PLx Pharma Winddown (PLXPQ) 10-Q 17 Apr 17 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 17, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Entity Registrant Name	Dipexium Pharmaceuticals, Inc.
Entity Central Index Key	1,497,504
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	DPRX
Entity Common Stock, Shares Outstanding		11,230,511

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash and Cash Equivalents	$ 12,414,004	$ 16,675,228
Interest Receivable	36,822
Prepaid Expenses	83,018	359,015
TOTAL CURRENT ASSETS	12,533,844	17,034,243
OTHER ASSETS
Note Receivable from advance to PLx Pharma, Inc.	2,000,000	0
Security Deposit	56,630	56,630
TOTAL OTHER ASSETS	2,056,630	56,630
TOTAL ASSETS	14,590,474	17,090,873
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses	462,136	2,121,893
TOTAL LIABILITIES	462,136	2,121,893
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock: $.001 par value, 30,000,000 shares authorized, 11,129,747 and 11,115,747 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	11,130	11,116
Additional paid-in capital	78,029,657	77,340,448
Accumulated deficit	(63,912,449)	(62,382,584)
TOTAL SHAREHOLDERS' EQUITY	14,128,338	14,968,980
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 14,590,474	$ 17,090,873

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Common Stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	30,000,000	30,000,000
Common Stock, shares issued	11,129,747	11,115,747
Common Stock, shares outstanding	11,129,747	11,115,747

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
REVENUES	$ 0	$ 0
OPERATING EXPENSES
Research and Development Expenses	14,688	3,583,667
Selling, General and Administrative Expenses	1,552,329	2,247,207
TOTAL OPERATING EXPENSES	1,567,017	5,830,874
LOSS FROM OPERATIONS	(1,567,017)	(5,830,874)
Interest Income	37,152	14,242
NET LOSS	$ (1,529,865)	$ (5,816,632)
LOSS PER SHARE
Basic and diluted net loss per common share (in dollars per share)	$ (0.14)	$ (0.56)
Weighted average common shares outstanding basic and diluted (in shares)	11,123,991	10,315,726

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - 3 months ended Mar. 31, 2017 - USD ($)	Total	Common Stock Shares	Additional Paid-In Capital	Accumulated Deficit
Balance at Dec. 31, 2016	$ 14,968,980	$ 11,116	$ 77,340,448	$ (62,382,584)
Balance (in shares) at Dec. 31, 2016	11,115,747	11,115,747
Share-Based Compensation	$ 689,223	$ 14	689,209	0
Share-Based Compensation (in shares)		14,000
Net Loss	(1,529,865)	$ 0	0	(1,529,865)
Balance at Mar. 31, 2017	$ 14,128,338	$ 11,130	$ 78,029,657	$ (63,912,449)
Balance (in shares) at Mar. 31, 2017	11,129,747	11,129,747

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating Activities:
Net Loss	$ (1,529,865)	$ (5,816,632)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-Based Compensation	689,223	1,353,093
Share-Based Payments to Vendors	0	145,020
Amortization of short-term investment interest income	0	(14,135)
Change In:
Prepaid Expenses	275,997	38,175
Interest Receivable	(36,822)
Security Deposit	0	(43,532)
Accounts Payable and Accrued Expenses	(1,659,757)	(737,160)
Net Cash Used In Operating Activities	(2,261,224)	(5,075,171)
Investing Activities:
Note Receivable from advance to PLx Pharma, Inc.	(2,000,000)	0
Proceeds from Short-term Investments	0	8,000,000
Purchase of Short-term Investments	0	(3,990,107)
Net Cash Provided By (Used In) Investing Activities	(2,000,000)	4,009,893
Financing Activities:
Net Decrease In Cash and Cash Equivalents	(4,261,224)	(1,065,278)
Cash and Cash Equivalents at Beginning of Period	16,675,228	5,234,953
Cash and Cash Equivalents at End of Period	$ 12,414,004	$ 4,169,675

