COVER PAGE
COVER PAGE - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Mar. 16, 2020 | |
Cover page. | ||
Entity Registrant Name | SALARIUS PHARMACEUTICALS, INC. | |
Entity Central Index Key | 0001615219 | |
Current Fiscal Year End Date | --12-31 | |
Document Annual Report | true | |
Document Transition Report | false | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | FY | |
Amendment Flag | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, par value $ 0.0001 | |
Trading Symbol | SLRX | |
Security Exchange Name | NASDAQ | |
Entity File Number | 001-36812 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 2450 Holcombe Blvd | |
Entity Address, Address Line Two | Suite J 608 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77021 | |
Entity Tax Identification Number | 46-5087339 | |
City Area Code | 346 | |
Local Phone Number | 772-0346 | |
Entity Public Float | $ 9,203,679 | |
Entity Common Stock, Shares Outstanding | 13,666,453 | |
Documents Incorporated by Reference | Portions of the registrant’s definitive proxy statement for its 2020 Annual Meeting of Stockholders, which will be filed with the United States Securities and Exchange Commission within 120 days of December 31, 2019, are incorporated by reference into Part III of this Annual Report on Form 10-K. |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 3,738,900 | $ 3,228,288 |
Restricted cash | 0 | 2,903,493 |
Prepaid expenses and other current assets | 955,899 | 249,086 |
Total current assets | 4,694,799 | 6,380,867 |
Property and equipment, net | 25,016 | 37,525 |
Goodwill | 8,865,909 | 0 |
Other assets | 308,674 | 195,431 |
Total assets | 13,894,398 | 6,613,823 |
Current liabilities: | ||
Accounts payable | 1,790,966 | 379,780 |
Accrued expenses and other current liabilities | 160,783 | 628,990 |
Private Salarius accrued series A preferred units | 0 | 2,869,412 |
Note payable | 502,332 | 0 |
Deferred revenue | 541,701 | 4,006,755 |
Warrant liability | 317,762 | 0 |
Total liabilities | 3,313,544 | 7,884,937 |
Commitments and contingencies | ||
Stockholders' equity (deficit): | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock, $0.0001 par value; 100,000,000 shares authorized; 4,515,404 and 2,338,899 shares issued at December 31, 2019 and December 31, 2018, and 4,511,174 and 2,032,763 shares outstanding at December 31, 2019 and December 31, 2018, respectively | 451 | 203 |
Additional paid-in capital | 22,657,103 | 3,869,120 |
Accumulated deficit | (12,076,700) | (5,140,437) |
Total stockholders' equity (deficit) | 10,580,854 | (1,271,114) |
Total liabilities and stockholders' equity (deficit) | $ 13,894,398 | $ 6,613,823 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 4,515,404 | 2,338,899 |
Common stock, shares outstanding | 4,511,174 | 2,032,763 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Grant revenue | $ 3,465,055 | $ 1,951,351 |
Operating expenses: | ||
Research and development | 4,018,951 | 1,287,621 |
General and administrative | 7,711,181 | 2,348,361 |
Total operating expenses | 11,730,132 | 3,635,982 |
Loss before other income (expense) | (8,265,077) | (1,684,631) |
Change in fair value of warrant liability | 1,311,333 | 0 |
Interest income, net | 15,648 | 14,994 |
Loss from continuing operations | (6,938,096) | (1,669,637) |
Income from discontinued operations | 1,833 | 0 |
Net loss | (6,936,263) | (1,669,637) |
Preferred dividends | 0 | (123,727) |
Loss from continuing operations attributable to common stockholders | $ (6,938,096) | $ (1,793,364) |
Loss per common share — basic and diluted | ||
Continuing operations (usd per share) | $ (2.12) | $ (1.16) |
Discontinued operations (usd per share) | 0 | 0 |
Total net loss per share (usd per share) | $ (2.12) | $ (1.16) |
Weighted-average number of common shares outstanding — basic and diluted | 3,268,637 | 1,539,388 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities | ||
Net loss | $ (6,936,263) | $ (1,669,637) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation, amortization and impairment | 127,408 | 16,950 |
Equity-based compensation expense | 751,618 | 30,961 |
Change in Fair Value | (1,311,333) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 690 | 0 |
Inventory | 1,169 | 0 |
Prepaid expenses and other current assets | 91,582 | (239,540) |
Accounts payable | (519,276) | (285,453) |
Accrued expenses and other current liabilities | (320,637) | 3,275,259 |
Deferred revenue | (3,465,054) | 3,048,649 |
Net cash provided by (used in) operating activities | (11,580,096) | 4,177,189 |
Investing activities | ||
Net cash received in reverse acquisition | 5,403,634 | 0 |
Net proceeds received from disposal of discontinued operations | 204,274 | 0 |
Net cash provided by investing activities | 5,607,908 | 0 |
Financing activities | ||
Proceeds to redeem equity securities | 0 | 25,000 |
Proceeds from issuance of equity securities | 4,130,786 | 2,025,269 |
Payment of dividends | (133,594) | 0 |
Payments to redeem Series 1 preferred units | 0 | (615,014) |
Payments on note payable | (417,885) | 0 |
Net cash provided by financing activities | 3,579,307 | 1,435,255 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (2,392,881) | 5,612,444 |
Cash, cash equivalents and restricted cash at beginning of period | 6,131,781 | 519,337 |
Cash, cash equivalents and restricted cash at end of period | $ 3,738,900 | $ 6,131,781 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 9,005 | $ 0 |
Non-cash investing and financing activities: | ||
Shares issued | 110,474 | 0 |
Conversion of liabilities to equity securities | 2,869,412 | 0 |
Prepaid expense financed by note payable | 920,217 | 0 |
Intangible assets (License right issued for accrued common stock investment) | 0 | 110,474 |
Dividend payable | 0 | 35,713 |
Series 1 preferred conversion | 0 | 1,330,734 |
Dividend accretion | 0 | 26,999 |
Business combinations | ||
Non-cash investing and financing activities: | ||
Shares issued | $ 11,093,561 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Total | Common Stock | Common StockStock Purchase Agreement, Commitment Fee | Common StockStock Purchase Agreement, Cash | Additional Paid-In Capital | Accumulated Deficit |
Common stock, beginning balance (shares) at Dec. 31, 2017 | 1,178,604 | |||||
Equity, beginning balance at Dec. 31, 2017 | $ (2,900,426) | $ 118 | $ 570,256 | $ (3,470,800) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of equity securities, net (shares) | 451,826 | |||||
Issuance of equity securities, net | 2,025,269 | $ 45 | 2,025,224 | |||
Equity-based compensation expense (shares) | 46,657 | |||||
Equity-based compensation expense | 30,961 | $ 4 | 30,957 | |||
Distribution to stockholders | (123,727) | (123,727) | ||||
Net loss | (1,669,637) | (1,669,637) | ||||
Conversion of Series 1 to Series A (shares) | 355,676 | |||||
Conversion of Series 1 to Series A | $ 1,366,446 | $ 36 | 1,366,410 | |||
Common stock, ending balance (shares) at Dec. 31, 2018 | 2,032,763 | 2,032,763 | ||||
Equity, ending balance at Dec. 31, 2018 | $ (1,271,114) | $ 203 | 3,869,120 | (5,140,437) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of equity securities, net (shares) | 1,711,350 | 101,810 | 649,051 | |||
Issuance of equity securities, net | 6,932,336 | $ 170 | 6,932,166 | |||
Issuance of equity securities for license, net (shares) | 12,907 | |||||
Issuance of equity securities for license, net | 110,474 | $ 1 | 110,473 | |||
Equity-based compensation expense (shares) | 31,586 | |||||
Equity-based compensation expense | 751,618 | $ 5 | 751,613 | |||
Distribution to stockholders | (99,758) | (99,758) | ||||
Effect of reverse acquisition (shares) | 722,568 | |||||
Effect of reverse acquisition | 11,093,561 | $ 72 | 11,093,489 | |||
Net loss | $ (6,936,263) | (6,936,263) | ||||
Common stock, ending balance (shares) at Dec. 31, 2019 | 4,511,174 | 4,511,174 | ||||
Equity, ending balance at Dec. 31, 2019 | $ 10,580,854 | $ 451 | $ 22,657,103 | $ (12,076,700) |
ORGANIZATION AND OPERATIONS
ORGANIZATION AND OPERATIONS | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND OPERATIONS | ORGANIZATION AND OPERATIONS Nature of Business Salarius Pharmaceuticals, Inc. (“Salarius” or the “Company”), together with its subsidiaries, Salarius Pharmaceuticals, LLC, Flex Innovation Group LLC, and TK Pharma, Inc., is a clinical-stage biotechnology company focused on developing effective epigenetic-based cancer treatments for indications with high unmet medical need. Salarius’ lead epigenetic enzyme technology was licensed from the University of Utah Research Foundation in 2011. The Company is located in Houston, Texas. Merger with Flex Pharma, Inc. On January 3, 2019, Flex Pharma, Inc. ("Flex Pharma"), Salarius Pharmaceuticals LLC ("Private Salarius") and Falcon Acquisition Sub, LLC (“Merger Sub”), a wholly owned subsidiary of Flex Pharma, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub merged with and into Private Salarius, with Private Salarius continuing as a wholly owned subsidiary of Flex Pharma and the surviving company of the merger. The merger was completed on July 19, 2019. After the merger, Flex Pharma was renamed Salarius Pharmaceuticals, Inc. The merger was accounted for as a reverse acquisition with Private Salarius being deemed the acquiring company for accounting purposes. See Note 3. |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standard Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB"). The Company considered its going concern disclosure requirements in accordance with ASC 205-40-50. As of September 30, 2019, the Company had determined that substantial doubt about the Company’s ability to continue as a going concern existed. Subsequently, the Company took into consideration the capital raised during February 2020 (see Note 10). As a result, substantial doubt about the Company’s ability to continue as a going concern for the 12 months from the date of issuance of these financial statements is alleviated. The Company is subject to risks common to companies in the biotechnology industry and the future success of the Company is dependent on its ability to successfully complete the development