including print and digital media campaigns, public relations activities, field marketing efforts, other sales and promotional activities and costs related tomonitor the distribution of HOTSHOT. These distribution costs include shipping and handling costs incurred once our product is in salable condition.situation closely.
Our selling, general and administrative expenses may increase as we support the efforts of our Consumer Operations and Drug Development segments as well as the needs of our corporate functions.
Interest Income, Net
Interest income, net primarily consists of interest income from our cash, cash equivalents and marketable securities, amortization and accretion of investment premiums and realized gains and losses.
Results of Operations
Three Months Ended September 30, 2017March 31, 2020 Compared to the Three Months Ended September 30, 2016March 31, 2019
The following table sets forth the condensed consolidated results of our operations including information related to our Consumer Operations and Drug Development segments, for the three months ended September 30, 2017March 31, 2020 compared to the three months ended September 30, 2016.March 31, 2019.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2020 | | Three Months Ended March 31, 2019 | | Change | | |
| | | | | $ | | % |
Grant revenue | $ | 1,132,830 | | | $ | 655,635 | | | $ | 477,195 | | | 73 | % |
Research and development expenses | (1,643,371) | | | (699,929) | | | (943,442) | | | 135 | % |
General and administrative expenses | (1,859,017) | | | (1,488,490) | | | (370,527) | | | 25 | % |
Change in fair value of warrant liability | 283,070 | | | — | | | 283,070 | | | — | % |
Interest income, net | 2,672 | | | 10,708 | | | (8,036) | | | (75) | % |
Net loss | $ | (2,083,816) | | | $ | (1,522,076) | | | $ | (561,740) | | | 37 | % |
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, 2017 | | Three Months Ended September 30, 2016 | | Change |
| | | $ | | % |
Net product revenue | $ | 407,241 |
| | $ | 586,134 |
| | $ | (178,893 | ) | | (31 | )% |
Other revenue | 6,360 |
| | 12,940 |
| | (6,580 | ) | | (51 | )% |
Total revenue | 413,601 |
| | 599,074 |
| | (185,473 | ) | | (31 | )% |
Costs and expenses: | |
| | | | | | |
Cost of product revenue | 148,756 |
| | 221,090 |
| | (72,334 | ) | | (33 | )% |
Research and development | 4,739,360 |
| | 5,665,357 |
| | (925,997 | ) | | (16 | )% |
Selling, general and administrative | 4,934,937 |
| | 5,447,847 |
| | (512,910 | ) | | (9 | )% |
Total costs and expenses | 9,823,053 |
| | 11,334,294 |
| | (1,511,241 | ) | | (13 | )% |
Loss from operations | (9,409,452 | ) | | (10,735,220 | ) | | 1,325,768 |
| | (12 | )% |
Interest income, net | 77,339 |
| | 97,726 |
| | (20,387 | ) | | (21 | )% |
Net loss | $ | (9,332,113 | ) | | $ | (10,637,494 | ) | | $ | 1,305,381 |
| | (12 | )% |
TotalGrant Revenue
Our Consumer Operations segment generated all of our
Grant revenue, which was derived solely from the CPRIT grant, was $1,132,830 during the three months ended September 30, 2017, totaling $0.4 million asMarch 31, 2020 compared to $0.6 million$655,635 during the three months ended March 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.
Research and Development Expenses
Research and development expenses were $1,643,371 during the three months ended March 31, 2020 compared to $699,929 during the three months ended March 31, 2019. The increase of $943,442 was principally due to the production of tablets for use in clinical trials, increased consulting fee related to clinic trials and a pre-clinical study for our next generation Seclidemstat program, and increased clinical trial costs resulting from the increased number of patients enrolled and additional clinical trial sites.
General and Administrative Expenses
General and administrative expenses were $1,859,017 for the three months ended September 30, 2016, through sales of HOTSHOT and expedited shipping and handling purchases. Revenue was driven by our HOTSHOT marketing, sales and promotional efforts, including our print and digital media campaigns, public relation efforts, field marketing efforts, other sales and promotional activities. RevenueMarch 31, 2020 compared to $1,488,490 for the three months ended September 30, 2016 was also driven by our HOTSHOT launchMarch 31, 2019. The net increase of $370,527 resulted from the costs related activities.
Sales via e-commerce represented approximately 80% of our total revenueto the Company' transformation into a public company during July 2019 more than offsetting reduced spending for the three months ended September 30, 2017professional fees and legal costs compared to 93% for the three months ended September 30, 2016. E-commerce revenue decreased as a percentage of total revenue in the comparative periods due to an increase in specialty retailer and sports team revenue in 2017.
During the three months ended September 30, 2017, we sold approximately 87,000 bottles of HOTSHOT at an average total revenue per bottle of $4.75, compared to 123,000 bottles at an average total revenue per bottle of $4.87 during the three months ended September 30, 2016. The decrease in average total revenue per bottle is due to various price promotions that were offered to customers during the third quarter of 2017 to attract new and repeat customers. The decrease in volume of bottles sold in the comparative periods was due to launch related media coverage received in 2016 that drove a significant amount of revenue in the three months ended September 30, 2016.
Cost of Product Revenue
All costs of product revenue are recorded by our Consumer Operations segment and relate to the production and sale of HOTSHOT. Cost of product revenue was $0.1 million for the three months ended September 30, 2017 and $0.2 million for the three months ended September 30, 2016, and included the cost of HOTSHOT sold, royalty expense, inventory write-offs, and depreciation expense related to manufacturing equipment purchased to support production which totaled approximately $35,000 for each quarter. Write-offs for the three months ended September 30, 2017 totaled approximately $14,700 and relate to finished goods with a 12 month product shelf life not expected to be sold due to expiration during the fourth quarter of 2017. The inventory produced during the second quarter of 2017 has a 30 month product shelf life. Write-offs for the three months ended September 30, 2016 totaled approximately $32,700, related to production fees for finished goods from the first production run of HOTSHOT that were not expected to be sold based upon projected sales, a 12 month product shelf life, the number of units produced and production level requirements.