NATURE OF OPERATIONS and SIGNIF

NATURE OF OPERATIONS and SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
NATURE OF OPERATIONS and SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 — NATURE OF OPERATIONS and SIGNIFICANT ACCOUNTING POLICIES Business Dipexium Pharmaceuticals, Inc. (the “Company” or “Dipexium”), a Delaware corporation, formerly Dipexium Pharmaceuticals, LLC, is a pharmaceutical company focused on the development and commercialization of Locilex® (pexiganan cream 0.8%). The Company was formed on January 14, 2010. On October 25, 2016, the Company announced that its lead and sole product candidate, Locilex®, failed to meet the primary clinical endpoint or secondary endpoints in its OneStep-1 and OneStep-2 Phase 3 clinical trials. Dipexium’s scientific team has evaluated the data from the OneStep clinical trials but has found no clear signal that Locilex® would be a strong product candidate for other possible clinical indications. Accordingly, Dipexium has explored strategic alternatives with its professional advisors and entered into a Merger Agreement with PLx Pharma Inc. (“PLx”) on December 22, 2016 (the “Proposed Merger”), pursuant to which PLx is expected to take control over Dipexium and Dipexium’s stockholders are expected to maintain approximately 23.25 700,000 500,000 The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. The Company has needed to raise capital from sales of its securities to sustain operations. In March 2014, the Company completed an initial public offering (“IPO”) of common stock with proceeds, net of issuance costs, of approximately $ 34.5 19.7 12.4 12.0 Under the proposed merger, the combined company will initially be focused on completion of manufacturing scale-up and label finalization for the previously conditionally approved AspertecTM 325 mg. aspirin dosage form thereby satisfying the open conditional items, and filing of a supplemental new drug application (sNDA) for Aspertec 81 mg. maintenance dose form. Aspertec is being developed to provide high-risk cardiovascular and neurology patients with more reliable and predictable antiplatelet efficacy as compared to enteric coated aspirin while also reducing the adverse gastric events common in an acute setting. PLx stockholders will receive newly issued shares of common stock of Dipexium in connection with the Proposed Merger contemplated by the Merger Agreement. Upon the closing of the Proposed Merger, existing PLx stockholders are expected to own 76.75 23.25 The Company is subject to risks common to companies in the biopharmaceutical industry including, but not limited to, dependence on collaborative arrangements, development by the Company or its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, development of sales and marketing infrastructure and compliance with the Food and Drug Administration (“FDA”) and other governmental regulations and approval requirements. Unaudited Condensed Consolidated Interim Financial Data The accompanying interim condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and footnotes required by Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2016. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements included in the Company’s Annual Report for the year ended December 31, 2016, and, in the opinion of management, reflect all the adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of March 31, 2017, the results of operations for the three months ended March 31, 2017 and 2016, the changes in shareholders’ equity for the three months ended March 31, 2017, and cash flows for the three months ended March 31, 2017 and 2016. The December 31, 2016 balance sheet included herein was derived from the audited financial statements, but may not include all disclosures required by GAAP for complete financial statements. The Company’s condensed consolidated financial statements include the accounts of the parent, Dipexium Pharmaceuticals, Inc., and Dipexium Pharmaceuticals Ireland, Limited, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The Company maintains its cash balance in one financial institution. The balance is insured up to the maximum allowable by the Federal Deposit Insurance Company (“FDIC”). The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant risk of loss on cash. At times, the cash balance may exceed the maximum limit of the FDIC. The Company has a note receivable from an advance to PLx. Accrued interest on the note is included as a part of interest income and as interest receivable In accordance with Accounting Standards Codification (“ASC”) 730, Accounting for Research and Development Costs 14,688 3,583,667 Although the Company manages the conduct of its clinical trials, it relies on third parties to conduct its clinical and preclinical studies and to provide services, including data management, statistical analysis and electronic compilation for clinical trials, as well as for the manufacture of clinical trial supplies. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that are considered in preparing these estimates include the number of subjects enrolled in studies, milestones achieved and other criteria related to the efforts of the vendors. These estimates are subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company records net prepaid or accrued expenses related to these costs. The Company accounts for the cost of services performed by officers and directors received in exchange for an award of Company membership interests, common stock, or stock options, based on the grant-date fair value of the award. In accordance with ASC 718, Stock Compensation The Company accounts for the cost of services performed by vendors in exchange for an award of common stock of the Company based on the grant-date fair value of the award or fair value of the services rendered, whichever is more readily determinable and adjusted to fair value at each reporting date. Such fair value is measured as of the earlier of the date the other party becomes committed to provide goods or services or the date performance by the other party is complete. The Company recognizes the expense in the same period and in the same manner as if the Company had paid cash for the services. The condensed consolidated financial statements are presented in U.S. Dollars (“USD”), the reporting currency of the Company. The functional currency for the Company’s subsidiary located in Ireland is the USD. Transactions denominated in Euros were translated to USD at rates which approximate those in effect on transaction dates. Monetary assets and liabilities denominated in foreign currencies at March 31, 2017 were translated at the exchange rate in effect as of those dates. Nonmonetary assets, liabilities, and shareholders’ equity are translated at the appropriate historical rates. The Company has intercompany loans between the parent company, Dipexium Pharmaceuticals, Inc., based in New York, NY, and its wholly owned subsidiary, Dipexium Pharmaceuticals Ireland, Limited, based in Ireland. The intercompany loans outstanding are not expected to be repaid in the foreseeable future. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, applied during the years in which temporary differences are expected to be settled, is reflected in the financial statements in the period of enactment. The measurement of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The Company had no material amounts recorded for uncertain tax positions, interest or penalties in the accompanying financial statements. The Company currently estimates an annual effective tax rate of 0% as the Company incurred losses for the year ended December 31, 2016 and for the three months ended March 31, 2017, respectively, for both financial statement and tax purposes. Therefore, no Federal or state income tax expense has been recorded in the financial statements for the year ended December 31, 2016 and for the three months ended March 31, 2017, respectively. Based on the Company’s history of generating operating losses and its anticipation of operating losses continuing in the foreseeable future, the Company has determined that it is more likely than not that the tax benefits from these net operating losses would not be realized and a full valuation allowance against all deferred tax assets has been recorded at March 31, 2017 and December 31, 2016, respectively. In the event the Company becomes profitable for a period of two or more years, with future expectations at that time of profitability for future years prior to any significant change in its equity capitalization, the Company would have an opportunity to realize benefit from the deferred tax asset at such time in the future. In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	3 Months Ended
	Mar. 31, 2017
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS	NOTE 2 — FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount of certain of the Company’s financial instruments, including cash, note receivable, and accounts payable, is shown at cost, which approximates fair value. Short-term investments with maturities ranging from six to twelve months are classified as being held to maturity and are carried at amortized cost. There were $0 short-term investments as of March 31, 2017 and December 31, 2016. The Company had total amortized interest income for the three months ended March 31, 2017 and 2016 of $ 0 14,135

