As filed with the Securities and Exchange Commission on February 13, 2019

Registration No.           

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

FLEX PHARMA, INC.

(Exact name of registrant as specified in its charter)

31 St. James Avenue, 6^th Floor

Boston, MA 02116

(617) 874-1821

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

William McVicar, Ph.D

President and Chief Executive Officer

31 St. James Avenue, 6^th Floor

Boston, MA 02116

(617) 874-1821

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement and at the effective time of the merger of Falcon Acquisition Sub, LLC, a wholly owned subsidiary of Flex Pharma, Inc., a Delaware corporation, with and into Salarius Pharmaceuticals, LLC, a Delaware limited liability company, as described in the agreement and plan of merger dated as of January 3, 2019, as attached as Annex A to the proxy statement/prospectus/information statement forming part of this registration statement.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☒

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

CALCULATION OF REGISTRATION FEE

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus/information statement is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus/information statement is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY—SUBJECT TO COMPLETION, DATED FEBRUARY 13, 2019

PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Flex Pharma, Inc. and Members of Salarius Pharmaceuticals, LLC:

On January 3, 2019, Flex Pharma, Inc., a Delaware corporation (which we refer to as “Flex” or “Flex Pharma”), Falcon Acquisition Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of Flex Pharma (which we refer to as “Merger Sub”), and Salarius Pharmaceuticals, LLC, a Delaware limited liability company (which we refer to as “Salarius”), entered into an Agreement and Plan of Merger (which we refer to as the “Merger Agreement”) pursuant to which, among other things, Merger Sub will merge with and into Salarius, with Salarius continuing as a wholly owned subsidiary of Flex Pharma and the surviving company of the merger (which we refer to as the “merger”).

The Merger Agreement (i) values Flex Pharma at $10.5 million, subject to adjustment, on a dollar-for-dollar basis, based on Flex Pharma’s net cash balance at the closing of the merger compared to a target net cash of $3.3 million, and (ii) values Salarius at $36.6 million, subject to adjustment, on a dollar-for-dollar basis, based on the sale of Series A Units pursuant to subscription agreements that Salarius entered into prior to the Merger Agreement compared to the target sale of $7.0 million of Series A Units.

At the closing of the merger, each outstanding common unit, profits interest common unit and Series A unit of Salarius will convert into the right to receive shares of Flex Pharma’s common stock (subject to the payment of cash in lieu of fractional shares and after giving effect to an anticipated reverse stock split of Flex Pharma’s common stock, as described below) at the conversion ratio formulae described in the Merger Agreement. Under those formulae, immediately following the effective time of the merger, Flex Pharma’s current stockholders will own approximately 19.9% of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants (as defined below) to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush (as defined below)) and Salarius’ current members will own approximately 80.1% of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush). For purposes of calculating the conversion ratios, the number of outstanding shares of Flex Pharma’s common stock immediately before the merger takes into account the dilutive effect of approximately 849,610 shares of Flex Pharma’s common stock underlying options outstanding as of January 3, 2019 that have an exercise price less than or equal to $1.35 per share of Flex Pharma’s common stock. Approximately 1,447,426 shares of Flex Pharma’s common stock underlie options outstanding as of January 3, 2019 that have an exercise price greater than $1.35 per share of Flex Pharma’s common stock.

In addition, at or prior to the closing of the merger, Flex Pharma will pay a dividend of or distribute one right per share of Flex Pharma’s common stock to its stockholders of record as of a date and time determined by Flex Pharma’s board of directors. Each right will entitle such stockholders to receive a warrant to purchase shares of Flex Pharma’s common stock (which we refer to as a “Warrant”) six months and one day following the closing date of the merger.

The Warrants will contain customary terms and conditions, provided that the Warrants:

The Warrant Aggregate Value generally represents the difference between (i) Flex Pharma’s value and (ii) the value of Flex Pharma’s common stock that Flex Pharma’s current stockholders will have in the combined company. Accordingly, the Warrant Aggregate Value will be based in part on Flex Pharma’s net cash balance at the time of closing of the merger and adjusted for the amount of additional financing consummated by Salarius at or before the closing of the merger, as further described in the Merger Agreement.