of, and obtain regulatory approval for, its product candidates, manage the growth of the organization, obtain additional financing necessary in order to develop, launch and commercialize its product candidates, and compete successfully with other companies in its industry. As described above, the merger with Flex Pharma closed on July 19, 2019. The merger was accounted for as a reverse acquisition with Private Salarius being deemed the acquiring company for accounting purposes. Private Salarius’ historical financial statements have replaced Flex Pharma’s historical consolidated financial statements with respect to periods prior to the completion of the merger with retroactive adjustments to Private Salarius' legal capital to reflect the legal capital of Flex Pharma. Flex Pharma (renamed Salarius Pharmaceuticals, Inc.) remains the continuing registrant and reporting company. Accordingly, the historical financial and operating data of Salarius Pharmaceuticals, Inc., which covers periods prior to the closing date of the merger, reflects the assets, liabilities and results of operations of Private Salarius and does not reflect the assets, liabilities and results of operations of Flex Pharma Inc. for the periods prior to July 19, 2019, the Company retrospectively adjusted its Statement of Changes in Stockholders’ Equity (Deficit) and the weighted average shares used in determining loss per common share to reflect the conversion of the outstanding common unit, profits interest common unit and Series A Preferred unit of Private Salarius that converted into shares of the Company’s common stock upon the merger, and to reflect the effect of the 25 to 1 reverse stock split of the Company’s common stock which occurred upon the merger. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America as defined by the FASB ASC requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash, Cash Equivalents and Short-Term Investments Salarius considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. Short-term investments consist of U.S. treasury bills and corporate debt securities. The Company’s short-term investments, if any, are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities. The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security. Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity. Net realized gains and losses, interest and dividends are included in interest income. The cost of securities sold is based on the specific identification method. There were no short term investments as of December 31, 2019 and December 31, 2018. At December 31, 2019 and December 31, 2018, Salarius held restricted cash of $0 and $2,903,493 for the Series A Preferred proceeds, respectively. At December 31, 2019 and December 31, 2018, Salarius also held approximately $1.0 million and $4.1 million, respectively, for funds received from Cancer Prevention and Research Institution of Texas ("CPRIT"). These funds are to be used for costs for allowable expenses, primarily research and development expenses. The grant has a mandatory fund matching requirement. Subject to CPRIT review, the Company believes that all matching fund requirements have been met at December 31, 2019. Intangibles Intangible assets that have finite useful lives are amortized over their useful lives, and are reviewed for impairment when warranted by economic conditions. Intangible assets are included in other assets in the Company's Consolidated Balance Sheets. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. During the twelve months ended December 31, 2019 and December 31, 2018 impairment charges related to long-lived assets was $110,474 and $0, respectively. Goodwill Goodwill is not amortized, but is tested at least annually for impairment at the reporting unit level. The Company has determined that the reporting unit is the single operating segment disclosed in its current financial statements. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. The first step in the impairment process is to determine the fair value of the reporting unit and then compare it to the carrying value, including goodwill. If the fair value exceeds the carrying value, no further action is required and no impairment loss is recognized. Additional impairment assessments may be performed on an interim basis if the Company encounters events or changes in circumstances that would indicate that, more likely than not, the carrying value of goodwill has been impaired. There was no impairment of goodwill in 2019 or 2018. Financial Instruments and Credit Risks Financial instruments that potentially subject the Company to credit risk include cash and cash equivalents and restricted cash. Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk. Insurance is provided through the Federal Deposit Insurance Corporation (“FDIC”). Although the balances in these accounts exceed the federally insured limit from time to time, the Company has not incurred losses related to these deposits. Warrants In conjunction with the reverse merger transaction, the Company issued rights to receive warrants to purchase the Company’s common stock. The Company determines whether the warrants should be classified as a liability or equity. For warrants classified as liabilities, the Company estimates the fair value of the warrants at each reporting period using Level 3 inputs with changes in fair value recorded in the Statement of Operations within Change in fair value of warrant liability. The estimates in valuation models are based, in part, on subjective assumptions, including but not limited to stock price volatility, the expected life of the warrants, the risk-free interest rate and the fair value of the common stock underlying the warrants, and could differ materially in the future. The Company will continue to adjust the fair value of the warrant liability at the end of each reporting period for changes in fair value from the prior period until the earlier of the exercise or expiration of the applicable warrant. Clinical Trial Accruals The Company’s preclinical and clinical trials are performed by third party contract research organizations (CROs) and/or clinical investigators, and clinical supplies are manufactured by contract manufacturing organizations (CMOs). Invoicing from these third parties may be monthly based upon services performed or based upon milestones achieved. The Company accrues these expenses based upon its assessment of the status of each clinical trial and the work completed, and upon information obtained from the CROs and CMOs. The Company’s estimates are dependent upon the timeliness and accuracy of data provided by the CROs and CMOs regarding the status and cost of the studies, and may not match the actual services performed by the organizations. This could result in adjustments to the Company’s research and development expenses in future periods. To date the Company has had no significant adjustments. Revenue Recognition Salarius’ source of revenue has been from a grant received from CPRIT. Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that conditions of the grant have been met. Cash received from grants in advance of incurring qualifying costs is recorded as deferred revenue and recognized as revenue when qualifying costs are incurred. Research and Development Costs Research and development costs consist of expenses incurred in performing research and development activities, including pre-clinical studies and clinical trials. Research and development costs include salaries and personnel-related costs, consulting fees, fees paid for contract research services, the costs of laboratory equipment and facilities, license fees and other external costs. Research and development costs are expensed when incurred. Equity-Based Compensation Salarius measures equity-based compensation based on the grant date fair value of the awards and recognizes the associated expense in the financial statements over the requisite service period of the award, which is generally the vesting period. The Company uses the Black-Scholes option valuation model and the Backsolve method (which is similar to the Black-Scholes valuation model and produces similar results) to estimate the fair value of the stock-based compensation and incentive units. Assumptions utilized in these models include expected volatility calculated based on implied volatility from traded stocks of peer companies, dividend yield and risk-free interest rate. Additionally, forfeitures are accounted for in compensation cost as they occur. Earnings (Loss) Per Share Basic net loss per share is calculated by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods, as the inclusion of all potential common shares outstanding is anti-dilutive. The number of anti-dilutive shares, consisting of common shares underlying (i) common stock options, (ii) stock purchase warrants, (iii) unvested restricted stock and (iv) rights entitling holders to receive warrants to purchase the Company's common shares, which have been excluded from the computation of diluted loss per share, was 360,234 and 39,945 shares as of December 31, 2019 and 2018, respectively. Income Taxes Income taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. The Company has evaluated available evidence and concluded that the Company may not realize the benefit of its deferred tax assets; therefore, a valuation allowance has been established for the full amount of the deferred tax assets. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2019 and December 31, 2018, the Company did not have any significant uncertain tax positions and no interest or penalties have been charged. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company is subject to routine audits by taxing jurisdictions. Reclassification Certain reclassifications have been made to the prior-year financial statements to conform to the current-year presentation. Subsequent Events The Company’s management reviewed all material events through the date that the financial statements were issued for subsequent event disclosure consideration. Application of New Accounting Standards In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, “Leases.” ASU 2016-02 requires companies that lease assets to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The pronouncement also requires additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. This pronouncement was effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. This ASU was required to be adopted using a modified retrospective approach. Management adopted ASU 2016-02 on the effective date of January 1, 2019 and elected the practical expedient that allows entities to not apply the new guidance in the comparative periods they present in their financial statements in the year of adoption. Consequently, prior year financial information has not been updated and the disclosures required under the new standard have not been provided for periods prior to January 1, 2019. Additionally, the Company elected the practical expedients whereby the Company (i) does not recognize right-of-use assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combines lease and non-lease elements of its operating leases. The adoption of this ASU on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. Pronouncements Not Yet Adopted In January 2017, the FASB 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 15, 2019. The Company does not expect adoption of this ASU to have a material impact on its consolidated financial statements. |