NOTE RECEIVABLE

NOTE RECEIVABLE	3 Months Ended
	Mar. 31, 2017
Note Receivable [Abstract]
Note Receivable	NOTE 3 – NOTE RECEIVABLE On January 6, 2017, in connection with the execution of the Merger Agreement, Dipexium loaned PLx $ 2.0 The Bridge Loan accrues interest on all outstanding principal at a rate of 8 (a) October 15, 2017, or (b) the date that is two hundred seventy (270) days following the termination of the Merger Agreement, subject to acceleration in the event that (i) the Merger Agreement is terminated by Dipexium if PLx has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement such that the conditions to the closing of the Proposed Merger would not be satisfied as of the time of such breach or inaccuracy, but if such breach or inaccuracy is curable, then the Merger Agreement will not terminate pursuant to this provision as a result of a particular breach or inaccuracy until the expiration of a 30-day period after delivery of written notice of such breach or inaccuracy if such breach has not been cured; and (ii) PLx thereafter consummates a financing of at least $10.0 million or conducts a reorganization, consolidation, or merger of PLx pursuant to which the holders of PLx’s securities prior to such transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction or the consummation of the sale, lease, transfer, conveyance or other disposition in one or a series of transactions, of all or substantially all of PLx’s assets, or PLx and its subsidiaries, taken as a whole, to any person or entity. The Bridge Loan is secured by a first priority perfected security interest in and lien on all right, title and interest of PLx in and to substantially all of its assets. Upon the occurrence of any of the following events that results in a termination of the Merger Agreement, any security interest created by the promissory note shall immediately cease to be effective: · if the closing shall not have occurred on or before April 30, 2017 (or such later date as agreed to by the parties to the Merger Agreement) (the “outside date”), except that the right to so terminate the Merger Agreement will not be available to Dipexium or PLx if its failure to fulfill any obligation under the Merger Agreement has been a principal cause of, or resulted in the failure of the closing to occur by such date; and provided, further, however, that, in the event that this joint proxy statement/prospectus is still being reviewed or commented on by the SEC after March 15, 2017, either party shall be entitled to extend the outside date by an additional sixty (60) days. The SEC declared the joint merger proxy effective on March 17, 2017; · (i) if the Dipexium board of directors changes its recommendation to approve the issuance of shares of Dipexium common stock necessary to complete the Proposed Merger, (ii) if Dipexium materially breaches its non-solicitation covenants in the Merger Agreement, or (iii) if Dipexium breaches any of its representations, warranties, covenants or other agreements contained in the Merger Agreement, which breach or failure would render the conditions precedent to PLx’s obligations under the Merger Agreement not to be satisfied and which breach is not cured within 30 days following written notice of such breach or by its nature or timing cannot be cured within that time; or · if Dipexium enters into an agreement providing for a “superior proposal”. Interest income of $ 36,822 0