Research and Development Expenses
Our Drug Development segment incurred the majority of our research and development expenses, which were $4.7 million for the three months ended September 30, 2017 compared to $5.7 million for the three months ended September 30, 2016. The 16% decrease of $0.9 million was primarily related to:
$0.5 million decrease in the level of clinical activities compared to 2016, related primarily to prior year studies of our extract formulation, studies to identify our drug product candidate, IND-supporting pre-clinical activities and decreased manufacture of drug substance, partially offset by increases related to startup, formulation and production costs for our FLX-787 Phase 2 clinical trials in the United States; and
$0.4 million decrease in stock-based compensation expense, related primarily to the revaluation of non-employee awards and option grants at lower valuations than the prior year due to decreased stock price.
Selling, General and Administrative Expenses
Selling, general and administrative includes expenses that are incurred by our Consumer Operations segment as well as corporate and unallocated amounts that do not relate to a reportable segment. Selling, general and administrative costs were $4.9 million for the three months ended September 30, 2017 compared to $5.4 million for the three months ended September 30, 2016. The 9% decrease of $0.5 million was primarily related to:
$0.5 million decrease in stock-based compensation expense, related primarily to the revaluation of non-employee awards and option grants at lower valuations than the prior year due to decreased stock price, as well as a stock option award modificationsame period in the prior year;
$0.3 million decreaseyear. During the current period the transformation accounted for higher director and officer insurance expense, and fees related to salariesits NASDAQ listing and benefits as Consumer Operations and corporate headcount decreased from the prior year;
$0.2 million ofinvestor relations costs. Additionally, compensation expense increased costs within our Consumer Operations segment related to event sponsorships and sampling of HOTSHOT, offset by a decrease in media spend related to launch activities in the prior year; and
$0.1 million in increased corporate professional costs, mainly related to legal costs for clinical site contracts for our FLX-787 Phase 2 trials in the United States.
Loss from Operations
Our consolidated loss from operations for the three months ended September 30, 2017 totaled $9.4 million. Of this total, $2.3 million of the operating loss was incurred by our Consumer Operations segment, $4.7 million was incurred by our Drug Development segment and the remaining $2.4 million related to corporate and unallocated costs. The operating loss incurred by the Consumer Operations segment was primarily driven by marketing, sales and promotional costs related to HOTSHOT, and personnel-related expenses, including stock-based compensation. These costs were slightly offset by the total revenue generated from HOTSHOT sales in the third quarter of 2017. The operating loss incurred by the Drug Development segment relates to costs incurred for FLX-787 formulation and production and clinical study costs, other clinical study activities and personnel-related expenses, including stock-based compensation.
Interest Income, net
Interest income, net, decreased by $20,387 in the three months ended September 30, 2017 compared to the three months ended September 30, 2016 as we hadMarch 31, 2019 resulting from the payment of bonuses and increased personnel, These higher costs
were partially offset by lower available cash to invest.
Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016
The following table sets forth the condensed consolidated results of operations, including information related to our Consumer Operationsdecreased legal and Drug Development segments,professional services expenses resulting from 2019 costs incurred for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.
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| | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2017 | | Nine Months Ended September 30, 2016 | | Change |
| | | $ | | % |
Net product revenue | $ | 978,221 |
| | $ | 698,819 |
| | $ | 279,402 |
| | 40 | % |
Other revenue | 13,450 |
| | 12,940 |
| | 510 |
| | 4 | % |
Total revenue | 991,671 |
| | 711,759 |
| | 279,912 |
| | 39 | % |
Costs and expenses: | |
| | |
| | | | |
Cost of product revenue | 373,187 |
| | 529,041 |
| | (155,854 | ) | | (29 | )% |
Research and development | 12,730,554 |
| | 16,147,357 |
| | (3,416,803 | ) | | (21 | )% |
Selling, general and administrative | 14,520,596 |
| | 15,937,326 |
| | (1,416,730 | ) | | (9 | )% |
Total costs and expenses | 27,624,337 |
| | 32,613,724 |
| | (4,989,387 | ) | | (15 | )% |
Loss from operations | (26,632,666 | ) | | (31,901,965 | ) | | 5,269,299 |
| | (17 | )% |
Interest income, net | 227,535 |
| | 308,877 |
| | (81,342 | ) | | (26 | )% |
Net loss | $ | (26,405,131 | ) | | $ | (31,593,088 | ) | | $ | 5,187,957 |
| | (16 | )% |
Total Revenue
Our Consumer Operations segment generated all of our revenue during the nine months ended September 30, 2017, totaling $1.0 million, as compared to $0.7 million for the nine months ended September 30, 2016 through sales of HOTSHOT and expedited shipping and handling purchases. HOTSHOT launched in the second quarter of 2016. Revenue was driven by our HOTSHOT marketing, sales and promotional efforts, including our print and digital media campaign, public relation efforts, field marketing efforts and other sales and promotional activities.
Sales via e-commerce represented approximately 82% of our total revenue for the nine months ended September 30, 2017 compared to 92% for the nine months ended September 30, 2016. E-commerce revenue decreased as a percentage of total revenue in the comparative periods due to an increase in specialty retailer and sports team revenue in 2017.