REVERSE ACQUISITION AND DISPOSA
REVERSE ACQUISITION AND DISPOSAL | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
REVERSE ACQUISITION AND DISPOSAL | REVERSE ACQUISITION AND DISPOSAL Reverse Acquisition On January 3, 2019, Flex Pharma, Private Salarius and Merger Sub entered into the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into Private Salarius, with Private Salarius continuing as a wholly owned subsidiary of Flex Pharma and the surviving company of the merger. The merger was completed on July 19, 2019. After the merger, Flex Pharma was renamed Salarius Pharmaceuticals, Inc. The merger was accounted for as a reverse acquisition business acquisition with Private Salarius being deemed the acquiring company for accounting purposes. Private Salarius, as the accounting acquirer, recorded the assets acquired and liabilities assumed of Flex Pharma in the merger at their fair values as of the acquisition date. Private Salarius’ historical financial statements have replaced Flex Pharma’s historical consolidated financial statements with respect to periods prior to the completion of the merger with retroactive adjustments to Private Salarius' legal capital to reflect the legal capital of Flex Pharma. Flex Pharma (which was renamed Salarius Pharmaceuticals, Inc. in connection with the merger) remains the continuing registrant and reporting company. Private Salarius was determined to be the accounting acquirer based on the following facts and circumstances: (1) members of Private Salarius owned approximately 80.7% of the voting interests of the combined company immediately following the closing of the transaction; (2) the majority of the board of directors of the combined company was composed of directors designated by Private Salarius under the terms of the Merger Agreement; and (3) existing members of Private Salarius management became the management of the combined company. The business purposes of the merger included, among other purposes, obtaining the following potential advantages: (i) the combined organization’s resources would be immediately available to support Private Salarius’ research on Seclidemstat; and (ii) the public company status would allow the Company greater potential access to additional capital. At the closing of the merger, each outstanding common unit, profits interest common unit and Series A Preferred unit of Private Salarius converted into shares of the Company’s common stock (subject to the payment of cash in lieu of fractional shares and after giving effect to a 25 to 1 reverse stock split of the Company’s common stock) at the conversion ratio formulae described in the Merger Agreement. In addition, at the closing of the merger, the Company distributed one right per share of common stock to stockholders of record as of the close of business on July 18, 2019. Each right entitles such stockholders to receive a warrant to purchase shares of the Company’s common stock six months and one day following the closing date of the merger. See Note 7. The Company accounted for the acquisition as a reverse merger using purchase accounting. Because the merger qualifies as a reverse acquisition and given that Private Salarius was a private company at the time of the merger and therefore its value was not readily determinable, the fair value of the merger consideration was deemed to be equal to the sum of the quoted market capitalization of the Company at the merger date, the fair value of the Flex Pharma options that fully vested upon the merger together, and the fair value of the rights to receive warrants that were granted to the pre-merger Flex Pharma stockholders. Total purchase consideration is as follows: Flex Pharma market capitalization at closing $ 10,963,526 Fair value of rights to warrants 1,629,095 Fair value of Flex Pharma outstanding options on the merger date 132,227 Total purchase consideration $ 12,724,848 The Company recorded all tangible and intangible assets acquired and liabilities assumed at their preliminary estimated fair values on the merger date. The following represents the allocation of the estimated purchase consideration: Fair value of assets acquired Cash $ 5,405,826 Accounts receivable 15,168 Inventory 122,235 Prepaid expense and other current assets 106,319 Goodwill and intangibles 8,937,899 Total fair value of assets acquired 14,587,447 Fair value of liabilities assumed Accounts payable, accrued liabilities and other current liabilities 1,862,599 Total fair value of liabilities assumed 1,862,599 Net assets acquired $ 12,724,848 Disposition of HOTSHOT Business On July 24, 2019, the Company sold specified assets related to the HOTSHOT business to Cliff-Cartwright Corporation, an unrelated party, for cash consideration of $299,135. HOTSHOT was a consumer product that prevents and targets exercise-associated muscle cramps. The Company acquired the HOTSHOT business as a result of the reverse acquisition with Flex Pharma. The transaction was treated as a sale of a business. Details of the transaction are as follows: Proceeds from sale $ 299,135 Carrying value of tangible assets sold (135,544) Carrying value of goodwill and intangible assets sold (71,990) Cost incurred related to the sale (94,861) Liabilities transferred upon sale 3,260 Total gain on sale of HOTSHOT $ — The Company had no assets and liabilities presented as discontinued operations as of December 31, 2019 and December 31, 2018. Unaudited Pro Forma Disclosure The following unaudited pro forma financial information summarizes the results of operations for the twelve months ended December 31, 2019 and 2018 as if the merger and disposal described above had been completed as of January 1, 2018. Pro forma information primarily reflects adjustments relating to the reversal of transaction costs. Assuming that the merger had been completed as of January 1, 2018, the transaction costs would have been expensed in the prior period. Twelve Months Ended December 31, 2019 Twelve Months Ended December 31, 2018 Revenues $ 3,465,055 $ 1,951,351 Net loss (10,865,500) (21,147,765) Net loss per share (3.32) (6.47) |
REVERSE ACQUISITION AND DISPOSAL | REVERSE ACQUISITION AND DISPOSAL Reverse Acquisition On January 3, 2019, Flex Pharma, Private Salarius and Merger Sub entered into the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into Private Salarius, with Private Salarius continuing as a wholly owned subsidiary of Flex Pharma and the surviving company of the merger. The merger was completed on July 19, 2019. After the merger, Flex Pharma was renamed Salarius Pharmaceuticals, Inc. The merger was accounted for as a reverse acquisition business acquisition with Private Salarius being deemed the acquiring company for accounting purposes. Private Salarius, as the accounting acquirer, recorded the assets acquired and liabilities assumed of Flex Pharma in the merger at their fair values as of the acquisition date. Private Salarius’ historical financial statements have replaced Flex Pharma’s historical consolidated financial statements with respect to periods prior to the completion of the merger with retroactive adjustments to Private Salarius' legal capital to reflect the legal capital of Flex Pharma. Flex Pharma (which was renamed Salarius Pharmaceuticals, Inc. in connection with the merger) remains the continuing registrant and reporting company. Private Salarius was determined to be the accounting acquirer based on the following facts and circumstances: (1) members of Private Salarius owned approximately 80.7% of the voting interests of the combined company immediately following the closing of the transaction; (2) the majority of the board of directors of the combined company was composed of directors designated by Private Salarius under the terms of the Merger Agreement; and (3) existing members of Private Salarius management became the management of the combined company. The business purposes of the merger included, among other purposes, obtaining the following potential advantages: (i) the combined organization’s resources would be immediately available to support Private Salarius’ research on Seclidemstat; and (ii) the public company status would allow the Company greater potential access to additional capital. At the closing of the merger, each outstanding common unit, profits interest common unit and Series A Preferred unit of Private Salarius converted into shares of the Company’s common stock (subject to the payment of cash in lieu of fractional shares and after giving effect to a 25 to 1 reverse stock split of the Company’s common stock) at the conversion ratio formulae described in the Merger Agreement. In addition, at the closing of the merger, the Company distributed one right per