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Flex Pharma to merge with cancer drug developer Salarius

Flex Pharma Inc. said it will merge with privately held oncology company Salarius Pharmaceuticals LLC.

Flex Pharma's shares were up 45.18% to about 55 cents on Nasdaq as of 1 p.m. ET on Jan. 4.

The company said Houston, Texas-based Salarius recently completed a $6.4 million private placement, which combined with cash from Flex Pharma is expected to fund the combined company to mid-2020 and advance Salarius' lead drug candidate, seclidemstat, in a phase 1 trial to treat Ewing sarcoma — a rare type of cancer that occurs in bones or in the soft tissue around the bones.

Boston-based biotechnology company Flex Pharma said Salarius investors will own about 80.1% of the combined company, which will be renamed as Salarius Pharmaceuticals Inc., while the remaining 19.9% will be held by Flex stockholders.

Flex Pharma stockholders will also receive a right to receive warrants, six months and one day after the closing of the transaction, allowing them to purchase additional shares. Upon exercise of the warrants, Flex Pharma stockholders would own an additional 2.4%, or a total of 22.3%, of the value of the combined entity, subject to adjustment based on Flex Pharma's net cash at closing.

Salarius' clinical pipeline will become the combined company's lead assets following the transaction.

David Arthur, Salarius' CEO, will lead the combined company along with his management team while Flex Pharma's president and CEO, William McVicar, is expected to join the board of the new entity following the merger's close.

The transaction has been approved by Flex Pharma's board and Salarius' board of managers. The deal is expected to close in the first half of the year, subject to approvals of Flex Pharma stockholders, Salarius' members and other customary conditions.

Wedbush PacGrow served as strategic adviser, while Dentons Canada LLP and Duane Morris LLP are acting as legal counsel to Flex Pharma. Healthios Capital Markets is serving as financial adviser, while Pillsbury Winthrop Shaw Pittman LLP is acting as legal counsel to Salarius.