ACCOUNTS PAYABLE AND ACCRUED EX

ACCOUNTS PAYABLE AND ACCRUED EXPENSES	3 Months Ended
	Mar. 31, 2017
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
ACCOUNTS PAYABLE AND ACCRUED EXPENSES	NOTE 4 — ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses at March 31, 2017 and December 31, 2016 are as follows: March 31, 2017 December 31, 2016 Accrued compensation expense $ 17,463 $ 579,207 Accrued research and development 283,123 460,219 Accrued professional fees 101,455 1,040,184 Other accounts payable and accrued expenses 60,095 42,283 Totals $ 462,136 $ 2,121,893

SHARE-BASED COMPENSATION and ST

SHARE-BASED COMPENSATION and STOCK OPTIONS	3 Months Ended
	Mar. 31, 2017
SHARE-BASED COMPENSATION and STOCK OPTIONS
SHARE-BASED COMPENSATION and STOCK OPTIONS	NOTE 5 — SHARE-BASED COMPENSATION and STOCK OPTIONS Prior to the Company’s IPO, the Company granted awards of restricted Class A Membership Interests to board members in exchange for services. These membership interests awards, which were converted to restricted common shares (7:1 ratio) at the time of the corporate conversion in March 2014, were originally scheduled to vest over a period of either three or four years with the first year beginning on the date the member joined the board. In each case, the restricted common shares involved accelerated vesting upon a change of control or other business combination. The fair value of the membership interests, at the time they were granted, was equal to the per-membership interest value of the most recent private placement ($ 50 20,833 25,000 The following table summarizes the restricted common stock at March 31, 2017: Restricted Common Stock Nonvested at January 1, 2017 14,000 Granted — Forfeited — Vested (14,000) Nonvested at March 31, 2017 - As of March 31, 2017, there was $ 0 In November 2013, the board of directors adopted the 2013 Equity Incentive Plan. The plan became effective as of the completion of the corporate conversion and the closing of the IPO. The 2013 Equity Incentive Plan currently reserves 2,141,169 7,824 In January 2017, the Company granted stock options to purchase 688,332 1.80 24 Compensation expense associated with these awards is recognized over the vesting period based on the fair value of the option at the grant date determined based on the Black-Scholes model. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company’s employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. Because there is no public market for the Company’s stock options and very little historical experience with the Company’s stock, similar public companies were used for comparison and expectations as to the price volatility assumptions required for fair value computation using the Black-Scholes methodology. The Company determined the fair value of the option awards using the Black-Scholes option pricing model and the following weighted average assumptions for options issued during the respective periods: Three Months Ended Three Months Ended March 31, 2017 March 31, 2016 Expected term 4.09 years 5.55 years Volatility 77.0 % 63.3 % Dividend yield 0 % 0 % Risk free interest rate 1.64 % 1.54 % ASC 718 requires stock compensation expense to be recorded net of estimated forfeitures. The Company currently estimates there will be no forfeitures of options. A summary of the Company’s stock option activity is as follows: Weighted Average Number of Options Exercise Price Outstanding at the beginning of the period 1,445,013 $ 12.64 Granted 688,332 $ 1.80 Forfeited — Outstanding and expected to vest at March 31, 2017 2,133,345 $ 9.14 Compensation expense relating to options for the three months ended March 31, 2017 and 2016 was $ 668,390 1,328,093 573,213 1.7 0.83 4.66 0 5.47 1,746,282