share of common stock to stockholders of record as of the close of business on July 18, 2019. Each right entitles such stockholders to receive a warrant to purchase shares of the Company’s common stock six months and one day following the closing date of the merger. See Note 7. The Company accounted for the acquisition as a reverse merger using purchase accounting. Because the merger qualifies as a reverse acquisition and given that Private Salarius was a private company at the time of the merger and therefore its value was not readily determinable, the fair value of the merger consideration was deemed to be equal to the sum of the quoted market capitalization of the Company at the merger date, the fair value of the Flex Pharma options that fully vested upon the merger together, and the fair value of the rights to receive warrants that were granted to the pre-merger Flex Pharma stockholders. Total purchase consideration is as follows: Flex Pharma market capitalization at closing $ 10,963,526 Fair value of rights to warrants 1,629,095 Fair value of Flex Pharma outstanding options on the merger date 132,227 Total purchase consideration $ 12,724,848 The Company recorded all tangible and intangible assets acquired and liabilities assumed at their preliminary estimated fair values on the merger date. The following represents the allocation of the estimated purchase consideration: Fair value of assets acquired Cash $ 5,405,826 Accounts receivable 15,168 Inventory 122,235 Prepaid expense and other current assets 106,319 Goodwill and intangibles 8,937,899 Total fair value of assets acquired 14,587,447 Fair value of liabilities assumed Accounts payable, accrued liabilities and other current liabilities 1,862,599 Total fair value of liabilities assumed 1,862,599 Net assets acquired $ 12,724,848 Disposition of HOTSHOT Business On July 24, 2019, the Company sold specified assets related to the HOTSHOT business to Cliff-Cartwright Corporation, an unrelated party, for cash consideration of $299,135. HOTSHOT was a consumer product that prevents and targets exercise-associated muscle cramps. The Company acquired the HOTSHOT business as a result of the reverse acquisition with Flex Pharma. The transaction was treated as a sale of a business. Details of the transaction are as follows: Proceeds from sale $ 299,135 Carrying value of tangible assets sold (135,544) Carrying value of goodwill and intangible assets sold (71,990) Cost incurred related to the sale (94,861) Liabilities transferred upon sale 3,260 Total gain on sale of HOTSHOT $ — The Company had no assets and liabilities presented as discontinued operations as of December 31, 2019 and December 31, 2018. Unaudited Pro Forma Disclosure The following unaudited pro forma financial information summarizes the results of operations for the twelve months ended December 31, 2019 and 2018 as if the merger and disposal described above had been completed as of January 1, 2018. Pro forma information primarily reflects adjustments relating to the reversal of transaction costs. Assuming that the merger had been completed as of January 1, 2018, the transaction costs would have been expensed in the prior period. Twelve Months Ended December 31, 2019 Twelve Months Ended December 31, 2018 Revenues $ 3,465,055 $ 1,951,351 Net loss (10,865,500) (21,147,765) Net loss per share (3.32) (6.47) |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets at December 31, 2019 and December 31, 2018 consisted of the following: December 31, 2019 December 31, 2018 Prepaid clinical trial expenses $ 202,743 $ 210,333 Prepaid insurance 617,096 16,484 Other prepaid and current assets 136,060 22,269 Total prepaid expenses and other current assets $ 955,899 $ 249,086 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES License Agreement with the University of Utah Research Foundation In 2011, the Company entered into a license agreement with the University of Utah, under which, the Company acquired license to LSD 1. In exchange for the license, the Company issued 2% equity ownership in the Company based on a fully diluted basis at the effective date of the agreement and subject to certain adjustments specified in the agreement, granted revenue sharing rights on any resulting products or processes to commence on first commercial sale, and milestone payments based upon regulatory approval of any resulting product or process as well as on the second anniversary of first commercial sale. Cancer Prevention and Research Institute of Texas In June 2016, the Company entered into a Cancer Research Grant Contract with CPRIT. Pursuant to the contract, CPRIT awarded the Company a grant up to $18.7 million to fund development of LSD 1 inhibitor. This is a 3-year grant award originally expired on May 31, 2019. A six The Company will retain ownership over any intellectual property developed under the contract ("Project Result"). With respect to non-commercial use of any Project Result, the Company agreed to grant to CPRIT a nonexclusive, irrevocable, royalty-free, perpetual, worldwide license with right to sublicense any necessary additional intellectual property rights to exploit all Project Results by CPRIT, other governmental entities and agencies of the State of Texas, and private or independent institutions of higher education located in Texas, for education, research and other non-commercial purposes. The Company is obligated to make revenue-sharing payments to CPRIT with respect to net sales of any product covered by the contract, up to a maximum repayment of certain percentage of the aggregate amount paid to the Company by CPRIT under the CPRIT contract. The payments are determined as a percentage of net sales, which may be reduced if the Company is required to obtain a license from a third party to sell any such product. In addition, upon meeting the foregoing limitation on revenue-sharing payments, the Company agreed to make continued revenue-sharing payments to CPRIT of less than 1% of net sales. The CPRIT grant is subject to funding conditions including a matching funds requirement where the Company will match 50% of funding from the CPRIT grant. As of December 31, 2019, the Company has received an aggregate of $9.6 million from the CPRIT grant and there was $9.1 million of funds available for the Company to draw upon meeting certain requirements. There was no funding received from CPRIT during the twelve months ended December 31, 2019. At December 31, 2019 and December 31, 2018, the Company had deferred revenue of $541,701 and $4,006,755, respectively, related to CPRIT contract. Lease Agreement The Company presently leases office space under operating lease agreements on a month to month basis. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, are used to measure fair value: Level 1-Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2-Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3-Significant unobservable inputs including Salarius’ own assumptions in determining fair value. The Company believes the recorded values of its financial instruments, including cash and cash equivalents, restricted cash, accounts payable and note payable approximate their fair values due to the short-term nature of these instruments. The following table sets forth a summary of changes in the fair value of Level 3 liabilities, the warrant associated with the Flex Pharma merger measured at fair value on a recurring basis for the twelve months ended December 31, 2019 and 2018: Description Balance at December 31, 2018 Established Change in Fair Value Balance at December 31, 2019 Warrant liability $ — $ 1,629,095 $ (1,311,333) $ 317,762 The following table identifies the carrying amounts of such liabilities at December 31, 2019: Level 1 Level 2 Level 3 Total Warrant liability $ — $ — $ 317,762 $ 317,762 Balance at December 31, 2019 $ — $ — $ 317,762 $ 317,762 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY The accompanying consolidated statements of stockholders' equity (deficit) and the footnotes to the financial statements have been retroactively adjusted to reflect the equity structure (that is, the number and type of equity interests issued) of Flex Pharma, the legal parent (accounting acquiree) of the merger closed on July 19, 2019, with the retained earnings and other equity balances of Private Salarius before the merger. Private Salarius' equity was restated using the exchange ratio established in the merger agreement to reflect the number of shares of Flex Pharma issued in the merger. Concurrent with the merger, the Company's shareholders approved a 1-for-25 reverse stock split, which became effective on July 19, 2019. Total shares owned by Flex Pharma pre-merger shareholders (net of fractional shares paid in cash) was 722,568 shares after reverse stock-split. Common Stock During the twelve months ended December 31, 2019, the Company issued 960,489 common shares (4,035 Series A preferred units and 350 profit interest units of Private Salarius) for $4,377,591 (net of offering cost of $10,617) of which, $2,869,412 was received in advance, in 2018. On October 24, 2019, the Company entered into a common stock purchase agreement with Aspire Capital, which provides that the Company may offer under certain conditions to Aspire Capital up to an aggregate of $10.9 million of the Company's common shares over 30 months. During the twelve months ended December 31, 2019, the Company issued 750,861 common shares to Aspire Capital, 101,810 shares were issued in consideration for entering into the purchase agreement, and 649,051 shares were issued for cash. In October 2018, 1,366,448 of Private Salarius' Series 1 preferred units were converted into 355,676 common shares (1,530 Series A preferred units). In December 2018, the Company agreed to grant an unrelated party 12,907 common shares (91 common units of Private Salarius) to acquire licenses for the DNMT1 inhibitor. The grant was approved in January 2019 and the license was granted in 2018. These common shares were valued at $110,474 based on a third-party valuation report and included in accrued liabilities at December 31, 2018. Right