SLRX Pursuing Strategic Alternatives
NASDAQ:SLRX
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Salarius Pharmaceuticals (NASDAQ:SLRX) recently announced that it was exploring “strategic alternatives” and cutting costs in order to extend its resources. We are disappointed in this announcement as we continue to believe in the science behind the treatments being developed by Salarius.
However, we understand that funding has become more difficult in recent months as credit markets have tightened and that it takes large capital resources to shepherd a treatment through the FDA approval process. We are also hopeful that Salarius will either find the resources needed or be acquired by an entity that has the resources to continue the work that Salarius has undertaken. We continue to believe, based on the data that we’ve seen to this point, that the treatment being developed by the company have the opportunity to provide hope to those suffering from conditions with few acceptable treatment options available.
We also believe that this was a difficult decision for management of Salarius to come to, especially after recently announcing the FDA approval of its Phase 1 trial of its treatment known as SP-3164. But if the company was going to be unable to continue in the testing and approval process, we believe it was the correct decision to make.
Where does that leave investors? As we’ve written about extensively, we continue to be confident in the treatments being developed and that Salarius makes an attractive investment opportunity for private equity or an acquisition by a larger pharma company looking to bolster their pipeline. We obviously can’t know how this will work out, or if an investment will even be forthcoming, but we believe the attractiveness of the assets still makes Salarius a valuable company to an investor.
As a result of the reduction in negotiating power the company may have after the public announcement of the plan to explore strategic alternatives, along with the strain the finances of the company appear to be experiencing as evidenced by the reduction in head count by 50%, we are reducing our price target on SLRX.
We continue to believe that SLRX can provide value to investors at recent prices due to our view that the assets, including intellectual capital, of the company will be of value to a variety of investors, but with credit markets tightening, risks have risen, and only those with a higher risk tolerance should take a look at SLRX.
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