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Flex Pharma Finds A Lifeline In Merger With Oncology Biotech Salarius Pharma

Shanthi Rexaline

Biotech deal flow is continuing in the new year following Thursday's announcement of Bristol-Myers Squibb Co (NYSE: BMY)'s proposed -billion acquisition of Celgene Corporation (NASDAQ: CELG).

What Happened

Embattled Flex Pharma Inc (NASDAQ: FLKS) announced a deal Friday to merge with privately held Salarius Pharma, an oncology company targeting the epigenetic causes of cancer.

Following the closing of the deal, Flex shareholders would own about 19.9 percent of the combined company and Salarius shareholders the remaining 80.1 percent.

Flex shareholders would also receive a right to receive warrants six months and a day after the closing of the deal, which gives them the option to purchase additional shares.

The combined company is to be called Salarius Pharma, with leadership from its current management team.

Why It's Important

Flex Pharma shares came under intense selling pressure in June following the discontinuation of two clinical trials for its lead product candidate FLX-787 in both amyotrophic lateral sclerosis and Charcot-Marie-Tooth disorder.

Simultaneously, the company said it is planning to explore strategic opportunities.

"Based on our diligence, we believe Salarius could be poised to advance multiple potential product opportunities that address significant unmet needs in oncology," Flex Pharma CEO William McVicar said in a statement. 

"I look forward to supporting the company and being a member of the Salarius board of directors following the closing of the transaction."

What Next

The companies expect the deal to be consummated in the first half of 2019 pending approval by Flex shareholders and other customary closing conditions that include approval by Salarius' members.

Salarius' pipeline will become the lead assets of the combined company following the transaction. Salarius' lead compound seclidemstat is indicated to treat epigenetic dysregulation underlying Ewing sarcoma and is being evaluated in an early stage trial. Enrollment of patients in an open-label Phase 1 dose escalation/dose expansion study is underway, with the study expected to be completed in 2020.

Flex shares were rallying 58.93 percent to 61 cents at the time of publication Friday. 

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