to Warrants Pursuant to the Merger Agreement (See Note 3), Flex Pharma distributed one right per share of common stock to stockholders of record as of the close of business on July 18, 2019. Each right entitles such stockholders to receive a warrant to purchase the Company's common shares on January 20, 2020. These warrants are exercisable, in the aggregate, into 142,711 shares of the Company's common stock with a 5-year term from January 20, 2020, and an exercise price of $15.17 per share. The warrants are subject to a cashless exercise, at the option of the Company, at the closing of an issuance and sale of the Company’s common stock in certain qualified financing, upon the closing of which the holders of warrants shall be entitled to receive a number of shares of common stock equal to the greater of two formulae defined by the Merger Agreement, which are based on the volume weighted average price of the Company's common stock during the 10 consecutive trading days ending on the trading day immediately preceding the date of exercise. As a result, the warrants have been classified as a liability. The Company accounted for these warrants at fair value using Level 3 inputs. The Company determined the fair value of this warrant liability using a Black-Scholes valuation model as the Company believes the value will closely approximate the value from the binomial asset pricing model that consisted of a conditional probability weighted expected return method that values the Company’s equity securities assuming various possible future outcomes to estimate the allocation of value within one or more of the scenarios. Using this method, unobservable inputs included the Company’s equity value, expected timing of possible outcomes, risk free interest rates and stock price volatility. Variables used in the Black-Scholes model are as follows: July 19, 2019 December 31, 2019 Discount rate 1.80 % 1.69 % Expected life (years) 5.50 years 5.06 years Expected volatility 96.02 % 105.93 % Expected dividend — % — % Wedbush Warrant On July 19, 2019, upon the closing of the merger, the Company elected to issue warrants to purchase 42,928 common shares to Wedbush Securities Inc. ("Wedbush") to satisfy $500,000 of the $1,000,000 success fee payable to Wedbush at the closing of the merger. The remaining $500,000 success fee was paid in cash. These warrants have an exercise price of $18.90 and a 5-year term. As of December 31, 2019, all warrants issued to Wedbush were outstanding. |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
EQUITY-BASED COMPENSATION | EQUITY-BASED COMPENSATION Private Salarius' Grants During the twelve months ended December 31, 2019, the Company granted a total of 8,799 restricted common shares (137 profit interest units of Private Salarius) to two employees and one consultant with a vesting period ranging from 9 months to 4 years. These common shares have an aggregated fair value of approximately $83,000 that was calculated using the Backsolve method. During the twelve months ended December 31, 2019, 31,583 shares of common stock for Private Salarius' grants vested. As of December 31, 2019, there were 8,362 unvested restricted common stock issued in the Company. Compensation expense related to Private Salarius' grants was $53,512 and $30,961 for the twelve months ended December 31, 2019 and 2018, respectively. As of December 31, 2019, there was $31,383 of unrecognized compensation cost related to Private Salarius’ non-vested grants. Equity Incentive Plans The Company has granted options to employees, directors, and consultants under the Flex Pharma Inc. 2015 Equity Incentive Plan (the "2015 Plan"). On July 19, 2019, the Company completed a merger with Flex Pharma and Flex Pharma had fully vested options to purchase 90,279 common shares outstanding as of the date of the merger that continue to be exercisable. The 2015 Plan provides for the grant of incentive stock options ("ISOs"), nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance-based stock awards and other stock-based awards. Additionally, the 2015 Plan provides for the grant of performance-based cash awards. ISOs may be granted only to the Company's employees. All other awards may be granted to the Company's employees, including officers, and to non-employee directors and consultants. As of December 31, 2019, there were 25,145 shares remaining available for the grant of stock awards under the 2015 Plan. The Company has awarded stock options to its employees, directors and consultants, pursuant to the plan described above. Stock options generally vest over one The fair value of the option grants of $642,360 has been estimated with the following assumptions for the year ended December 31, 2019: Risk-free interest rate 1.61% Volatility 103.70% Expected life (years) 5.79 Expected dividend yield 0.00% The following table summarizes stock option activity for employees and non-employees for the twelve months ended December 31, 2019: Shares Weighted-Average Weighted-Average Aggregate Outstanding at December 31, 2018 — $ — — $ — Granted 101,082 8.00 Options from Flex Pharma 65,151 75.42 Exercised — — Forfeited — — Expired — — Outstanding at December 31, 2019 166,233 $ 34.42 6.53 $ — Exercisable at December 31, 2019 84,321 $ 60.09 3.45 $ — |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAX Private Salarius was organized as a limited liability company and subject to the provisions of Subchapter K of the Internal Revenue Code. As such, Private Salarius was not viewed as a taxpaying entity in any jurisdiction and did not require a provision for income taxes. Each member was responsible for the tax liability, if any, related to its proportionate share of Private Salarius’s taxable income. The following table presents a reconciliation of income tax expense (benefit) for the Company subsequent to the closing of the reverse acquisition on July 19, 2019, computed at the statutory federal income tax rate to the effective income tax rate as reflected in the consolidated financial statements: December 31, 2019 Federal income tax benefit at statutory rate of 21% $ (1,456,615) Stock warrant - fair value adjustment (275,380) Transaction costs 232,133 Private Salarius activity 622,660 Other 23,675 Valuation allowance 853,527 Income tax benefit $ — The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized differently in the financial statements and tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of liabilities and assets using enacted tax rates and laws in effect in the years in which the differences are expected to reverse. Deferred tax assets are evaluated for realization based on a more-likely-than-not criteria in determining if a valuation allowance should be provided. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during periods in which those temporary differences become deductible. Due to the uncertainty surrounding the realization of the benefits of its deferred assets, including NOL carryforwards, the Company has provided a 100% valuation allowance on its deferred tax assets at December 31, 2019. The components of the Company's deferred tax assets (liabilities) at December 31, 2019 are as follow: Deferred tax assets: Net operating loss carryforwards 888,000 Stock-based compensation 70,000 Total deferred tax assets 958,000 Deferred tax liabilities: Depreciation (5,000) Total deferred tax liabilities (5,000) Net deferred tax assets 953,000 Less valuation allowance (953,000) Net Deferred tax assets — At December 31, 2019, the Company has U.S. federal net operating loss carryforwards of approximately $4,228,318 which are available to reduce future taxable income. Any federal net operating losses generated in 2018 or after will not expire as a result of the Tax Cuts and Jobs Act. The Company does not have any pre-2018 federal loss carryforwards. Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The merger between Flex Pharma, Inc. and Salarius, LLC resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code and the federal and state net operating losses and tax credit carryforwards of Flex Pharma, Inc. were written off in full. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSOn February 11, 2020, the Company completed a public offering with total gross proceeds of approximately $11.0 million, which includes the full exercise of the underwriter's over-allotment option to purchase additional shares and warrants prior to deducting underwriting discounts and commissions and offering expenses payable by Salarius. The offering is comprised of 7,101,307 Class A units, priced at a public offering price of $1.15 per unit, with each unit consisting of one share of common stock and a five five |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standard Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB"). The Company considered its going concern disclosure requirements in accordance with ASC 205-40-50. As of September 30, 2019, the Company had determined that substantial doubt about the Company’s ability to continue as a going concern existed. Subsequently, the Company took into consideration the capital raised during February 2020 (see Note 10). As a result, substantial doubt about the Company’s ability to continue as a going concern for the 12 months from the date of issuance of these financial statements is alleviated. The Company is subject to risks common to companies in the biotechnology industry and the future success of the Company is dependent on its ability to successfully complete the development of, and obtain regulatory approval for, its product candidates, manage the growth of the organization, obtain additional financing necessary in order to develop, launch and commercialize its product candidates, and compete successfully with other companies in its industry. As described above, the merger with Flex Pharma closed on July 19, 2019. The merger was accounted for as a reverse acquisition with Private Salarius being deemed the acquiring company for accounting purposes. Private Salarius’ historical financial statements have replaced Flex Pharma’s historical consolidated financial statements with respect to periods prior to the completion of the merger with retroactive adjustments to Private Salarius' legal capital to reflect the legal capital of Flex Pharma. Flex Pharma (renamed Salarius Pharmaceuticals, Inc.) remains the continuing registrant and reporting company. Accordingly, the historical financial and operating data of Salarius Pharmaceuticals, Inc., which covers periods prior to the closing date of the merger, reflects the assets, liabilities and results of operations of Private Salarius and does not reflect the assets, liabilities and results of operations of Flex Pharma Inc. for the periods prior to July 19, 2019, the Company retrospectively adjusted its Statement of Changes in Stockholders’ Equity (Deficit) and the weighted average shares used in determining loss per common share to reflect the conversion of the outstanding common unit, profits interest common unit and Series A Preferred unit of Private Salarius that converted into shares of the Company’s common stock upon the merger, and to reflect the effect of the 25 to 1 reverse stock split of the Company’s common stock which occurred upon the merger. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America as defined by the FASB ASC requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. |