Flex Pharma common stock is listed on the Nasdaq Capital Market under the symbol “FLKS.” Prior to consummation of the merger, Flex Pharma intends to file an initial listing application for the combined company with Nasdaq pursuant to its “reverse merger” rules. On [●], 2019, the last trading day before the date of this proxy statement/prospectus/information statement, the closing sale price of Flex Pharma common stock was $[●] per share.

Following the merger, Flex Pharma will change its name to “Salarius Pharmaceuticals, Inc.” (which we refer to as “New Salarius” or the “combined company”) and expects to trade on either the Nasdaq Global Market or the Nasdaq Capital Market under the symbol “SLRX.”

Flex Pharma is holding a special meeting of its stockholders to obtain the necessary stockholder approvals necessary to complete the merger and related matters. At the special meeting, which will be held at [●], at [●] local time, on [●], 2019, unless postponed or adjourned to a later date, Flex Pharma will ask its Stockholders, among other things to consider and act upon the following matters:

After careful consideration, and upon the recommendation of the Special Committee of Flex Pharma’s board of directors, Flex Pharma’s board of directors (i) determined that the merger and the other transactions contemplated by the Merger Agreement are fair to, and in the best interests of Flex Pharma and its stockholders, (ii) authorized and approved the Merger Agreement and the transactions contemplated by the Merger Agreement, (iii) declared that the Merger Agreement, the merger and the other transactions contemplated by the Merger Agreement are advisable to Flex Pharma and its stockholders and (iv) recommended that Flex Pharma’s stockholders approve the proposals referred to above. Accordingly, Flex Pharma’s board of directors unanimously recommends that Flex Pharma’s stockholders vote “FOR” each of the proposals referred to above.

After careful consideration, the Salarius board of managers (i) determined that the merger is fair to, and in the best interests of, the Salarius and the Salarius members, (ii) has adopted and declared advisable the Merger Agreement and approved the adoption of the Merger Agreement and the approval of the merger and related transactions, and (iii) has determined to recommend that the Salarius members vote to adopt the Merger Agreement, approve the merger and related transactions. Accordingly, Salarius’ board of managers unanimously recommends that its members sign and return the member written consent to Salarius indicating their approval of the merger and other transactions contemplated by the Merger Agreement.

More information about Flex Pharma, Salarius and the proposed transactions are contained in this proxy statement/prospectus/information statement. Flex Pharma and Salarius urge you to read the proxy statement/prospectus/information statement carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS ” BEGINNING ON PAGE 21.

Your vote is important. If you are a Flex Pharma stockholder, whether or not you expect to attend the special meeting in person, please complete, date, sign and promptly return the accompanying proxy card in the enclosed postage paid envelope to ensure that your shares will be represented and voted at the special meeting. You can also vote your shares via the internet or by telephone as provided in the instructions set forth in the enclosed proxy card. If you hold your shares in “street name” through a broker, you should follow the procedures provided by your broker.

Flex Pharma and Salarius are excited about the opportunities the merger brings to both Flex Pharma’s stockholders and Salarius’ members, and thank you for your consideration and continued support.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or passed upon the adequacy or accuracy of this proxy statement/prospectus/information statement. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus/information statement is dated [●], 2019, and is first being mailed to stockholders and members on or about [●], 2019.

REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus/information statement contains a notice of meeting with respect to the special meeting of stockholders at which Flex Pharma’s stockholders will consider and vote on the proposals (1) to approve the issuance of Flex Pharma’s common stock to Salarius’ members pursuant to the Merger Agreement and the resulting “change of control” of Flex Pharma under Nasdaq rules and the dividend or distribution of rights, and issuance of Warrants, to Flex Pharma’s stockholders pursuant to the Merger Agreement, (2) to approve an amendment of Flex Pharma’s Certificate of Incorporation to effect a reverse stock split of Flex Pharma’s common stock to satisfy the listing requirements of the Nasdaq Global Market or the Nasdaq Capital Market, (3) approve an amendment of Flex Pharma’s Certificate of Incorporation to effect the name change of Flex Pharma to “Salarius Pharmaceuticals, Inc.”, and (4) to consider and vote on an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to approve Proposals 1, 2 or 3.