During the nine months ended September 30, 2017, we sold approximately 222,000 bottles of HOTSHOT at an average total revenue per bottle of $4.47, compared to 147,000 bottles at an average total revenue per bottle of $4.84 during the nine months ended September 30, 2016. The decrease in average total revenue per bottle is due to various price promotionsannounced reverse merger with Flex Pharma that were offered to customers during 2017 to attract new and repeat customers. The increase in the number of bottles sold was a result of HOTSHOT being on the market for all of 2017 to date, while available in 2016 from its June launch date.
Cost of Product Revenue
All costs of product revenue are recorded by our Consumer Operations segment and relate to the production and sale of HOTSHOT. Cost of product revenue was $0.4 million for the nine months ended September 30, 2017 compared to $0.5 million for the nine months ended September 30, 2016. Cost of product revenue during the nine months ended September 30, 2017 includes the cost of HOTSHOT sold, royalty expense, inventory write-offs of approximately $34,200 related to certain raw materials that aredid not expected to be used in future production runs and expiring finished goods, and depreciation expense of approximately $0.1 million related to manufacturing equipment used to support production. Cost of product revenue during the nine months ended September 30, 2016 included the cost of HOTSHOT sold, royalty expense, inventory write-offs of $0.3 million related to HOTSHOT finished goods that were not expected to be sold and depreciation expense of approximately $80,000.
Research and Development Expenses
Our Drug Development segment incurred the majority of our research and development expenses, which were $12.7 million for the nine months ended September 30, 2017 compared to $16.1 million for the nine months ended September 30, 2016. The 21% decrease of $3.4 million was primarily related to:
$2.2 million decrease in clinical activities and related work, primarily related to studies completed in the prior year or ramping downrecur in the current year, such as the submissionperiod.
Change in Fair Value of our IND, identificationWarrant Liability
The change in fair value of our drug product candidate and developmentwarrant liability of our drug substance, offset by startup, formulation and production costs for our FLX-787 Phase 2 clinical trials and other related studies in the United States, which commenced in 2017;
$0.9 million decrease in stock-based compensation expense, related primarily to the revaluation of non-employee awards and option grants at lower valuations than the prior year due to decreased stock price;
$0.3 million decrease related to salaries and benefits as research and development personnel changed from the prior year;
$0.2 million decrease related to our Consumer Operations segment, related to formulation of our HOTSHOT product in prior year;
$0.1 million increase in consulting related expenses to supplement our Drug Development personnel; and
$0.1 million increase in rent expense due to entering into a new lease agreement for our current corporate headquarters.
Selling, General and Administrative Expenses
Selling, general and administrative includes expenses that are incurred by our Consumer Operations segment as well as corporate and unallocated amounts that do not relate to a reportable segment. Selling, general and administrative expenses were $14.5 million for the nine months ended September 30, 2017 compared to $15.9 million for the nine months ended September 30, 2016. The 9% decrease of $1.4 million$283,070 was primarily related to:
$1.2 million decrease in stock-based compensation expense, related primarily to the revaluation of non-employee awards and option grants at lower valuations than the prior year due to decreased stock price, as well as a stock option award modification in the prior year;
$0.7 million decrease related to salaries and benefits, as Consumer operations and corporate headcount decreased from the prior year;
$0.4 million decrease in external consulting costs within our Consumer Operations segment due to decreased use of consultants;
$0.1 million decrease in HOTSHOT sampling costs;
$0.5 million of increased costs within our Consumer Operations segment for HOTSHOT print and digital media campaigns, as well as our branded website;
$0.3 million increase in consulting expenses to supplement our corporate personnel;
$0.1 million increase in rent expense due to the terminationfluctuation of the price of our lease agreement at our office in New York, NY, as well as increase in rent expense due to entering into a new lease agreement for our current corporate headquarters; and
$0.1 million increase related to nine months of distribution costs for HOTSHOT sales in 2017, as the product launched during the second quarter of 2016.
Loss from Operations
Our consolidated loss from operations for the nine months ended September 30, 2017 totaled $26.6 million. Of this total, $7.1 million of the operating loss was incurred by our Consumer Operations segment, $12.5 million was incurred by our Drug Development segment and the remaining $7.1 million related to corporate and unallocated costs. The operating loss incurred by the Consumer Operations segment was driven by sales, marketing, promotional and distribution costs related to HOTSHOT, and personnel-related expenses, including stock-based compensation. These costs were slightly offset by the total revenue generated from HOTSHOT sales during the nine months ended September 30, 2017. The operating loss incurred by the Drug Development segment relates to costs incurred for FLX-787 formulation, production and clinical study costs, other clinical study activities and personnel-related expenses, including stock-based compensation, as well as consulting costs.
Interest Income, net
Interest income, net, decreased by 81,342 in the nine months ended September 30, 2017common stock ($3.78 per share on December 31, 2019 compared to $0.68 per share on March 31, 2020). The Company recognized a gain of $283,070 due the nine months ended September 30, 2016 as we had lower available cash to invest.change in fair value of warrant liability.
Liquidity and Capital Resources
Overview
Since inception, we have incurred an operating losslosses and we anticipate that we will continue to incur operating losses for at least the next several years.foreseeable future. To date, we have financed our operations through private placements of equity securities and our IPO, which we completed in February 2015,generated revenue solely from CPRIT grant, and have not generated limitedany revenue from sales of HOTSHOT. product sales.
We do not know when, or if, we will generate any revenue from product sales. We do not expect to continue incurring significant researchgenerate any revenue from product sales unless and development expenses related to the developmentuntil we obtain regulatory approval for and commercializes any of our drug product candidatescandidates. At the same time, we expect our expenses to increase in connection with our ongoing development and significant selling, general and administrative expensesmanufacturing activities, particularly as we continue to commercialize HOTSHOT. the research, development, manufacture and clinical trials of, and seek regulatory approval for our product candidates.