Cash, Cash Equivalents and Short-Term Investments | Cash, Cash Equivalents and Short-Term InvestmentsSalarius considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. Short-term investments consist of U.S. treasury bills and corporate debt securities. The Company’s short-term investments, if any, are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities. The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security. Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity. Net realized gains and losses, interest and dividends are included in interest income. The cost of securities sold is based on the specific identification method. There were no short term investments as of December 31, 2019 and December 31, 2018. |
Intangibles | Intangibles Intangible assets that have finite useful lives are amortized over their useful lives, and are reviewed for impairment when warranted by economic conditions. Intangible assets are included in other assets in the Company's Consolidated Balance Sheets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived AssetsLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
Goodwill | Goodwill Goodwill is not amortized, but is tested at least annually for impairment at the reporting unit level. The Company has determined that the reporting unit is the single operating segment disclosed in its current financial statements. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. The first step in the impairment process is to determine the fair value of the reporting unit and then compare it to the carrying value, including goodwill. If the fair value exceeds the carrying value, no further action is required and no impairment loss is recognized. Additional impairment assessments may be performed on an interim basis if the Company encounters events or changes in circumstances that would indicate that, more likely than not, the carrying value of goodwill has been impaired. There was no impairment of goodwill in 2019 or 2018. |
Financial Instruments and Credit Risks | Financial Instruments and Credit RisksFinancial instruments that potentially subject the Company to credit risk include cash and cash equivalents and restricted cash. Cash is deposited in demand accounts in federally insured domestic institutions to minimize risk. Insurance is provided through the Federal Deposit Insurance Corporation (“FDIC”). Although the balances in these accounts exceed the federally insured limit from time to time, the Company has not incurred losses related to these deposits. |
Warrants | Warrants In conjunction with the reverse merger transaction, the Company issued rights to receive warrants to purchase the Company’s common stock. The Company determines whether the warrants should be classified as a liability or equity. For warrants classified as liabilities, the Company estimates the fair value of the warrants at each reporting period using Level 3 inputs with changes in fair value recorded in the Statement of Operations within Change in fair value of warrant liability. The estimates in valuation models are based, in part, on subjective assumptions, including but not limited to stock price volatility, the expected life of the warrants, the risk-free interest rate and the fair value of the common stock underlying the warrants, and could differ materially in the future. The Company will continue to adjust the fair value of the warrant liability at the end of each reporting period for changes in fair value from the prior period until the earlier of the exercise or expiration of the applicable warrant. |
Revenue Recognition | Revenue Recognition Salarius’ source of revenue has been from a grant received from CPRIT. Grant revenue is recognized when qualifying costs are incurred and there is reasonable assurance that conditions of the grant have been met. Cash received from grants in advance of incurring qualifying costs is recorded as deferred revenue and recognized as revenue when qualifying costs are incurred. |
Research and Development Costs | Research and Development Costs Research and development costs consist of expenses incurred in performing research and development activities, including pre-clinical studies and clinical trials. Research and development costs include salaries and personnel-related costs, consulting fees, fees paid for contract research services, the costs of laboratory equipment and facilities, license fees and other external costs. Research and development costs are expensed when incurred. |
Equity-Based Compensation | Equity-Based Compensation Salarius measures equity-based compensation based on the grant date fair value of the awards and recognizes the associated expense in the financial statements over the requisite service period of the award, which is generally the vesting period. |
Earnings (Loss) Per Share | Earnings (Loss) Per ShareBasic net loss per share is calculated by dividing the net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods, as the inclusion of all potential common shares outstanding is anti-dilutive. |
Income Taxes | Income Taxes Income taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. The Company has evaluated available evidence and concluded that the Company may not realize the benefit of its deferred tax assets; therefore, a valuation allowance has been established for the full amount of the deferred tax assets. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2019 and December 31, 2018, the Company did not have any significant uncertain tax positions and no interest or penalties have been charged. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company is subject to routine audits by taxing jurisdictions. |
Reclassification | Reclassification Certain reclassifications have been made to the prior-year financial statements to conform to the current-year presentation. |
Subsequent Events | Subsequent Events The Company’s management reviewed all material events through the date that the financial statements were issued for subsequent event disclosure consideration. |
Application of New Accounting Standards and Pronouncements Not Yet Adopted | Application of New Accounting Standards In February 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-02, “Leases.” ASU 2016-02 requires companies that lease assets to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The pronouncement also requires additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. This pronouncement was effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. This ASU was required to be adopted using a modified retrospective approach. Management adopted ASU 2016-02 on the effective date of January 1, 2019 and elected the practical expedient that allows entities to not apply the new guidance in the comparative periods they present in their financial statements in the year of adoption. Consequently, prior year financial information has not been updated and the disclosures required under the new standard have not been provided for periods prior to January 1, 2019. Additionally, the Company elected the practical expedients whereby the Company (i) does not recognize right-of-use assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combines lease and non-lease elements of its operating leases. The adoption of this ASU on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. Pronouncements Not Yet Adopted In January 2017, the FASB 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 15, 2019. The Company does not expect adoption of this ASU to have a material impact on its consolidated financial statements. |
Fair Value of Financial Instruments | Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, are used to measure fair value: Level 1-Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2-Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3-Significant unobservable inputs including Salarius’ own assumptions in determining fair value. The Company believes the recorded values of its financial instruments, including cash and cash equivalents, restricted cash, accounts payable and note payable approximate their fair values due to the short-term nature of these instruments. |
REVERSE ACQUISITION AND DISPO_2
REVERSE ACQUISITION AND DISPOSAL (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Summary of Purchase Consideration | Total purchase consideration is as follows: Flex Pharma market capitalization at closing $ 10,963,526 Fair value of rights to warrants 1,629,095 Fair value of Flex Pharma outstanding options on the merger date 132,227 Total purchase consideration $ 12,724,848 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following represents the allocation of the estimated purchase consideration: Fair value of assets acquired Cash $ 5,405,826 Accounts receivable 15,168 Inventory 122,235 Prepaid expense and other current assets 106,319 Goodwill and intangibles 8,937,899 Total fair value of assets acquired 14,587,447 Fair value of liabilities assumed Accounts payable, accrued liabilities and other current liabilities 1,862,599 Total fair value of liabilities assumed 1,862,599 Net assets acquired $ 12,724,848 |