If you are a Flex Pharma Stockholder:

Additional business and financial information about Flex Pharma can be found in documents previously filed by Flex Pharma with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”). This information is available to you without charge on the SEC’s website. Flex Pharma’s stockholders will also be able to obtain the proxy statement/prospectus/information statement, free of charge, from Flex Pharma by requesting copies in writing using the following contact information:

FLEX PHARMA, INC.

Attn: Secretary

31 St. James Avenue, 6th Floor

Boston, MA 02116

Tel: (617) 874-1821

You may also request additional copies from Flex Pharma’s proxy solicitor using the following contact information:

INNISFREE M&A INCORPORATED

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders Call Toll-Free: (XXX) XXX-XXXX

To ensure timely delivery of these documents, any requests should be made no later than [●], 2019 to receive them before the special meeting.

See “Where You Can Find More Information” beginning on page     .

If you are a Salarius member:

If you have additional questions or would like to obtain an additional copy of the proxy statement/prospectus/information statement, free of charge, please contact:

SALARIUS PHARMACEUTICALS, LLC

Tiberend Strategic Advisors, Inc.

Joshua Drumm, Ph.D. (Investors)

(212) 375-2664

jdrumm@tiberend.com

David Schemelia (Media)

(212) 375 6298

dschemelia@tiberend.com

Flex Pharma, Inc.

31 St. James Avenue, 6^th Floor, BOSTON, MA 02116

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held On [●], 2019

To the Stockholders of Flex Pharma, Inc.:

A special meeting of stockholders of Flex Pharma, Inc. (which we refer to as “Flex Pharma”) will be held at [●], local time, on [●], 2019, at [●], to consider and act upon the following matters:

If Flex Pharma is to complete the merger with Salarius, stockholders must approve Proposals 1, 2 and 3. The approval of Proposal 4 is not a condition to the closing of the transactions contemplated by the Merger Agreement.

Stockholders also will consider and act on any other matters as may properly come before the special meeting or any adjournment or postponement thereof, including any procedural matters incident to the conduct of the special meeting.

Flex Pharma’s common stock is the only type of security entitled to vote at the special meeting. The board of directors has fixed [●], 2019 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof. Only holders of record of shares of Flex Pharma’s common stock at the close of business on the record date are entitled to notice of, and to vote at, the special meeting. At the close of business on the record date, Flex Pharma had [●] shares of common stock outstanding and entitled to vote at the special meeting. Each holder of record of shares of common stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the special meeting.

Your vote is important. The affirmative vote of the holders of a majority of the shares of Flex Pharma’s common stock present in person or represented by proxy and entitled to vote on such matter at the special meeting is required for approval of Proposals 1 and 4. The affirmative vote of holders of a majority of the outstanding shares of Flex Pharma’s common stock as of the record date for the special meeting is required for approval of Proposals 2 and 3. Whether or not you plan to attend the special meeting in person, please submit your proxy promptly by telephone or via the internet in accordance with the instructions on the enclosed proxy

card or complete, date, sign and promptly return the accompanying proxy card in the enclosed postage paid envelope to ensure that your shares will be represented and voted at the special meeting. If you date, sign and return your proxy card without indicating how you wish to vote, your proxy will be counted as a vote in favor of Proposals 1 through 4. If you fail either to return your proxy card or to vote in person at the special meeting, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote against Proposals 2 and 3. If you attend the special meeting, you may, upon your written request, withdraw your proxy and vote in person. You may revoke your proxy (i) at any time before the polls close at the special meeting by sending a written notice to the Corporate Secretary of Flex Pharma, (ii) at any time before the polls close at the special meeting by providing a duly executed proxy card bearing a later date than the proxy being revoked, (iii) before [●] Eastern Time on [●] by submitting a proxy on a later date by telephone or via the internet (only your last telephone or internet proxy will be counted), or (iii) by attending the special meeting and voting in person.