As a result, we will need additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements.
Sources of Liquidity
At September 30, 2017,March 31, 2020, we had $35.6 million$8,821,668 of working capital and our cash and cash equivalents and marketable securities totaled $38.9 million,$9,646,940, which were held in bank deposit accounts and money market funds, U.S. government agency securities and commercial paper.funds. Our cash and cash equivalents and marketable securities balance decreasedincreased during the ninethree months ended September 30, 2017,March 31, 2020, primarily due primarily to our net loss incurred.public offering closed on February 11, 2020.
Cash Flows
| | | | | | | | | | | |
| Three Months Ended March 31, 2020 | | Three Months Ended March 31, 2019 |
Net cash used in: | | | |
Operating activities | $ | (3,708,034) | | | $ | (1,868,713) | |
Financing activities | 9,616,074 | | | 1,508,179 | |
Net increase (decrease) in cash and cash equivalents | $ | 5,908,040 | | | $ | (360,534) | |
Cash Flows
|
| | | | | | | |
| Nine Months Ended September 30, 2017 | | Nine Months Ended September 30, 2016 |
Net cash (used in) provided by: | |
| | |
|
Operating activities | $ | (22,093,488 | ) | | $ | (25,753,337 | ) |
Investing activities | 19,827,530 |
| | (13,125,863 | ) |
Financing activities | 2,047 |
| | 22,096 |
|
Net increase (decrease) in cash and cash equivalents | $ | (2,263,911 | ) | | $ | (38,857,104 | ) |
Operating Activities
Net cash used in operating activities was $3,708,034 and $1,868,713 for the ninethree months ended September 30, 2017March 31, 2020, and March 31, 2019, respectively, an increase of $1,839,321. This cash spending increase was $22.1 million, a decrease of $3.7 million comparedprimarily due to increased clinical trial and related research costs plus the same period in the prior year. The use of cashCompany's increased spending for the nine months ended September 30, 2017 was primarily related to our net loss for the period of $26.4 million, offset by non-cash charges for stock-based compensation expense of $3.3 million, depreciation expense of $0.3 million andtransformation into a cash inflow of $0.8 million from changes in operating assets and liabilities.
The $0.8 million cash inflow from changes in operating assets and liabilities was driven primarily by inflows from increases in accrued expenses and other current liabilities, and deferred rent. The increases in accrued expenses and other current liabilities relate to the timing of payments, primarily related to clinical trial startup activities for our FLX-787 Phase 2 clinical trials in the United States. The increase in deferred rent is due to signing a direct lease for our corporate headquarters through 2019. These inflows were offset by outflows primarily from an increase in prepaid expenses and other current assets and restricted cash and a decrease in accounts payable. The increase in prepaid expenses and other current assets relates to the timing of payments for insurance policies. The increase in restricted cash relates to a letter of credit established for the direct lease of our corporate headquarters. The letter of credit for our previous sublease of the office space was not released until October 2017. The decrease in accounts payable related to the timing of payments at December 31, 2016 compared to September 30, 2017.
Net cash used in operating activities for the nine months ended September 30, 2016 totaled $25.8 million and was primarily related to our net loss for the period of $31.6 million, offset by total non-cash charges of $5.6 million, including stock-based compensation expense of $5.4 million, depreciation expense of $0.2 million and amortization and accretion on investments of $0.1 million.
Investing Activities
Net cash provided by (used in) investing activities for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, increased $33.0 million, primarily related to a $32.5 million increase in net purchases and sales of marketable securities. Property and equipment acquisitions decreased $0.4 million, which primarily related to prior year activity of manufacturing equipment purchased to produce HOTSHOT and development of our branded website for HOTSHOT.public company during 2020.
Financing Activities
Net cash provided by financing activities was $9,616,074 for the nine months ended September 30, 2017 did not change significantlyfirst quarter of the year 2020, compared to $1,508,179 for the nine months ended September 30, 2016. Cashsame period of the year 2019. The increase of cash provided by financing activities resulted from the Company completing a public offering on February 11, 2020 with net proceeds of approximately $9.8 million, partially offset by the payment of $249,653 towards the principal on an insurance financing note by the Company. There were no such payments during the ninethree months ended September 30, 2017 and 2016 totaled $2,047 and $22,096, respectively, and related to proceeds from exercises of common stock.
As of September 30, 2017, we had no long-term debt.
We currently have no ongoing material financial commitments, such as lines of credit or guarantees that are expected to affect our liquidity over the next five years, other than leases.
Funding Requirements
We expect that we will require additional funding to support the commercialization of HOTSHOT and to develop and commercialize our drug product candidates. In addition, if we receive regulatory approval for any of our drug product candidates, and if we choose not to grant rights to commercialize our drug products to partners, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution activities. We also expect to incur additional costs to support our operations as well as the costs associated with operating as a public company.
Until we can generate a sufficient amount of revenue from our products, if ever, we expect to finance future cash needs through public or private equity or debt offerings. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates or sell some of our assets. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and these securities may have rights senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical costs, third-party research and development costs, legal and other regulatory expenses, manufacturing, marketing, promotion and selling costs related to our consumer brand and products, external consulting costs and general administrative and overhead costs. Our future funding requirements will be heavily reliant upon the resources required to support our drug product candidates as well as our consumer brand and products.
Drug Product Candidates
The successful development of any drug product candidate is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the development of our future drug product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of drug product candidates. This is due to the numerous risks and uncertainties associated with developing drug products, including the uncertainty of:
receiving regulatory approval to conduct clinical trials;
successfully enrolling, and completing, clinical trials;
receiving marketing approvals from applicable regulatory authorities;
establishing arrangements with third-party manufacturers;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity; and
launching commercial sales of our products, if and when approved, whether alone or in collaboration with others.