Summary of Sale of Business | Details of the transaction are as follows: Proceeds from sale $ 299,135 Carrying value of tangible assets sold (135,544) Carrying value of goodwill and intangible assets sold (71,990) Cost incurred related to the sale (94,861) Liabilities transferred upon sale 3,260 Total gain on sale of HOTSHOT $ — |
Schedule of Unaudited Pro Forma Results | The following unaudited pro forma financial information summarizes the results of operations for the twelve months ended December 31, 2019 and 2018 as if the merger and disposal described above had been completed as of January 1, 2018. Pro forma information primarily reflects adjustments relating to the reversal of transaction costs. Assuming that the merger had been completed as of January 1, 2018, the transaction costs would have been expensed in the prior period. Twelve Months Ended December 31, 2019 Twelve Months Ended December 31, 2018 Revenues $ 3,465,055 $ 1,951,351 Net loss (10,865,500) (21,147,765) Net loss per share (3.32) (6.47) |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets at December 31, 2019 and December 31, 2018 consisted of the following: December 31, 2019 December 31, 2018 Prepaid clinical trial expenses $ 202,743 $ 210,333 Prepaid insurance 617,096 16,484 Other prepaid and current assets 136,060 22,269 Total prepaid expenses and other current assets $ 955,899 $ 249,086 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Changes in Fair Value of Level 3 Liabilities | The following table sets forth a summary of changes in the fair value of Level 3 liabilities, the warrant associated with the Flex Pharma merger measured at fair value on a recurring basis for the twelve months ended December 31, 2019 and 2018: Description Balance at December 31, 2018 Established Change in Fair Value Balance at December 31, 2019 Warrant liability $ — $ 1,629,095 $ (1,311,333) $ 317,762 |
Schedule of Assets and Liabilities Measured at Fair Value | The following table identifies the carrying amounts of such liabilities at December 31, 2019: Level 1 Level 2 Level 3 Total Warrant liability $ — $ — $ 317,762 $ 317,762 Balance at December 31, 2019 $ — $ — $ 317,762 $ 317,762 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Variables used in Black-Scholes Model | Variables used in the Black-Scholes model are as follows: July 19, 2019 December 31, 2019 Discount rate 1.80 % 1.69 % Expected life (years) 5.50 years 5.06 years Expected volatility 96.02 % 105.93 % Expected dividend — % — % |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Fair Value Assumptions | The fair value of the option grants of $642,360 has been estimated with the following assumptions for the year ended December 31, 2019: Risk-free interest rate 1.61% Volatility 103.70% Expected life (years) 5.79 Expected dividend yield 0.00% |
Summary of Stock Option Activity | The following table summarizes stock option activity for employees and non-employees for the twelve months ended December 31, 2019: Shares Weighted-Average Weighted-Average Aggregate Outstanding at December 31, 2018 — $ — — $ — Granted 101,082 8.00 Options from Flex Pharma 65,151 75.42 Exercised — — Forfeited — — Expired — — Outstanding at December 31, 2019 166,233 $ 34.42 6.53 $ — Exercisable at December 31, 2019 84,321 $ 60.09 3.45 $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The following table presents a reconciliation of income tax expense (benefit) for the Company subsequent to the closing of the reverse acquisition on July 19, 2019, computed at the statutory federal income tax rate to the effective income tax rate as reflected in the consolidated financial statements: December 31, 2019 Federal income tax benefit at statutory rate of 21% $ (1,456,615) Stock warrant - fair value adjustment (275,380) Transaction costs 232,133 Private Salarius activity 622,660 Other 23,675 Valuation allowance 853,527 Income tax benefit $ — |
Schedule of Deferred Tax Assets and Liabilities | The components of the Company's deferred tax assets (liabilities) at December 31, 2019 are as follow: Deferred tax assets: Net operating loss carryforwards 888,000 Stock-based compensation 70,000 Total deferred tax assets 958,000 Deferred tax liabilities: Depreciation (5,000) Total deferred tax liabilities (5,000) Net deferred tax assets 953,000 Less valuation allowance (953,000) Net Deferred tax assets — |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) | Jul. 19, 2019 | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares |
Class of Stock [Line Items] | |||
Restricted cash | $ 0 | $ 2,903,493 | |
Grant contract amount | 1,000,000 | 4,100,000 | |
Impairment charges of long-lived assets | $ 110,474 | $ 0 | |
Antidilutive securities excluded from computation of earnings per share (shares) | shares | 360,234 | 39,945 | |
Common Stock | |||
Class of Stock [Line Items] | |||
Conversion ratio | 25 |
REVERSE ACQUISITION AND DISPO_3
REVERSE ACQUISITION AND DISPOSAL - Narrative (Details) | Jul. 24, 2019USD ($) | Jul. 19, 2019 | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Jul. 18, 2019shares |
Business Acquisition [Line Items] | |||||
Period the right is unexercisable | 6 months | ||||
Proceeds from sale | $ 204,274 | $ 0 | |||
Disposed of by Sale | HotShot Business | |||||
Business Acquisition [Line Items] | |||||
Proceeds from sale | $ 299,135 | ||||
Common Stock | |||||
Business Acquisition [Line Items] | |||||
Conversion ratio | 25 | ||||
Number of rights per share | shares | 1 | ||||
Flex Pharma | |||||
Business Acquisition [Line Items] | |||||
Voting interest acquired | 80.70% |
REVERSE ACQUISITION AND DISPO_4
REVERSE ACQUISITION AND DISPOSAL - Summary of Purchase Consideration (Details) - Flex Pharma | Jul. 19, 2019USD ($) |
Business Acquisition [Line Items] | |
Flex Pharma market capitalization at closing | $ 10,963,526 |
Fair value of rights to warrants | 1,629,095 |
Fair value of Flex Pharma outstanding options on the merger date | 132,227 |
Total purchase consideration | $ 12,724,848 |
REVERSE ACQUISITION AND DISPO_5
REVERSE ACQUISITION AND DISPOSAL - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - Flex Pharma | Jul. 19, 2019USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 5,405,826 |
Accounts receivable | 15,168 |
Inventory | 122,235 |
Prepaid expense and other current assets | 106,319 |
Goodwill and intangibles | 8,937,899 |
Fair value of assets acquired | 14,587,447 |
Accounts payable, accrued liabilities and other current liabilities | 1,862,599 |
Fair value of liabilities assumed | 1,862,599 |
Net assets acquired | $ 12,724,848 |
REVERSE ACQUISITION AND DISPO_6
REVERSE ACQUISITION AND DISPOSAL - Summary of Sale of Business (Details) - USD ($) | Jul. 24, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from sale | $ 204,274 | $ 0 | |
Disposed of by Sale | HotShot Business | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from sale | $ 299,135 | ||
Carrying value of tangible assets sold | (135,544) | ||
Carrying value of goodwill and intangible assets sold | (71,990) | ||
Cost incurred related to the sale | (94,861) | ||
Liabilities transferred upon sale | 3,260 | ||
Total gain on sale of HOTSHOT | $ 0 |
REVERSE ACQUISITION AND DISPO_7
REVERSE ACQUISITION AND DISPOSAL - Schedule of Unaudited Pro Forma Results (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Revenues | $ 3,465,055 | $ 1,951,351 |
Net loss | $ (10,865,500) | $ (21,147,765) |
Net loss per share (usd per share) | $ (3.32) | $ (6.47) |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid clinical trial expenses | $ 202,743 | $ 210,333 |
Prepaid insurance | 617,096 | 16,484 |
Other prepaid and current assets | 136,060 | 22,269 |
Total prepaid expenses and other current assets | $ 955,899 | $ 249,086 |
PREPAID EXPENSES AND OTHER CU_4
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Narrative (Details) - USD ($) | Dec. 31, 2019 | Jul. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Principal amount | $ 900,000 | ||
Interest rate | 4.61% | ||
Note payable | $ 502,332 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
May 31, 2019 | Jun. 30, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2011 | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
Award amount | $ 18,700,000 | ||||
Award term | 3 years | ||||
Extension term | 6 months | ||||
Continued payments, percent of net sales | 1.00% | ||||
Matching funds requirement | 50.00% | ||||
Aggregate amount received | $ 9,600,000 | ||||
Current funding available | 9,100,000 | ||||
Current funding received | 0 | ||||
Deferred revenue | $ 541,701 | $ 4,006,755 | |||
University of Utah Research Foundation | |||||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||
Ownership percentage by noncontrolling Owner | 2.00% |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Summary of Changes in Fair Value of Level 3 Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Change in Fair Value | $ (1,311,333) | $ 0 |
Recurring | Level 3 | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance at December 31, 2018 | 0 | |
Established | 1,629,095 | |
Change in Fair Value | (1,311,333) | |
Balance at December 31, 2019 | $ 317,762 | $ 0 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Schedule of Assets and Liabilities Measured at Fair Value (Details) - Recurring | Dec. 31, 2019USD ($) |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Warrant liability | $ 317,762 |
Balance at December 31, 2019 | 317,762 |
Level 1 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Warrant liability | 0 |
Balance at December 31, 2019 | 0 |
Level 2 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Warrant liability | 0 |
Balance at December 31, 2019 | 0 |
Level 3 | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Warrant liability | 317,762 |