By Order of the Board of Directors of Flex Pharma, Inc.

/s/ William McVicar

William McVicar

President, Chief Executive Officer and Director

[●], 2019

Boston, Massachusetts

FLEX PHARMA’S BOARD OF DIRECTORS (1) HAS DETERMINED THAT THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST INTERESTS OF, FLEX PHARMA AND ITS STOCKHOLDERS, (2) HAS AUTHORIZED AND APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, (3) HAS DECLARED THAT THE MERGER AGREEMENT, THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT ARE ADVISABLE TO FLEX PHARMA AND ITS STOCKHOLDERS AND (4) RECOMMENDED THAT FLEX PHARMA’S STOCKHOLDER APPROVE THE PROPOSALS REFERRED TO ABOVE.

FLEX PHARMA’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT FLEX PHARMA’S STOCKHOLDERS VOTE “FOR” EACH OF THE PROPOSALS REFERRED TO ABOVE.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR FLEX PHARMA’S SPECIAL MEETING TO BE HELD ON [●], 2019

The accompanying proxy statement/prospectus/information statement is available at www.[●].com

TABLE OF CONTENTS

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References to “Flex Pharma” and “Salarius” in this proxy statement/prospectus/information statement refer to Flex Pharma, Inc. and Salarius Pharmaceuticals, LLC, respectively. References to the “combined company” refer to Flex Pharma and its wholly owned subsidiary, Salarius, after the merger. Except as otherwise noted, references to “we,” “us” or “our” refer to both Flex Pharma and Salarius. References to “Merger Sub” refer to Falcon Acquisition Sub, LLC, a newly formed, wholly owned subsidiary of Flex Pharma.

References to the “Merger Agreement” refer to that certain agreement and plan of merger dated as of January 3, 2019 among Flex Pharma, Merger Sub and Salarius, as amended from time to time. References to the “merger” refer to the merger of Merger Sub with and into Salarius, with Salarius surviving as the surviving entity and as a wholly owned subsidiary of Flex Pharma as contemplated under the Merger Agreement.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Except as specifically indicated, the following information and all other information contained in this proxy statement/prospectus/information statement does not give effect to the reverse stock split described in Proposal 2.

The following section provides answers to frequently asked questions about the special meeting of stockholders and the merger. This section, however, only provides summary information. These questions and answers may not address all issues that may be important to you as a stockholder or member. For a more complete response to these questions and for additional information, please refer to the cross-referenced pages below. You should carefully read this entire proxy statement/prospectus/information statement, including each of the annexes.

Q: What is the merger?

A: Flex Pharma, Merger Sub and Salarius have entered into a Merger Agreement that contains the terms and conditions of the proposed business combination of Flex Pharma and Salarius. Under the Merger Agreement, Flex Pharma will acquire all of the outstanding memberships units of Salarius. This transaction is referred to as the merger.

Immediately prior to the effective time of the merger, each Salarius common unit, Salarius Series A preferred unit and Salarius profits interest common unit will be converted into the right to receive a number of shares of Flex Pharma common stock determined as follows:

Flex Pharma stockholders will continue to own and hold their existing shares of Flex Pharma common stock.

Immediately following the effective time of the merger, Salarius’ current members will own approximately 80.1% of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush) and Flex Pharma’s current stockholders will own approximately 19.9% of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush). For purposes of calculating the conversion ratios of membership units of Salarius, the number of outstanding shares of Flex Pharma’s common stock immediately before the merger takes into account the dilutive effect of approximately 849,610 shares of Flex Pharma’s common stock underlying options outstanding as of January 3, 2019 that have an exercise price less than or equal to $1.35 per share of Flex Pharma’s common stock. Approximately 1,447,426 shares of Flex Pharma’s common stock underlie

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options outstanding as of January 3, 2019 that have an exercise price greater than $1.35 per share of Flex Pharma’s common stock.