A change in the outcome of any of these variables with respect to the development of any of our drug product candidates would significantly change the costs and timing associated with the development of that drug product candidate.
As our drug product candidate, FLX-787, is in the early stage of development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of FLX-787 and future development costs may increase.
Consumer Brand and Products
The development and growth of our consumer brand, HOTSHOT and future products is uncertain, including the timing and resources needed to support successful commercialization. Our future success depends, in part, on our ability to implement a growth strategy that establishes distribution and placement of our products, attracts consumers to HOTSHOT and future product offerings, and maintains brand loyalty for our consumer products.
Our future funding requirements will be impacted by our ability to successfully grow our consumer brand, HOTSHOT and any future products. In addition, delays or unexpected costs related to HOTSHOT and growth plans could significantly change the costs and the timing of such costs associated with our consumer operations.
Outlook
Based on our research and development plans, our consumer brand and HOTSHOT growth plans and our expectations of timing related to the progress of our clinical programs, we expect that our existing cash resources and marketable securities will enable us to fund our costs and expenses, working capital and capital expenditure requirements into early 2019. We have based this estimate on assumptions that may prove to be wrong, however, and we could use our capital resources sooner than we expect. Additionally, the process of testing drug product candidates in clinical trials is costly, as are the resources required to commercialize a consumer brand and products, and the timing of progress of these efforts is uncertain.
Contractual Obligations
There have been no material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the year ended December 31, 2016, other than as noted below.
In January 2017, we signed a lease agreement for our corporate headquarters in Boston, MA. Our sublease for this office space terminated on August 31, 2017, following which time we leased the same location from September 1, 2017 until AugustMarch 31, 2019. This lease resulted in an aggregate increase to future minimum lease payments of $933,186 through 2019.
Off-Balance Sheet Arrangements
We did not have during the period presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the condensed consolidated balance sheet and the reported amounts of expenses during the reporting period. In
accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances at the time such estimates are made. Actual results may differ materially from our estimates and judgments under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in our condensed consolidated financial statements prospectively from the date of the change in estimate.
There have been no material changes to our critical accounting policies from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K filed with SEC on March 23, 2020.
Readers should refer to our Annual Report on Form10-K filed with SEC on March 23, 2020, Note 2, Basis of Presentation and Significant Accounting Policies to the accompanying financial statements for descriptions of these policies and estimates.
Application of New Accounting Standards
In January 2017, the year endedFASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other,” which is intended to simplify the subsequent measurement of goodwill. The pronouncement allows an entity, during its annual or interim goodwill impairment evaluation, to compare the fair value of a reporting unit with its carrying amount. An impairment charge is immediately recognized by which the carrying amount exceeds the fair value. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 31, 2016.15, 2019. We do not expect adoption of this ASU to have a material impact on our condensed consolidated financial statements.
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Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of September 30, 2017, we had cash, cash equivalents and marketable securities of $38.9 million. We invest our cash in a variety of financial instruments, principally money market funds, U.S. government securities, investment-grade corporate notes and commercial paper. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Available-for-sale securities that we invest in are subject to interest rate risk and may fall in value if market interest rates increase. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our portfolio.Not applicable.
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Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure“disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in our periodic and current reports that we file under the Exchange Act with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chiefChief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer and our chief financial officer,principal accounting officer), as appropriate, to allow timely decisions regarding required disclosure.
AsIn designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of September 30, 2017, wethe disclosure controls and procedures are met. Our disclosure controls and procedures have evaluated,been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under the supervision and all potential future conditions.
Based on management’s evaluation (with the participation of our management, includingprincipal executive officer and principal financial officer), as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer (our principal executive officer) and theour Chief Financial Officer the effectiveness(our principal financial and accounting officer) have concluded that, as of the design and operation ofsuch date, our disclosure controls and procedures pursuant to(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act Rule 13a-15. Based upon our evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures Act) were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the ninethree months ended September 30, 2017,March 31, 2020, there was no significant change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
We are not currently a party to any material legal proceedings.proceedings on the date of this report. We may from time to time become involved in legal proceedings arising in the ordinary course of business, and the resolution of any such claims could be material.
You should carefully review and consider the information regarding
For a discussion of certain factors that could materially affect our business, financial condition, or futureand operating results, set forthyou should carefully review and consider the information under “Part I, Item 1A. (Risk Factors)1A- Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
There2019, filed with the SEC on March 23, 2020, as well as the risk factors set forth below. The risk factors below are in addition to and supplement (and with respect to certain matters, update) the risk factors discussed in our Annual Report on Form 10-K. Other than as set forth below, there have been no material changes to the risk factors included in our Annual Report on Form 10-K forfiled with the fiscal year ended December 31, 2016, except as follows:SEC on March 23, 2020.
Risks Related to Our Business Operations and Our Industry
The COVID-19 pandemic could adversely affect our business, results of operations, and financial condition.
Our future success dependsTo date, the COVID-19 pandemic has negatively impacted the global economy and the magnitude, severity, and duration of this impact is unclear and difficult to assess. Salarius has worked to adapt to the unexpected and challenging circumstances resulting from the COVID-19 pandemic and we have experienced minimal COVID-19 disruptions to our clinical programs, our manufacturing capabilities and our financing capabilities during the three months ended March 31, 2020.Both our Ewing Sarcoma clinical study and our Advanced Solid Tumor clinical study are active and continue to enroll patients. Salarius plans to release clinical data from both studies, as previously disclosed, during 2020 and 2021.However, the impact of COVID-19 changes daily and is difficult to predict.
