In June 2018, Flex Pharma Inc. (NASDAQ:FLKS) issued a corporate update that spooked investors. Notably, the update set in motion a selling spree which saw the stock sink. In particular, the firm discontinued two clinical trials for a lead drug candidate. At the same time, the company said its Board of Directors was exploring the best way forward for the company.
Salarius is a white knight to Flex
Among the options on the table were sale of the company or merger. Fortunately for Flex Pharma, Salarius came knocking and a merger deal took off. Interestingly, the firm insists that the merger is with a partner diligently sought.
In a statement, William McVicar, CEO of Flex Pharma said, “Based on our diligence, we believe Salarius could be poised to advance multiple potential product opportunities that address significant unmet needs in oncology.”
In this light, it is clear that Flex has found a partner that will help it get back into business. The official statement on the transaction indicates that the merger is definitive. Notably, the new company will take on Salarius Pharmaceuticals, Inc. as its new name.
Further, the current Salarius leadership team will take the reins as the management of the new company. As per shareholding, only 19.9% of the shares of the new company will be available to Flex Pharma stockholders. The remaining 80.1% will belong to Salarius and its original stockholders.
Interestingly, this is the second merger in the biopharma sector after Bristol-Myers and Celgene agreed to fold into one company. Notably Bristol-Myers Squibb announced it would purchase Celgene in a deal valued at $74 billion. As such, the new company could be on the way to becoming one of the big players in the industry. In particular, the combined company will report annual revenues of above $37 billion with a potential EPS of $6.
The Salarius-Flex deal will conclude in the course of the first of 2019. Interestingly, only the firm’s Board of Directors have approved the deal which means a stockholder vote will have to happen. In case the deal sails through, Flex will take on Salarius’ pipeline as its lead assets.