In addition, at or prior to the closing of the merger, Flex Pharma will pay a dividend of or distribute one right per share of Flex Pharma’s common stock to its current stockholders of record as of a date and time determined by Flex Pharma’s board of directors. Each right will entitle such stockholders to receive a warrant to purchase shares of Flex Pharma’s common stock (which we refer to as a “Warrant”) six months and one day following the closing date of the merger. The Warrants will have an exercise price per share of Flex Pharma’s common stock equal to the fair market value of a share of Flex Pharma’s common stock on the closing date of the merger (such exercise price subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to Flex Pharma’s common stock). The Warrants will be exercisable, in the aggregate, with respect to that number of share of Flex Pharma’s common stock equal to the Warrant Aggregate Value (as defined in the Merger Agreement) divided by the value (determined using the Black-Scholes-Merton option pricing formula) of a warrant to purchase a share of Flex Pharma’s common stock on the closing date of the merger. The Warrant Aggregate Value generally represents the difference between (i) Flex Pharma’s value and (ii) the value of Flex Pharma’s common stock that Flex Pharma’s current stockholders will have in the combined company. Accordingly, the Warrant Aggregate Value will be based in part on Flex Pharma’s net cash balance at the time of closing of the merger and adjusted for the amount of additional financing consummated by Salarius at or before the closing of the merger, as further described in the Merger Agreement.

For a more complete description of the merger, please see the section entitled “The Merger Agreement” beginning on page 120 of this proxy statement/prospectus/information statement.

The calculation of the Exchange Ratio and the number of shares of Flex Pharma common stock to which each Salarius member is entitled is complex. Please see the section entitled “The Merger Agreement—Merger Consideration” in this proxy statement/prospectus/information statement for more information.

Q: What will happen to Flex Pharma if, for any reason, the merger with Salarius does not close?

A: Flex Pharma has invested significant time and incurred, and expects to continue to incur, significant expenses related to the proposed merger with Salarius. In the event the merger does not close, Flex Pharma will have a limited ability to continue its current operations without obtaining additional financing. Although Flex Pharma’s board of directors may elect to, among other things, attempt to complete another strategic transaction if the merger with Salarius does not close, Flex Pharma’s board of directors would likely vote to divest all or a portion of Flex Pharma’s business or take steps necessary to liquidate or dissolve Flex Pharma’s business and assets if a viable alternative strategic transaction is not available.

Q: Why are the two companies proposing to merge?

A: Following the merger, Flex Pharma and Salarius believe that the merger will result in a clinical-stage oncology company targeting the epigenetic causes of cancers for patients that need them most. Flex Pharma and Salarius believe that the combined company will have the following potential advantages: (i) a differentiated, clinical-stage clinical product development pipeline that addresses significant unmet needs in oncology; (ii) appropriate resources; (iii) an experienced management team; and (iv) the potential to access additional sources of capital.

Flex Pharma’s board of directors considered a number of factors that supported its decision to approve the Merger Agreement. In the course of its deliberations, Flex Pharma’s board of directors also considered a variety of risks and other countervailing factors related to entering into the Merger Agreement.

For a more complete discussion of Flex Pharma’s reasons for the merger, please see the section entitled “The Merger—Flex Pharma’s Reasons for the Merger; Recommendations of the Flex Pharma Board of Directors” beginning on page 105 of this proxy statement/prospectus/information statement.

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Q: What is required to consummate the merger?

A: To consummate the merger, among other things, Flex Pharma’s stockholders must approve (1) the issuance of Flex Pharma’s common stock to Salarius’ members pursuant to the Merger Agreement and the resulting “change of control” of Flex Pharma under Nasdaq rules, (2) an amendment of Flex Pharma’s Certificate of Incorporation to effect a reverse stock split of Flex Pharma’s common stock, and (3) an amendment of Flex Pharma’s Certificate of Incorporation to effect the name change of Flex Pharma to “Salarius Pharmaceuticals, Inc.” The affirmative vote of the holders of a majority of the shares of Flex Pharma’s common stock present in person or represented by proxy and entitled to vote on such matter at the special meeting is required for approval of Proposals 1 and 4. The affirmative vote of holders of a majority of the outstanding shares of Flex Pharma’s common stock as of the record date for the special meeting is required for approval of Proposals 2 and 3.

