Salarius (now Decoy Therapeutics) cuts its valuation to $2.31 million in merger deal

Salarius Pharmaceuticals, Inc. (Nasdaq: SLRX) agreed on June 10, 2025 to cut its own relative valuation in its planned merger with Decoy Therapeutics Inc. from $4.6 million to $2.31 million. The change is in a second amendment to the merger agreement, disclosed in a Form 8-K dated June 11, 2025. Salarius's existing shareholders would keep 7.6% of the combined company and Decoy's holders 92.4%, on a fully diluted basis and before the required financing.

What the amendment changes

The merger agreement was signed on January 10, 2025, between Salarius, two merger subsidiaries it created and Decoy. The original terms valued Decoy at a base of $28.0 million against $4.6 million for Salarius, with adjustments for the cash each side held at closing. Salarius holders would have kept approximately 14.1%.

The first amendment, dated March 28, 2025, removed the cash adjustment and fixed ownership at 14.1% for Salarius and 85.9% for Decoy. The second amendment reopens that split. Salarius says its common stock price has experienced "substantial deterioration" since the original agreement and after the first amendment, which materially affected the relative valuations behind the exchange ratio. The 8-K adds that the amendment was also meant to secure necessary consents from Decoy noteholders. It does not say how many noteholders are involved or what they asked for.

To reflect the lower valuation, the number of common shares underlying the Series A Preferred Stock that Decoy stockholders receive at closing rises by approximately 17 million shares.

Closing conditions and new price protection

Closing still depends on minimum proceeds of at least $6.0 million from offerings, which the agreement calls the Qualified Financing, and on the continued listing of Salarius common stock on Nasdaq. The 8-K gives no date for the financing or the closing, and it names no bank or placement agent.

The amendment revises the certificate of designation for the Series A Non-Voting Convertible Preferred Stock. It adds anti-dilution price protection for a year from issuance. If the combined company later completes a dilutive financing of at least $2 million at a weighted average effective price below the public offering price in the Qualified Financing, the conversion ratio resets and preferred holders receive more shares in proportion to the dilution.

The preferred cannot convert until the combined company meets Nasdaq's relevant initial listing standards, and the certificate adds a provision meant to stop preferred holders from short selling the common stock. As before, conversion also needs stockholder approval under Nasdaq listing rule 5635. Salarius agreed to call a special meeting after closing to vote on conversion, a new equity incentive plan and, if needed, a reverse stock split.

The deal structure

The merger is a stock-for-stock transaction. Decoy ends up as a wholly owned subsidiary of Salarius after two merger steps. Its equity holders receive common stock of up to 19.9% of Salarius's shares outstanding on January 10, 2025, plus Series A Preferred Stock. Salarius retained Canaccord Genuity, LLC in August 2023 to lead a review of strategic alternatives.

The business Salarius brings

Salarius describes itself in its annual report, filed March 21, 2025, as a clinical-stage biopharmaceutical company working on cancers caused by dysregulated gene expression. Its pipeline has two small molecule drugs, one of them SP-3164, a targeted protein degrader. The report says a lack of funding made the company curtail the spending needed to begin a clinical trial program for it.

The other is seclidemstat, also called SP-2577, a targeted protein inhibitor. On July 19, 2024, Salarius closed its Phase 1/2 trial of the drug in Ewing sarcoma to conserve cash. It still supports a trial run by The University of Texas MD Anderson Cancer Center that combines the drug with azacytidine. The FDA put that trial on partial clinical hold in July 2024 after a serious and unexpected grade 4 adverse event, encephalopathy, which the company said was reversible. The hold was lifted in February 2025.

What the 8-K leaves out

The 8-K gives no cash balance, net loss or pro forma capital structure for Salarius, and it does not describe Decoy's business or finances. Neither does it say what becomes of the seclidemstat and SP-3164 programs once the merger closes.

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