Decoy Therapeutics Inc. signs a definitive agreement to acquire Salarius Pharmaceuticals, Inc. (NasdaqCM:SLRX) in a reverse merger transaction on January 10, 2025. The Merger is structured as a stock-for-stock transaction pursuant to which all of Decoy?s outstanding equity interests will be exchanged based on an exchange ratio for consideration of a combination of (a) shares of the Company?s common stock par value $0.0001 (the ?Common Stock?) in an amount up to (i) 19.9% of the Company?s total shares outstanding as of January 10, 2025 minus (ii) any shares of Salarius' Common Stock issued in any private placement between January 10, 2025 and the effective time of the First Merger (the "First Effective Time"), and (b) shares of Series A Preferred Stock, which is a newly designated series of preferred stock (?Preferred Stock?) that is intended to have economic rights equivalent to the Common Stock, but with only limited voting rights, in addition to the assumption of outstanding and unexercised stock options to purchase shares of Common Stock from the Decoy Therapeutics Inc. 2020 Equity Incentive Plan. The number of shares of common stock to be issued at the Closing and the number of shares of common stock underlying the Series A Preferred Stock to be issued at Closing is based on an exchange ratio which assumes a base value of $28.0 million for Decoy and $4.6 million for Salarius, subject in each case to adjustment based on the balance sheet cash available to each Salarius and Decoy at Closing (excluding any proceeds raised in in the Qualified Financing, as defined below). Based on these relative values, before taking into account the dilutive effects of the Qualified Financing, Salarius? legacy stockholders would retain approximately 14.1% of Salarius on an as-converted-to-common basis and, after giving effect to the exchange ratio and the conversion of the Series A Preferred Stock, Decoy stockholders would own approximately 85.9% of Salarius. The Certificate of Designation provides that the preferred stock will be convertible into shares of Common stock on a 1-for-1000 basis, subject to stockholder approval. Decoy Therapeutics will merge with a wholly-owned subsidiary of Salarius Pharmaceuticals, subject to the closing conditions set forth in the definitive agreement. The newly formed company will be named Decoy Therapeutics. If this Agreement is terminated by Salarius Pharmaceuticals pursuant to Section 9.1(h) or 9.1(d), then Salarius Pharmaceuticals shall pay to the Decoy a nonrefundable fee in an amount equal to $300,000. If this Agreement is terminated by Salarius pursuant to Section 9.1(c) or 9.1(e), then Decoy Therapeutics shall pay to Salarius a nonrefundable fee in an amount equal to $300,000.

The combined company will be led by Decoy?s Co-founders, Chief Executive Officer Frederick ?Rick? Pierce and Chief Scientific Officer Barbara Hibner, by Decoy?s Chief Business Officer Peter Marschel, Chief Technology Officer Mike Lipp and acting Chief Medical Officer and Scientific Advisory Board Chair Shahin Gharakhanian, M.D., and by Salarius? Chief Financial Officer Mark Rosenblum. The two companies have further agreed that upon closing of the merger and a post-closing shareholder vote approving the conversion of the preferred stock issued at closing, the newly merged company?s Board of Directors will be comprised of Rick Pierce and Barbara Hibner, and three independent Directors, two appointed by Decoy?s Board and one by Salarius? Board.

The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the Merger. Those conditions include, among other things: (i) the lack of a Material Adverse Effect on the respective businesses of Salarius and Decoy; (ii) the continued listing of our Common Stock on Nasdaq through the closing; (iii) the absence of any order, injunction, decree or other legal restraint preventing the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement or making the completion of the Merger or any of the other transactions contemplated by the Merger Agreement illegal; and (iv) the accuracy of the respective parties? representations and warranties contained in the Merger Agreement (subject to certain customary qualifications) and compliance by Salarius and Decoy with its respective agreements and covenants contained in the Merger Agreement. Definitive agreements were executed with unanimous approvals by the Boards of Directors of Salarius Pharmaceuticals and Decoy Therapeutics.

Canaccord Genuity is serving as exclusive strategic advisor, financial advisor and fairness opinion provider to Salarius, and Hogan Lovells US LLP; and Phillip D. Torrence, Jeff Kuras, and Emily J. Johns of Honigman LLP are serving as legal counsel. Ladenburg Thalmann is serving as financial advisor to Decoy, and; Brian S. Bernstein and Brian A. Pearlman of Nason, Yeager, Gerson, Harris & Fumero, P.A. are serving as legal counsel. American Stock Transfer and Trust Company, LLC acted as transfer agent to Salarius.