The adoption of the Merger Agreement and the approval of the merger and related transactions by the members of Salarius require the affirmative votes of the holders of a majority of Salarius common units, Salarius Series A preferred units and Salarius profits interest common units, voting together as a single class.

In addition to obtaining the stockholder and member approvals, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived in order to consummate the merger.

For a more complete description of the closing conditions under the Merger Agreement, please see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 126 of this proxy statement/prospectus/information statement.

Q: Are there any federal or state regulatory requirements that must be complied with or federal or state regulatory approvals or clearances that must be obtained in connection with the merger?

A: Neither Flex Pharma nor Salarius is required to make any filings or to obtain any approvals or clearances from any antitrust regulatory authorities in the United States or other countries to consummate the merger. In the United States, Flex Pharma must comply with applicable federal and state securities laws and Nasdaq rules and regulations in connection with the issuance of shares of Flex Pharma’s common stock in the merger, including the filing with the Securities and Exchange Commission (which we refer to as the “SEC”) of this proxy statement/prospectus/information statement and the required stockholder approval for the resulting “change of control” of Flex Pharma under Nasdaq rules. Prior to consummation of the merger, Flex Pharma intends to file an initial listing application with the Nasdaq Global Market or Nasdaq Capital Market pursuant to Nasdaq’s “reverse merger” rules and to effect the initial listing of Flex Pharma’s common stock issuable in connection with the merger.

Q: What will Salarius’ members receive in the merger?

A: Subject to the terms of the Merger Agreement, on a pro forma basis, based upon the number of shares of Flex Pharma common stock to be issued in the merger, (i) Flex Pharma’s current stockholders will own approximately 19.9% of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush) and Salarius’ current members will own approximately 80.1% of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush). Please also see the answer to the above question “What is the merger?”

For a more complete discussion of the conversion ratio at the effective time of the merger, please see the section entitled “The Merger Agreement—Merger Consideration” beginning on page 121 of this proxy statement/prospectus/information statement.

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Q: Who will be the directors of Flex Pharma following the Merger?

A: Immediately following the merger, the combined company is expected to have a seven member board of directors, six of whom will be designated by Salarius and one of whom will be designated by Flex Pharma. Flex Pharma expects the board of directors to be comprised of: Jonathan P. Northrup, Paul Lammers, David J. Arthur, Tess Burleson, Arnold C. Hanish, Bruce J. McCreedy and William K. McVicar.

Q: Who will be the executive officers of Flex Pharma immediately following the Merger?

A: Immediately following the merger, the executive management team of Flex Pharma is expected to be composed solely of the members of the Salarius executive management team prior to the merger, as set forth below:

Q: What are the material federal income tax consequences of the merger?

A: The receipt of Flex Pharma common stock and cash in lieu of fractional shares, if any, in exchange for Salarius common units, Salarius Series A preferred units and Salarius profits interest common units (collectively referred to as the “Units”) pursuant to the Merger Agreement is generally intended to qualify as an exchange described in Section 351 of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”) for U.S. holders (as defined in “Material U.S. Federal Income Tax Consequences of the Merger, the Reverse Stock Split and the Warrants”) for U.S. federal income tax purposes. It is intended that a U.S. holder generally will not recognize gain or loss on the receipt of Flex Pharma common stock in exchange for the Units (although such U.S. holder may recognize gain with respect to any cash received in lieu of fractional shares). Flex Pharma’s stockholders will not sell, exchange or dispose of any shares of Flex Pharma’s common stock as a result of the merger. Thus, there will be no material U.S. federal income tax consequences to Flex Pharma’s stockholders as a result of the merger.