To combat the spread of COVID-19, the United States and other locations in which we operate have imposed measures such as quarantines and “shelter-in-place” orders that are restricting business operations and travel and requiring individuals to work from home (“WFH”), which has impacted all aspects of our business as well as those of the third-parties we rely upon for certain supplies and services.The continuation of WFH and other restrictions for an extended period of time may negatively impact our productivity, research and development, operations, preclinical studies and clinical trials, business and financial results. Among other things, the COVID-19 pandemic may result in:
•a global economic recession or depression that could significantly and negatively impact our business or those of third parties upon which we rely for services and supplies;
•constraints on our ability to retain key executivesconduct our operations and our preclinical studies and clinical trials;
•delays in our ability to extend the term of the CPRIT grant;
•reduced productivity in our business operations, research and development, marketing, and other activities;
•disruptions to our third-party manufacturers and suppliers;
•increased costs resulting from WFH or from our efforts to mitigate the impact of COVID-19; and
•reduced access to financing to fund our operations due to a deterioration of credit and financial markets.
We will continue to monitor the situation but the continued disruption of the COVID-19 pandemic and its effects on the worldwide economy could negatively and materially impact our operating and financial operating results. The resumption of normal business operations may be delayed and a resurgence of COVID-19 could occur resulting in continued disruption to us or third parties with whom we do business. As a result, the effects of the COVID-19 pandemic could have a material adverse impact on our business, results of operations and financial condition for the remainder of 2020 and beyond.
Risks Related to Salarius’ Financial Condition and Capital Requirements
We will continue to require substantial additional capital to fund our clinical activities and operations and the impact of the COVID-19 pandemic on the financial markets will likely negatively impact our ability to raise additional financing.
We are a clinical development-stage biopharmaceutical company with a limited operating history. 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. Our net losses were $6,936,263 and $2,083,816 for the year ended December 31, 2019 and the three months ended March 31, 2020, respectively. We have prepared our financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we be unable to continue in existence.
We will continue to require substantial additional capital to continue our clinical development and potential commercialization activities. Accordingly, we will need to raise substantial additional capital to continue to fund our operations. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our clinical development efforts. To date, we have financed our operations primarily through the sale of equity securities. Our stock price has been negatively impacted in part by the downturn in the financial markets due to the COVID-19 pandemic.This in turn will likely negatively impact our ability to raise funds through equity-related financings.Further, the global economic downturn may impair our ability to obtain additional financing through other means, such as debt financing.There can be no assurance we will be able to secure additional financing on favorable terms to us, or at all.Further any debt financing may contain restrictive covenants which limit our operating flexibility and any equity financing will likely result in additional and possibly significant dilution to existing stockholders. Failure to raise sufficient capital, as and when needed, would have a significant and negative impact on our financial condition and our ability to develop our product candidates.
Risks Related to Salarius’ Reliance on Third Parties
We rely on third parties to conduct our clinical trials, manufacture our product candidates, and perform other services. If these parties are not able to successfully perform due to the impact of the COVID-19 pandemic or otherwise, there may be delays in our ability to successfully complete clinical development, obtain regulatory approval or commercialize our product candidates and our business could be substantially harmed.
We have relied upon and plan to continue to rely upon third-parties such as CROs, hospitals, etc. to conduct, monitor and manage our ongoing clinical programs. We rely on these parties for execution of clinical trials and manage and control only some aspects of their activities. In addition, third parties may not prioritize Salarius’ clinical trials relative to those of other customers due to resource or other constraints as a result of COVID-19. Due to the continued impact of COVID-19 pandemic or otherwise, we may experience enrollment at a slower pace at certain of our clinical trial sites than initially anticipated.Further, our clinical trial sites may be required to suspend enrollment due to travel restrictions, workplace safety concerns, quarantine, facility closures, and other governmental restrictions.As a result, results from our clinical trials may be delayed, which in turn would have a material adverse impact on our clinical trial plans and timelines and impair our ability to successfully complete clinical development, obtain regulatory approval, or commercialize our product candidates. This in turn would substantially harm our business and operations.
Salarius expects to rely on third parties to manufacture its clinical product supplies and to attract, retainproduce and motivateprocess its product candidates, if approved.Salarius’ commercialization of any of its product candidates could be stopped, delayed or made less profitable if those third parties are unable to provide Salarius with sufficient quantities of drug product, or to do so at acceptable quality levels or prices due to the COVID-19 pandemic or otherwise.
Salarius currently relies on outside vendors to manufacture its clinical supplies of its product candidates and plans to continue relying on third parties to manufacture its product candidates on a commercial scale, if approved.The COVID-19 pandemic has placed a significant strain on the pharmaceutical industry, manufacturers of clinical supplies, healthcare-related supplies and resources, and the healthcare-related manufacturing sector in general.The impact of the COVID-19 pandemic has exacerbated the risks to which Salarius is subject due to its reliance on third-party manufacturers.For example, Salarius may be unable to identify manufacturers on acceptable terms or at all or third-party manufacturers may not be able to execute Salarius’ manufacturing procedures appropriately or may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply its clinical trials or to successfully produce, store and distribute its products.
Additionally, Salarius’ manufacturers may experience manufacturing difficulties due to resource constraints, the impact of the COVID-19 pandemic, or as a result of labor disputes or unstable political environments. If Salarius’ manufacturers were to encounter any of these difficulties, or otherwise fail to comply with their contractual obligations, Salarius’ ability to provide its product candidates to patients in clinical trials would be jeopardized. Any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require Salarius to commence new clinical trials at additional expense or terminate clinical trials completely.