Balance at December 31, 2019 | $ 317,762 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) | Oct. 24, 2019USD ($) | Jul. 19, 2019USD ($)$ / sharesshares | Jul. 18, 2019trading_Days$ / sharesshares | Jan. 31, 2019USD ($) | Dec. 31, 2018shares | Oct. 31, 2018shares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Dec. 31, 2017shares |
Class of Stock [Line Items] | |||||||||
Common stock, shares outstanding | 2,032,763 | 4,511,174 | 2,032,763 | ||||||
Shares issued, value | $ | $ 6,932,336 | $ 2,025,269 | |||||||
Offering costs | $ | 10,617 | ||||||||
Amount received from issuance | $ | $ 2,869,412 | ||||||||
Shares issued upon conversion | 355,676 | ||||||||
Issuance of equity securities for license, net | $ | $ 110,474 | $ 110,474 | |||||||
Number of shares called by warrants | 142,711 | ||||||||
Expected life (years) | 5 years 6 months | 5 years | 5 years 21 days | ||||||
Exercise price (usd per share) | $ / shares | $ 15.17 | ||||||||
Consecutive trading days | trading_Days | 10 | ||||||||
Stock Purchase Agreement | |||||||||
Class of Stock [Line Items] | |||||||||
Aggregate amount issuable | $ | $ 10,900,000 | ||||||||
Agreement term | 30 months | ||||||||
Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion ratio | 25 | ||||||||
Common stock, shares outstanding | 2,032,763 | 4,511,174 | 2,032,763 | 1,178,604 | |||||
Shares issued | 1,711,350 | 451,826 | |||||||
Shares issued, value | $ | $ 170 | $ 45 | |||||||
Shares issued upon conversion | 355,676 | ||||||||
Issuance of equity securities for license, net (shares) | 12,907 | 12,907 | |||||||
Issuance of equity securities for license, net | $ | $ 1 | ||||||||
Number of rights per share | 1 | ||||||||
Common Stock | Stock Purchase Agreement | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued | 750,861 | ||||||||
Common Stock | Stock Purchase Agreement, Commitment Fee | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued | 101,810 | ||||||||
Common Stock | Stock Purchase Agreement, Cash | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued | 649,051 | ||||||||
Common Stock | Flex Pharma | |||||||||
Class of Stock [Line Items] | |||||||||
Conversion ratio | 25 | ||||||||
Common stock, shares outstanding | 722,568 | ||||||||
Common Units | Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued | 960,489 | ||||||||
Shares issued, value | $ | $ 4,377,591 | ||||||||
Issuance of equity securities for license, net (shares) | 91 | ||||||||
Series A Preferred | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued upon conversion | 1,530 | ||||||||
Series A Preferred | Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued | 4,035 | ||||||||
Profit Interest Units | Common Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued | 350 | ||||||||
Series 1 Preferred Units | |||||||||
Class of Stock [Line Items] | |||||||||
Shares converted | 1,366,448 | ||||||||
Wedbush | Satisfy success fee | |||||||||
Class of Stock [Line Items] | |||||||||
Number of shares called by warrants | 42,928 | ||||||||
Expected life (years) | 5 years | ||||||||
Exercise price (usd per share) | $ / shares | $ 18.90 | ||||||||
Warrant value | $ | $ 500,000 | ||||||||
Due to related party | $ | 1,000,000 | ||||||||
Cash payment to related party | $ | $ 500,000 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Variables used in Black-Scholes Model (Details) | Dec. 31, 2019 | Jul. 19, 2019 | Jul. 18, 2019 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Expected life (years) | 5 years 21 days | 5 years 6 months | 5 years |
Discount rate | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants measurement input | 1.69% | 1.80% | |
Expected volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants measurement input | 105.93% | 96.02% | |
Expected dividend | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Warrants measurement input | 0.00% | 0.00% |
EQUITY-BASED COMPENSATION - Nar
EQUITY-BASED COMPENSATION - Narrative (Details) | Sep. 10, 2019shares | Dec. 31, 2019USD ($)numberOfGranteesshares | Dec. 31, 2018USD ($)shares | Jul. 19, 2019shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ | $ 53,512 | $ 30,961 | ||
Unrecognized compensation cost | $ | $ 31,383 | |||
Number of shares outstanding | 166,233 | 0 | 90,279 | |
Fair value | $ | $ 642,360 | |||
Unrecognized compensation cost, options | $ | $ 493,360 | |||
Unrecognized compensation cost, recognition period | 2 years 11 months 19 days | |||
Number of stock options granted (shares) | 101,082 | 101,082 | ||
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted | 8,799 | |||
Fair value | $ | $ 83,000 | |||
Shares vested | 31,583 | |||
Shares issued, unvested | 8,362 | |||
Employee stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options, contractual term | 10 years | |||
Employee | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of grantees | numberOfGrantees | 2 | |||
Consultant | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of grantees | numberOfGrantees | 1 | |||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 months | |||
Minimum | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 9 months | |||
Minimum | Employee stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 1 year | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Maximum | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
Maximum | Employee stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 4 years | |||
2015 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares remaining available for grant of stock awards (shares) | 25,145 | |||
Profit Interest Units | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares granted | 137 |
EQUITY-BASED COMPENSATION - Sch
EQUITY-BASED COMPENSATION - Schedule of Fair Value Assumptions (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Risk-free interest rate | 1.61% |
Volatility | 103.70% |
Expected life (years) | 5 years 9 months 14 days |
Expected dividend yield | 0.00% |
EQUITY-BASED COMPENSATION - Sum
EQUITY-BASED COMPENSATION - Summary of stock option activity (Details) - USD ($) | Sep. 10, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Shares | |||
Shares outstanding, Beginning Balance (shares) | 0 | ||
Shares granted (shares) | 101,082 | 101,082 | |
Options from Flex Pharma (shares) | 65,151 | ||
Shares exercised (shares) | 0 | ||
Shares forfeited (shares) | 0 | ||
Shares expired (shares) | 0 | ||
Shares outstanding, Ending Balance (shares) | 166,233 | ||
Shares exercisable (shares) | 84,321 | ||
Weighted-Average Exercise Price | |||
Shares outstanding, weighted-average exercise price, Beginning Balance (in usd per share) | $ 0 | ||
Shares granted, weighted-average exercise price (in usd per share) | 8 | ||
Options from Flex Pharma, weighted-average exercise price (in usd per share) | 75.42 | ||
Shares exercised, weighted-average exercise price (in usd per share) | 0 | ||
Shares forfeited, weighted-average exercise price (in usd per share) | 0 | ||
Shares expired, weighted-average exercise price (in usd per share) | 0 | ||
Shares outstanding, weighted-average exercise price, Ending Balance (in usd per share) | 34.42 | ||
Shares exercisable, weighted-average exercise price (in usd per share) | $ 60.09 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Outstanding, weighted-average remaining contractual term | 6 years 6 months 10 days | ||
Exercisable, weighted-average remaining contractual term | 3 years 5 months 12 days | ||
Outstanding, aggregate intrinsic value | $ 0 | $ 0 | |
Exercisable, aggregate intrinsic value | $ 0 |
INCOME TAXES - Schedule of Effe
INCOME TAXES - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Amount | |
Federal income tax benefit at statutory rate of 21% | $ (1,456,615) |
Stock warrant - fair value adjustment | (275,380) |
Transaction costs | 232,133 |
Private Salarius activity | 622,660 |
Other | 23,675 |
Valuation allowance | 853,527 |
Income tax benefit | $ 0 |
INCOME TAXES - Schedule of Defe
INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) | Dec. 31, 2019USD ($) |
Deferred tax assets: | |
Net operating loss carryforwards | $ 888,000 |
Stock-based compensation | 70,000 |
Total deferred tax assets | 958,000 |
Deferred tax liabilities: | |
Depreciation | (5,000) |
Total deferred tax liabilities | (5,000) |
Net deferred tax assets | 953,000 |
Less valuation allowance | (953,000) |
Net Deferred tax assets | $ 0 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) | Dec. 31, 2019USD ($) |
Federal | |
Operating Loss Carryforwards [Line Items] | |
Operating loss carryforwards | $ 4,228,318 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Feb. 11, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Jul. 19, 2019 | Jul. 18, 2019 |
Subsequent Event [Line Items] | |||||
Issuance of equity securities, net | $ 6,932,336 | $ 2,025,269 | |||
Expected life (years) | 5 years 21 days | 5 years 6 months | 5 years | ||
Exercise price (usd per share) | $ 15.17 | ||||
Common Stock | |||||
Subsequent Event [Line Items] | |||||
Issuance of equity securities, net | $ 170 | $ 45 | |||
Number of rights per share | 1 | ||||
Issuance of equity securities, net (shares) | 1,711,350 | 451,826 | |||
Subsequent Event | Common Stock | |||||
Subsequent Event [Line Items] | |||||
Issuance of equity securities, net (shares) | 8,353,480 | ||||
Shares issued for warrant exercise (shares) | 9,599,999 | ||||
Subsequent Event | Preferred Stock | |||||
Subsequent Event [Line Items] | |||||
Issuance of equity securities, net (shares) | 1,246,519 | ||||
Over-Allotment Option | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Issuance of equity securities, net | $ 11,000,000 | ||||
Over-Allotment Option | Subsequent Event | Common Stock | |||||
Subsequent Event [Line Items] | |||||
Expected life (years) | 5 years | ||||
Number of rights per share | 1 | ||||
Exercise price (usd per share) | $ 1.15 | ||||
Over-Allotment Option | Subsequent Event | Common Stock | Class A | |||||
Subsequent Event [Line Items] | |||||
Number of shares in transaction | 7,101,307 | ||||
Price per share (usd per share) | $ 1.15 | ||||
Over-Allotment Option | Subsequent Event | Preferred Stock | Class B | |||||
Subsequent Event [Line Items] | |||||
Number of shares in transaction | 1,246,519 | ||||
Price per share (usd per share) | $ 1.15 |