The dividend or distribution of rights and issuance of Warrants to Flex Pharma’s stockholders is intended to constitute a distribution of stock under Section 305(a) of the Code. Thus, there should not be any material U.S. federal income tax consequences to Flex Pharma’s stockholders as a result of the distribution.

For a more complete description of the tax consequences of the merger, please see the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Reverse Stock Split and the Merger” beginning on page 117 of this proxy statement/prospectus/information statement.

Q: Why is Flex Pharma seeking stockholder approval to issue shares of common stock to existing members of Salarius in the merger?

A: Because Flex Pharma’s common stock is listed on the Nasdaq Global Market or the Nasdaq Capital Market, Flex Pharma is subject to the Nasdaq Listing Rules. Rule 5635(a) of Nasdaq Listing Rules requires stockholder approval with respect to issuances of Flex Pharma’s common stock, among other instances, when the shares to be issued are being issued in connection with the acquisition of the stock or assets of another company and are equal to 20% or more of the outstanding shares of Flex Pharma’s common stock before the issuance. Rule 5635(b) of the Nasdaq Listing Rules also requires stockholder approval when any issuance or potential issuance will result in a “change of control” of the issuer. Although Nasdaq has not adopted any rule on what constitutes a “change of control” for purposes of Rule 5635(b), Nasdaq has previously indicated that the acquisition of, or right to acquire, by a single investor or affiliated investor group, as little as 20% of the common stock (or securities convertible into or exercisable for common stock) or voting power of an issuer could constitute a change of control.

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In the case of the merger, Flex Pharma will be issuing approximately 76,151,698 shares of its common stock, and the common stock to be issued pursuant to the Merger Agreement will represent greater than 20% of its voting stock. Accordingly, Flex Pharma is seeking stockholder of approval of this issuance under Nasdaq Listing Rules.

Q: What is the reverse stock split and why is it necessary?

A: Prior to the effective time of the merger, the outstanding shares of Flex Pharma’s common stock will be combined into a lesser number of shares to be determined by Flex Pharma’s board of directors. Flex Pharma’s board of directors believes that a reverse stock split may be desirable for a number of reasons. Flex Pharma’s common stock is currently, and is expected to be following the completion of the merger, listed on the Nasdaq Global Market or the Nasdaq Capital Market. According to applicable Nasdaq rules, in order for Flex Pharma’s common stock to continue to be listed on the Nasdaq Global Market or the Nasdaq Capital Market, Flex Pharma must satisfy certain requirements established by such market. Flex Pharma’s board of directors expects that a reverse stock split of Flex Pharma’s common stock will increase the market price of Flex Pharma’s common stock so that Flex Pharma is able to maintain compliance with the relevant Nasdaq listing requirements for the foreseeable future.

Q: Why am I receiving this proxy statement/prospectus/information statement?

A: You are receiving this proxy statement/prospectus/information statement because you have been identified as a stockholder or member of Flex Pharma or Salarius, as applicable, as of the applicable record date, and thus you are entitled to either vote at Flex Pharma’s special meeting or sign and return the Salarius written consent to adopt and approve the matters set forth in the written consent. This document serves as:

This document contains important information about the merger and the special meeting of Flex Pharma, and you should read it carefully.

Q: How does Flex Pharma’s board of directors recommend that Flex Pharma’s stockholders vote?

A: After careful consideration, Flex Pharma’s board of directors unanimously recommends that Flex Pharma’s stockholders vote:

FOR Proposal 1 to approve the issuance of Flex Pharma’s common stock to Salarius’ members pursuant to the Merger Agreement and the resulting “change of control” of Flex Pharma under Nasdaq rules and the dividend or distribution of rights, and issuance of Warrants, to Flex Pharma’s stockholders pursuant to the Merger Agreement;

FOR Proposal 2 to approve an amendment of Flex Pharma’s Certificate of Incorporation to effect a reverse stock split of Flex Pharma’s common stock;

FOR Proposal 3 to approve an amendment of Flex Pharma’s Certificate of Incorporation to effect the name change of Flex Pharma to “Salarius Pharmaceuticals, Inc.”; and

FOR Proposal 4 to approve an adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to approve Proposals 1, 2 or 3.