Risks Related to Salarius’ Business Operations
Due to its limited number of employees, Salarius’ operations could be significantly and disproportionately impacted if any of its personnel were to test positive for COVID-19.
Salarius is a small company with a limited number of employees performing multiple tasks each. Salarius is also highly dependent on David J. Arthur, its president and chief executive officer, the loss of whose services may adversely impact the achievement of its objectives. There is currently a shortage of highly qualified personnel.personnel in Salarius’ industry, which is likely to continue. Additionally, this shortage of highly qualified personnel is particularly acute in the area where Salarius is located. If any of Salarius’ personnel were to test positive for COVID-19, it would likely significantly impair Salarius’ operations.The loss of services of any of Salarius’ personnel, including Mr. Arthur, particularly for an extended period due to COVID-19 or otherwise, would likely impede the progress of Salarius’ research, development, and commercialization objectives and would negatively impact Salarius’ ability to succeed in its product development strategy.
Our future success dependsWe may face business disruption and related risks resulting from President Trump's recent invocation of the Defense Production Act, either of which could have a material adverse effect on our business.
In response to the COVID-19 pandemic, President Trump invoked the Defense Production Act, codified at 50 U.S.C. §§ 4501 et seq. (the “Defense Production Act”). Pursuant to the, Defense Production Act the federal government may, among other things, require domestic industries to provide essential goods and services needed for the national defense. While we have not experienced any significant impact on our business as a result of such actions, we continue to assess the potential impact COVID-19 and the invocation of the Defense Production Act may have on our ability to retain key executiveseffectively conduct our commercialization efforts and development programs and otherwise conduct our business operations as planned.There can be no assurance that we will not be further impacted by the COVID-19 pandemic or by any action taken by the federal government under the Defense Production Act, including downturns in business sentiment generally or in our industry and business in particular.
Risks Related to attract, retain motivate qualified personnel. WeOur Common Stock
If we are highly dependentunable to maintain listing of our securities on William McVicar,the Nasdaq Capital Market or another reputable stock exchange, it may be more difficult for our Presidentstockholders to sell their securities.
The Nasdaq Stock Market has experienced significant volatility and Chief Executive Officer, and Thomas Wessel, our Chief Medical Officer. Althoughdeclines due to the COVID-19 pandemic.In addition, we have employment agreementsa limited public float and our stock price has experienced a significant decline since the reverse merger.Between January 1, 2020 and April 30, 2020, our closing stock price has fluctuated from a high of $3.82 at January 3, 2020 to a low of $0.57 at March 24, 2020.In addition, Nasdaq requires listing issuers to comply with Drs. McVicar and Wessel, these agreements do not prevent them from terminating their employment with us at any time. We do not maintain “key person” insurance for anycertain standards in order to remain listed on its exchange.
On April 9, 2020, we were notified by Nasdaq that on April 8, 2020 the average closing price of our executives or other employees. The losscommon stock over the prior 30 consecutive trading days had fallen below $1.00 per share, which is the minimum average closing
price required to maintain listing on Nasdaq under Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Requirement”).In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days, to regain compliance with the services of any of these persons could impedeMinimum Bid Requirement. To regain compliance, the achievementclosing bid price of our research, development and commercialization objectives.
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Recent sales of unregistered securities.
None.
Use of Proceeds
In February 2015, we completed our initial public offering pursuant to a registration statement on Form S-1 (File No. 333-201276), which the SEC declared effective on January 28, 2015. In our initial public offering, we issued and sold 5,491,191 shares of common stock (inclusive of 91,191 shares of common stock sold by us pursuant to the exercise of an overallotment option granted to the underwriters in connection with the offering)must be at a public offering price of $16.00least $1.00 per share for aggregate gross offering proceedsa minimum of $87.9 million. The managing underwritersten consecutive business days during this 180-day period. During this 180-day period, we would anticipate reviewing our options to regain compliance with the minimum bid requirements, including conducting a reverse stock split.If we do not achieve compliance with the Minimum Bid Requirement during the initial 180 calendar day period, we may be eligible for an additional 180 calendar days compliance period. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other Nasdaq initial listing standards, with the exception of the bid price requirement, and would need to provide written notice of our intention to cure the deficiency during the second compliance period. However, if it appears to Nasdaq staff that we will not be able to cure the deficiency, or if we do not meet the other listing standards, Nasdaq could provide notice that our common stock will become subject to delisting. In the event we receive notice that our common stock is being delisted, Nasdaq rules permit the us to appeal any delisting determination by the Nasdaq staff.There can be no assurance that we will be able to regain compliance with the Minimum Bid Requirement or maintain compliance with the other listing requirements.
On April 20, 2020, we were notified by Nasdaq that it has determined to toll the compliance periods for bid price and market value of publicly held shares requirements (collectively, the “Price-based Requirements”) through June 30, 2020. In that regard, on April 16, 2020, Nasdaq filed an immediately effective rule change with the SEC. As a result, companies presently in compliance periods for any Price-based Requirements will remain at that same stage of the process and will not be subject to being delisted for these concerns. Starting on July 1, 2020, companies will receive the balance of any pending compliance period in effect at the start of the tolling period to regain compliance.
Accordingly, since we had 173 calendar days remaining in our bid price compliance period as of April 16, 2020, we will, upon reinstatement of the Price-based Requirements, still have 173 calendar days from July 1, 2020, or until December 21, 2020, to regain compliance.