SHARE-BASED PAYMENTS TO VENDORS

SHARE-BASED PAYMENTS TO VENDORS	3 Months Ended
	Mar. 31, 2017
SHARE-BASED PAYMENTS TO VENDORS
SHARE-BASED PAYMENTS TO VENDORS	NOTE 6 — SHARE-BASED PAYMENTS TO VENDORS In the ordinary course of business, the Company may issue restricted stock for services rendered by a vendor. The vesting of restricted stock and the associated expense for the services rendered are recorded over the term of the related contract. Research and development expenses resulting from vendor equity issuances for the three months ended March 31, 2017 and 2016 were $ 0 145,020

LEASE OF OFFICE SPACE

LEASE OF OFFICE SPACE	3 Months Ended
	Mar. 31, 2017
LEASE OF OFFICE SPACE
LEASE OF OFFICE SPACE	NOTE 7 — LEASE OF OFFICE SPACE In January 2016, the Company entered into a lease for office space commencing in March 2016. The term of the lease is for five years and five months with total minimum lease payments of approximately $ 1.28 Year ending December 31: 2017 $ 174,438 2018 238,004 2019 244,658 2020 251,522 2021 150,347 Total $ 1,058,969

LEGAL MATTERS

LEGAL MATTERS	3 Months Ended
	Mar. 31, 2017
LEGAL MATTERS
LEGAL MATTERS	NOTE 8 — LEGAL MATTERS The Company and its two original executives were three of some 30 The complaint alleged, among other things, that the Company and its two executives aided and abetted a breach of fiduciary duty alleged to have been committed by the former directors and officers of Genaera Corporation before it was approved for dissolution by its shareholders and also Argyce, LLC, the trustee of the Liquidating Trust. Plaintiff claims that the Company, and its executives, aided and abetted a breach of the duties of the board of directors and the trustee under common law and under a certain trust agreement allegedly signed between Argyce, LLC, as the trustee, and the Liquidating Trust. With regard to the claims made against the Company and its two executives, the plaintiff alleged, in pertinent part, that the Company’s acquisition of the pexiganan rights was for alleged inadequate consideration, and that the Company and its management aided and abetted a breach of fiduciary duty by the Genaera Corporation defendants who were formerly associated with Genaera Corporation and/or the Trust. The Company and its two executives filed a motion to dismiss the complaint within the prescribed time period. All of the other defendants in this litigation also filed motions to dismiss, and a court order by the Federal District Court granted each and every motion to dismiss, with prejudice, without leave to refile, on August 12, 2013 based on the argument that plaintiff’s claims were time barred. A subsequent motion to reconsider such dismissal was denied by the Federal District Court. Plaintiff appealed the dismissal to the United States Third Circuit Court of Appeals seeking reversal of the dismissal and the Third Circuit Court granted plaintiff’s appeal. On October 17, 2014, the Third Circuit Appellate Court, in a 2-1 decision with a strong dissenting opinion, reversed the trial court’s dismissal of Plaintiff’s claims based on the expiration of the applicable statutes of limitation. In a 2-1 decision, the Third Circuit held that more information was necessary to determine when plaintiff should have been on notice of his claims to determine the applicability of the discovery rule, which could serve to extend the time frame in which plaintiff could bring his claims. Due to the strong dissent, all Defendants filed the necessary documents requesting a petition for rehearing en banc, by the majority of the Third Circuit justices who are in active service. The Third Circuit denied the request for en banc hearing and remanded this case to District Court. Upon remand to the Federal District Court, all Defendants moved to dismiss the complaint for reasons other than being time barred. The Company and its two executives moved for dismissal based on plaintiff’s inability to make a case for aiding and abetting a breach of fiduciary duty because there was no underlying breach and such an aiding and abetting claim requires an element of knowing participation in the fiduciary breach which cannot be established by plaintiff. The District Court held a hearing on this in September 2015 and the District Court delivered an Order on November 10, 2015 pursuant to which the District Court granted the Motion to Dismiss filed by each and every defendant including the Company and its two executives. In December 2015, plaintiff appealed the Federal District Court’s decision to the Third Circuit Appellate Court and the Company anticipates a decision on whether to grant plaintiff’s appeal by the Third Circuit Appellate Court in the first half of 2017. The Company will continue to vigorously defend against plaintiff’s claims on the factual record, which it believes will prove that neither the Company nor its executives is liable to the plaintiff in any regard.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2017
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	NOTE 9 — RELATED PARTY TRANSACTIONS The Company engaged the consulting services of Drug Development Advisors (“DDA”) pursuant to which DDA performed detailed analysis on a number of the Company’s preclinical studies in connection with the NDA process. DDA is owned and operated by a member of the Company’s board of directors. The Company incurred expenses for services provided by DDA in the amounts of $ 0 5,167

