Decoy Therapeutics (DCOY) risk factors, FY2024 10-K

Risks Related to the Merger

1. 01The Merger may be completed even though certain events occur prior to Merger Closing that materially and adversely affect Salarius
2. 02If adverse changes occur and Salarius and Decoy still complete the Merger, the market price of the combined company’s common stock may suffer. This in turn may reduce the value of the Merger to the stockholders of Salarius
3. 03$100,000 for every $100,000 below the threshold. To the extent the Company Cash Amount falls below $2.0 million, Decoy’s assumed value would be reduced by $100,000 for every $100,000 below the threshold
4. 04Stockholders of the combined company may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger and the Qualified Financing
5. 05During the pendency of the Merger, Salarius may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect its business
6. 06Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement
7. 07Because the lack of a public market for Decoy’s capital stock makes it difficult to evaluate the value of Decoy’s capital stock, the stockholders of Decoy may receive shares of Salarius common stock in the Merger that have a value that is greater than, the fair market value of Decoy’s capital stock
8. 08The combined company may become involved in securities class action litigation that could divert management’s attention and harm the combined company’s business and insurance coverage may not be sufficient to cover all costs and damages
9. 09The Merger Agreement between Salarius and Decoy may be terminated in accordance with its terms and the Merger may not be completed
10. 10Salarius may not be able to effect the Merger pursuant to the Merger Agreement, and failure to complete the Merger would negatively impact Salarius’ stock price and materially adversely impact the future business and financial results of the Salarius
11. 11The market price of Salarius’ common stock following the Merger may decline as a result of the Merger
12. 12Salarius and Decoy securityholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the Merger Closing as compared to their current ownership and voting interest in the respective companies
13. 13The combined company will need to raise additional capital by issuing securities or debt or through licensing or other strategic arrangements, which may cause dilution to the combined company’s stockholders or restrict the combined company's operations or impact its proprietary rights

Risks Related to our Financial Position and Capital Needs

1. 14Salarius’ common stock may be subject to delisting from Nasdaq, which would seriously harm the liquidity of our stock and our ability to raise capital or complete a strategic transaction
2. 15listed securities is below $35 million. As a result, Salarius is not in compliance with the Stockholders’ Equity Requirement and expects to receive a delisting notice from Nasdaq
3. 16Salarius is substantially dependent on its remaining employees and consultants to facilitate the consummation of the Merger
4. 17The pendency of the Merger could have an adverse effect on the trading price of Salarius’ common stock and its business, financial condition and prospects
5. 18Salarius has never generated any revenue from product sales and may never generate revenue or be profitable

Risks Related to the Development of Salarius’ Product Candidates

1. 19The approach Salarius has taken to discover and develop novel oncology therapeutics using epigenetic enzymes to moderate transcription factors and thereby control abnormal protein expression is unproven and may never lead to marketable products
2. 20Clinical trials are costly, time consuming and inherently risky, and may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities
3. 21Salarius’ product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial viability of an approved label, or result in significant negative consequences following marketing approval, if any
4. 22Product development involves a lengthy and expensive process with an uncertain outcome, and results of earlier pre-clinical and clinical trials may not be predictive of future clinical trial results
5. 23Difficulty in enrolling patients is a common hurdle faced by early stage biotechnology companies and could, and often does, delay or prevent clinical trials of product candidates
6. 24Salarius may face potential product liability, and, if successful claims are brought against Salarius, Salarius may incur substantial liability and costs which could be greater than Salarius’ insurance coverage or overall resources

Risks Related to Regulatory Approval of Salarius’ Product Candidates and Other Legal Compliance Matters

1. 25Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if Salarius believes one of Salarius’ product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation
2. 26regulatory agencies in the United States and foreign jurisdictions. Failure to obtain marketing approval for Salarius’ product candidates will prevent Salarius from commercializing them in those markets

Risks Related to Salarius’ Intellectual Property

1. 27Salarius may not be successful in obtaining or maintaining necessary rights to Salarius’ targets, product compounds and processes for Salarius’ development pipeline through acquisitions and in-licenses
2. 28Salarius intends to rely on patent rights for Salarius’ product candidates and any future product candidates. If Salarius is unable to obtain or maintain exclusivity from the combination of these approaches, Salarius may not be able to compete effectively in Salarius’ markets
3. 29intellectual property protection in the United States and in other countries with respect to Salarius’ proprietary technology and products
4. 30Salarius may not have sufficient patent term protections for Salarius’ product candidates to effectively protect Salarius’ business
5. 31exclusivity to protect Salarius’ product candidates, Salarius’ business and results of operations will be adversely affected
6. 32If Salarius is unable to maintain effective proprietary rights for Salarius’ product candidates or any future product candidates, Salarius may not be able to compete effectively in Salarius’ proposed markets
7. 33Salarius’ commercial success depends in part on Salarius’ ability to develop, manufacture, market and sell Salarius’ product candidates and use Salarius’ proprietary technology without infringing the patent rights of third parties
8. 34Salarius may be unable to acquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that Salarius identifies as necessary for Salarius’ product candidates
9. 35Salarius may be involved in lawsuits to protect or enforce Salarius’ patents or the patents of Salarius’ licensors, which could be expensive, time consuming, and unsuccessful
10. 36Salarius may not be able to protect Salarius’ intellectual property rights throughout the world

Risks Related to Our Common Stock

1. 37Future sales of a significant number of our shares of common stock in the public markets, or the perception that such sales could occur, could depress the market price of our shares of our common stock or cause our stock price to decline
2. 38We do not currently intend to pay dividends on our common stock, and any return to investors is expected to come, if at all, only from potential increases in the price of our common stock
3. 39Failure in our information technology and storage systems could significantly disrupt the operation of our business and/or lead to potential large liabilities