If, for any reason, Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another reputable national securities exchange, a reduction in some or all of the following may occur, each of which could materially adversely affect our stockholders:
•the liquidity of our common stock;
•the market price of our common stock;
•our ability to obtain financing for the continuation of our operations;
•the number of institutional and general investors that will consider investing in our common stock;
•the number of market makers in our common stock;
•the availability of information concerning the trading prices and volume of our common stock; and
•the number of broker-dealers willing to execute trades in shares of our common stock.
To the extent that we are unable to resolve any listing deficiency, there is a risk that our common stock may be delisted from Nasdaq, which would adversely impact liquidity of our common stock and potentially result in even lower bid prices for our initial public offering were Jefferies LLC, Piper Jaffray & Co., JPM Securities LLC, Cantor Fitzgerald & Co., and Roth Capital Partners, LLC.common stock.
The aggregate net proceeds received by us from our initial public offering were $79.9 million, after deducting underwriting discounts and commissions and offering expenses payable by us. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10% or more of any class of our equity securities or to any other affiliates or to any other persons.
There has been no material change in the use of proceeds from our initial public offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b)(4) on January 28, 2015.
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Item 3. | Defaults Upon Senior Securities |
Not applicable.
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Item 4. | Mine Safety Disclosures |
Not applicable.
None.As previously disclosed in the Current Report on Form 8-K that the Company filed with the SEC on April 24, 2020, the Company entered into an employment agreement with Mark J. Rosenblum, its Chief Financial Officer and Executive Vice President of Finance (the "Employment Agreement"), with the following terms:
Cash Compensation. Mr. Rosenblum’s annual base salary will equal $265,000 (“Base Salary”) and he will be eligible to receive a target annual bonus of at least 35% of his base salary, to be earned based upon the
achievement of performance objectives to be determined by the Compensation Committee of the Board of Directors of the Company.
Benefits. Mr. Rosenblum will be eligible to participate in any company-sponsored benefit plans and programs, including medical, dental, life and disability insurance, holidays and other perquisites, at a level appropriate for his position and duties and to the extent that the Company makes such benefits generally available to executives of the Company. The Company may from time to time, in its sole discretion, amend, adjust or discontinue the benefits available to the Company’s executives and employees.
Termination for Cause or as a Result of Death, Disability or Resignation. If Mr. Rosenblum is terminated by the Company for “cause” or if his employment is terminated as a result of his death or “disability” or Mr. Rosenblum’s resignation without “good reason”, the Company shall pay Mr. Rosenblum (i) any unpaid Base Salary accrued up to the date of termination, (ii) accrued but unused vacation, (iii) benefits payable to Mr. Rosenblum pursuant to the terms and conditions of any benefit plan or program in which he participated during the term of his employment and (iv) unreimbursed business expenses.
Termination without Cause or Resignation for Good Reason. If the Company terminates Mr. Rosenblum’s employment other than for “cause,” or in the event Mr. Rosenblum terminates with “good reason,” then Mr. Rosenblum will receive (i) severance pay in an amount equal to nine months of his then current Base Salary which shall be paid in equal installments over such period and (ii) a monthly payment as a reimbursement that in the aggregate is equal to nine months of COBRA benefits at active employee rates.
The information under this Item 5 is being provided to clarify that Mr. Rosenblum's title under the Employment Agreement is Chief Financial Officer and Executive Vice President of Finance.
EXHIBIT INDEX
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| | | |
Exhibit number | | Description of Document |
| | |
3.1 |
| (1) | |
| | |
3.2 |
| (2) | |
| | |
4.1 |
| (3) | |
| | |
4.2 |
| (4) | |
| | |
10.1 |
| (5)+ | |
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10.2 |
| + | |
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31.1 |
| | |
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31.2 |
| | |
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32.1 |
| | |
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101 |
| | The following materials from Flex Pharma, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language):(i) Unaudited Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations (iii) Unaudited Condensed Consolidated Statements of Comprehensive Loss, (iv) Unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements. |
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Exhibit number | | Description of Document |
| | |
3.1 | | | |
3.2 | | | |
3.3 | | | |
3.4 | | | |
4.1 | | | |
4.2 | | | |
4.3 | | | |
10.1+ | | | |
10.2+ | | | |
10.3+ | | | |
31.1 | | | |
31.2 | | | |
32.1* | | | |
101.0 | | | The following materials from Salarius Pharmaceuticals, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL (eXtensible Business Reporting Language):(i) Unaudited Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations (iii) Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit), (iv) Unaudited Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Unaudited Consolidated Financial Statements. |
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+ Indicates managementManagement contract or compensatory plan.plans or arrangements.
(1) Incorporated by reference to* The material contained in Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-36812), filed32.1 is not deemed “filed” with the SEC on February 9, 2015.
(2) Incorporatedand is not to be incorporated by reference to Exhibit 3.2into any filing of the Company under the Securities Act of 1933 or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing, except to the Registrant's Current Report on Form 8-K (File No. 001-36812), filed withextent that the SEC on February 9, 2015.registrant specifically incorporates it by reference.
(3) Incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-1 (File No. 333-201276), as amended, filed with the SEC on January 13, 2015.(4) Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 333-201276), filed with the SEC on December 29, 2014.
(5) Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-36812), filed with the SEC on July 11, 2017.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | | SALARIUS PHARMACEUTICALS, INC. | | |
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| | | FLEX PHARMA, INC. |
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| | | By: | | /s/ William McVicarDavid J. Arthur |
| | | | | William McVicar, Ph.D.David J. Arthur
President and Chief Executive Officer (Principal Executive Officer) |
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| | | By: | | /s/ John McCabeMark J. Rosenblum |
| | | | | John McCabeMark J. Rosenblum
Chief Financial Officer and Executive Vice President of Finance (Principal Financial Officer and Principal Accounting Officer) |
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Date: | November 6, 2017May 14, 2020 | | | | |