NET LOSS PER SHARE

NET LOSS PER SHARE	3 Months Ended
	Mar. 31, 2017
NET LOSS PER SHARE
NET LOSS PER SHARE	NOTE 10 — NET LOSS PER SHARE Basic and diluted net loss per common share for the three months ended March 31, 2017 and 2016 was determined by dividing net loss by the weighted average common shares outstanding during the period. The Company’s potentially dilutive shares, which include 2,133,345 10,500

NATURE OF OPERATIONS and SIGN17

NATURE OF OPERATIONS and SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Basis of Consolidation	Basis of Consolidation The Company’s condensed consolidated financial statements include the accounts of the parent, Dipexium Pharmaceuticals, Inc., and Dipexium Pharmaceuticals Ireland, Limited, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents, and Note Receivable	The Company maintains its cash balance in one financial institution. The balance is insured up to the maximum allowable by the Federal Deposit Insurance Company (“FDIC”). The Company has not experienced any losses in such accounts and does not believe it is exposed to any significant risk of loss on cash. At times, the cash balance may exceed the maximum limit of the FDIC. The Company has a note receivable from an advance to PLx. Accrued interest on the note is included as a part of interest income and as interest receivable
Research and Development	Research and Development In accordance with Accounting Standards Codification (“ASC”) 730, Accounting for Research and Development Costs 14,688 3,583,667 Although the Company manages the conduct of its clinical trials, it relies on third parties to conduct its clinical and preclinical studies and to provide services, including data management, statistical analysis and electronic compilation for clinical trials, as well as for the manufacture of clinical trial supplies. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that are considered in preparing these estimates include the number of subjects enrolled in studies, milestones achieved and other criteria related to the efforts of the vendors. These estimates are subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company records net prepaid or accrued expenses related to these costs.
Share-Based Compensation	Share-Based Compensation The Company accounts for the cost of services performed by officers and directors received in exchange for an award of Company membership interests, common stock, or stock options, based on the grant-date fair value of the award. In accordance with ASC 718, Stock Compensation
Share-Based Payments to Vendors	Share-Based Payments to Vendors The Company accounts for the cost of services performed by vendors in exchange for an award of common stock of the Company based on the grant-date fair value of the award or fair value of the services rendered, whichever is more readily determinable and adjusted to fair value at each reporting date. Such fair value is measured as of the earlier of the date the other party becomes committed to provide goods or services or the date performance by the other party is complete. The Company recognizes the expense in the same period and in the same manner as if the Company had paid cash for the services.
Foreign Currency Translation and Transactions	Foreign Currency Translation and Transactions The condensed consolidated financial statements are presented in U.S. Dollars (“USD”), the reporting currency of the Company. The functional currency for the Company’s subsidiary located in Ireland is the USD. Transactions denominated in Euros were translated to USD at rates which approximate those in effect on transaction dates. Monetary assets and liabilities denominated in foreign currencies at March 31, 2017 were translated at the exchange rate in effect as of those dates. Nonmonetary assets, liabilities, and shareholders’ equity are translated at the appropriate historical rates. The Company has intercompany loans between the parent company, Dipexium Pharmaceuticals, Inc., based in New York, NY, and its wholly owned subsidiary, Dipexium Pharmaceuticals Ireland, Limited, based in Ireland. The intercompany loans outstanding are not expected to be repaid in the foreseeable future.
Income Taxes	Income Taxes The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities and the expected benefits of net operating loss carryforwards. The impact of changes in tax rates and laws on deferred taxes, if any, applied during the years in which temporary differences are expected to be settled, is reflected in the financial statements in the period of enactment. The measurement of deferred tax assets is reduced, if necessary, if, based on weight of the evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The Company had no material amounts recorded for uncertain tax positions, interest or penalties in the accompanying financial statements. The Company currently estimates an annual effective tax rate of 0% as the Company incurred losses for the year ended December 31, 2016 and for the three months ended March 31, 2017, respectively, for both financial statement and tax purposes. Therefore, no Federal or state income tax expense has been recorded in the financial statements for the year ended December 31, 2016 and for the three months ended March 31, 2017, respectively. Based on the Company’s history of generating operating losses and its anticipation of operating losses continuing in the foreseeable future, the Company has determined that it is more likely than not that the tax benefits from these net operating losses would not be realized and a full valuation allowance against all deferred tax assets has been recorded at March 31, 2017 and December 31, 2016, respectively. In the event the Company becomes profitable for a period of two or more years, with future expectations at that time of profitability for future years prior to any significant change in its equity capitalization, the Company would have an opportunity to realize benefit from the deferred tax asset at such time in the future.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740), In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern

ACCOUNTS PAYABLE AND ACCRUED 18

ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables)	3 Months Ended
	Mar. 31, 2017
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Schedule of accounts payable and accrued expenses	March 31, 2017 December 31, 2016 Accrued compensation expense $ 17,463 $ 579,207 Accrued research and development 283,123 460,219 Accrued professional fees 101,455 1,040,184 Other accounts payable and accrued expenses 60,095 42,283 Totals $ 462,136 $ 2,121,893

SHARE-BASED COMPENSATION and 19

SHARE-BASED COMPENSATION and STOCK OPTIONS (Tables)	3 Months Ended
	Mar. 31, 2017
SHARE-BASED COMPENSATION and STOCK OPTIONS
Summary of restricted common stock	Restricted Common Stock Nonvested at January 1, 2017 14,000 Granted — Forfeited — Vested (14,000) Nonvested at March 31, 2017 -
Schedule of weighted average assumptions for options used in determining the fair value of the option awards using the Black-Scholes option pricing model	Three Months Ended Three Months Ended March 31, 2017 March 31, 2016 Expected term 4.09 years 5.55 years Volatility 77.0 % 63.3 % Dividend yield 0 % 0 % Risk free interest rate 1.64 % 1.54 %
Summary of stock option activity	Weighted Average Number of Options Exercise Price Outstanding at the beginning of the period 1,445,013 $ 12.64 Granted 688,332 $ 1.80 Forfeited — Outstanding and expected to vest at March 31, 2017 2,133,345 $ 9.14

LEASE OF OFFICE SPACE (Tables)

LEASE OF OFFICE SPACE (Tables)	3 Months Ended
	Mar. 31, 2017
LEASE OF OFFICE SPACE
Future minimum lease payments	Year ending December 31: 2017 $ 174,438 2018 238,004 2019 244,658 2020 251,522 2021 150,347 Total $ 1,058,969

NATURE OF OPERATIONS and SIGN21

NATURE OF OPERATIONS and SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	1 Months Ended		3 Months Ended
	Jun. 30, 2015	Mar. 31, 2014	Mar. 31, 2017	Dec. 22, 2016
Net proceeds from IPO	$ 19,700,000	$ 34,500,000
Cash, Cash Equivalents, and Short-term Investments			$ 12,400,000
Expected Percentage Own by Parent Company on Common Share Outstanding			23.25%
Minimum Cash Balance to be Maintained			$ 12,000,000
Termination Fee Payable			$ 700,000
PLx Pharma Inc [Member]
Business Acquisition, Expected Percentage on Common Share Outstanding			76.75%
Business combination Expected Ownership Maintain Percentage				23.25%
Termination Fee Payable			$ 500,000

NATURE OF OPERATIONS and SIGN22

NATURE OF OPERATIONS and SIGNIFICANT ACCOUNTING POLICIES - SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Research and Development
Net research and development expenses	$ 14,688	$ 3,583,667

FAIR VALUE OF FINANCIAL INSTR23

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Fair Value of Financial Instruments
Interest income amortized	$ 0	$ 14,135
Short-term Investments	$ 0		$ 0

NOTE RECEIVABLE (Details)

NOTE RECEIVABLE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Jan. 06, 2017
Investment Income, Interest	$ 36,822	$ 0
Loans Receivable, Basis Spread on Variable Rate			8.00%
Loan Receivable, Maturity Date, Description	(a) October 15, 2017, or (b) the date that is two hundred seventy (270) days following the termination of the Merger Agreement, subject to acceleration in the event that (i) the Merger Agreement is terminated by Dipexium if PLx has breached any of its representations, warranties, covenants or agreements contained in the Merger Agreement such that the conditions to the closing of the Proposed Merger would not be satisfied as of the time of such breach or inaccuracy, but if such breach or inaccuracy is curable, then the Merger Agreement will not terminate pursuant to this provision as a result of a particular breach or inaccuracy until the expiration of a 30-day period after delivery of written notice of such breach or inaccuracy if such breach has not been cured; and (ii) PLx thereafter consummates a financing of at least $10.0 million or conducts a reorganization, consolidation, or merger of PLx pursuant to which the holders of PLxs securities prior to such transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction or the consummation of the sale, lease, transfer, conveyance or other disposition in one or a series of transactions, of all or substantially all of PLxs assets, or PLx and its subsidiaries, taken as a whole, to any person or entity.
Loans Receivable, Net			$ 2,000,000

ACCOUNTS PAYABLE AND ACCRUED 25

ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Accrued compensation expense	$ 17,463	$ 579,207
Accrued research and development	283,123	460,219
Accrued professional fees	101,455	1,040,184
Other accounts payable and accrued expenses	60,095	42,283
Totals	$ 462,136	$ 2,121,893

SHARE-BASED COMPENSATION and 26

SHARE-BASED COMPENSATION and STOCK OPTIONS - RESTRICTED COMMON SHARES (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Nov. 30, 2013
Additional disclosures
Common shares reserved for issuance under Equity Incentive Plan			2,141,169
Common shares available for issuance under Equity Incentive Plan	7,824
Restricted Common Stock
Share-based compensation and stock options
Fair value of the membership interests granted (in dollars per share)	$ 50
Total compensation expense recorded as director fees	$ 20,833	$ 25,000
Summary of restricted common stock
Nonvested at the beginning of the period (in shares)	14,000
Granted (in shares)	0
Forfeited (in shares)	0
Vested (in shares)	(14,000)
Nonvested at the end of the period (in shares)	0
Additional disclosures
Total unrecognized compensation cost	$ 0

SHARE-BASED COMPENSATION and 27

SHARE-BASED COMPENSATION and STOCK OPTIONS - STOCK OPTIONS (Details) - USD ($)	1 Months Ended	3 Months Ended
	Jan. 31, 2017	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Company's stock option activity
Granted (in shares)	688,332
Intrinsic value			$ 0
Grant price (in dollars per share)	$ 1.80
Vesting period	24 months
Stock Options
Weighted average assumptions used in determining the fair value of the option awards using the Black-Scholes option pricing model
Expected term		4 years 1 month 2 days	5 years 6 months 18 days
Volatility (as a percent)		77.00%	63.30%
Dividend yield (as a percent)		0.00%	0.00%
Risk free interest rate (as a percent)		1.64%	1.54%
Weighted average grant date fair value of options granted (in dollars per share)		$ 0.83	$ 4.66
Company's stock option activity
Outstanding at the beginning of the period (in shares)	1,445,013	1,445,013
Granted (in shares)		688,332
Forfeited (in shares)		0
Outstanding at the end of the period (in shares)		2,133,345
Compensation expense		$ 668,390	$ 1,328,093
Total compensation expense not yet recognized		$ 573,213
Weighted average vesting period over which the total compensation expense will be recorded		1 year 8 months 12 days
Intrinsic value		$ 0
Remaining weighted average contractual life		5 years 5 months 19 days
Exercise price (in dollars per share)		$ 9.14		$ 12.64
Grant price (in dollars per share)		$ 1.80
Options exercisable (in shares)		1,746,282

SHARE-BASED PAYMENTS TO VENDO28

SHARE-BASED PAYMENTS TO VENDORS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Research and development costs relates to vendor equity issuances	$ 0	$ 145,020

LEASE OF OFFICE SPACE (Details)

LEASE OF OFFICE SPACE (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Term of lease agreement	5 years 5 months
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2,017		$ 174,438
2,018		238,004
2,019		244,658
2,020		251,522
2,021		150,347
Total future minimum lease payments	$ 1,280,000	$ 1,058,969

LEGAL MATTERS (Details)

LEGAL MATTERS (Details)	Jun. 08, 2012
Legal matters
Number of defendants represented by original executives	2
Number of defendants represented by executives and the Company	3
Number of defendants in a lawsuit	30

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
DDA
Related party transactions
Fees for services rendered by the related party	$ 0	$ 5,167

NET LOSS PER SHARE (Details)

NET LOSS PER SHARE (Details)	3 Months Ended
	Mar. 31, 2017shares
Stock Options
Proforma net loss per share
Potentially dilutive shares not been included in the computation of diluted net loss per share as the result would be antidilutive	2,133,345
Warrants
Proforma net loss per share
Potentially dilutive shares not been included in the computation of diluted net loss per share as the result would be antidilutive	10,500