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Q: As a Salarius member, how does Salarius’ board of managers recommend that I vote?

A: After careful consideration, Salarius’ board of managers recommends that Salarius members execute the written consent indicating their vote in favor of the adoption of the Merger Agreement and the approval of the merger and the transactions contemplated thereby.

Q: What risks should I consider in deciding whether to vote in favor of the merger or to return the written consent, as applicable?

A: You should carefully read the section of this proxy statement/prospectus/information statement entitled “Risk Factors” beginning on page 21, which sets forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined company’s business will be subject, risks and uncertainties to which Flex Pharma, as an independent company, is subject and risks and uncertainties to which Salarius, as an independent company, is subject.

Q: When do you expect the merger to be consummated?

A: Flex Pharma and Salarius anticipate that the consummation of the merger will occur in the first half of 2019 as promptly as practicable after the special meeting to be held on [●], 2019 and following satisfaction or waiver of all closing conditions. However, the exact timing of the consummation of the merger is not yet known. For a more complete description of the closing conditions under the Merger Agreement, please see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 126 of this proxy statement/prospectus/information statement.

Q: How will the reverse stock split and the merger affect stock options to acquire Flex Pharma’s common stock and Flex Pharma’s stock option plans?

A: As of the effective time of the reverse stock split, Flex Pharma will adjust and proportionately decrease the number of shares of Flex Pharma’s common stock reserved for issuance upon exercise of, and adjust and proportionately increase the exercise price of, all stock options to acquire Flex Pharma’s common stock. All stock options to acquire shares of Flex Pharma’s common stock that are outstanding immediately prior to the effective time of the merger will remain outstanding following the effective time of the merger. In addition, as of the effective time of the reverse stock split, Flex Pharma will adjust and proportionately decrease the total number of shares of Flex Pharma’s common stock that may be the subject of future grants under Flex Pharma’s stock option plans.

Q: What do I need to do now?

A: You are urged to read this proxy statement/prospectus/information statement carefully, including each of the annexes, and to consider how the merger affects you. If you are a Flex Pharma stockholder and if your shares are registered directly in your name, you may submit your proxy promptly by telephone or via the internet in accordance with the instructions on the enclosed proxy card or complete, date and sign the enclosed proxy card and return it by mail in the enclosed postage-paid envelope. Alternatively, you can deliver your completed proxy card in person or vote by completing a ballot in person at the special meeting. If you are a Flex Pharma stockholder and if you hold your shares in “street name” please see the instructions included below.

If you are a member of Salarius, you may execute and return your written consent to Salarius in accordance with the instructions provided.

Q: If my Flex Pharma shares are held in “street name” by my broker, will my broker vote my shares for me?

A: Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed

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“non-discretionary.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “discretionary,” but may not vote the shares with respect to “non-discretionary” matters. Your broker will not be able to vote your shares of Flex Pharma’s common stock without specific instructions from you for “non-discretionary” matters. You should instruct your broker to vote your shares, following the procedures provided by your broker. Under rules applicable to broker-dealers, Proposals 1, 2, 3 and 4 are considered a non-discretionary matter.

Q: How many Flex Pharma shares must be represented to have a quorum and hold the special meeting?

A: A quorum of Flex Pharma’s stockholders is necessary to hold a valid meeting. A quorum will be present if Flex Pharma stockholders of record holding at least a majority of Flex Pharma’s outstanding common stock entitled to vote at the special meeting are present in person or represented by proxy.

Q: What happens if I do not return a proxy card or otherwise provide proxy instructions?

A: The failure to return your proxy card or otherwise provide proxy instructions will have the same effect as voting against Proposals 2 and 3, and your shares will not be counted for purposes of determining whether a quorum is present at the special meeting.

Q: May I vote in person at the special meeting of Flex Pharma stockholders?

A: If you are a stockholder of Flex Pharma and your shares of Flex Pharma’s common stock are registered directly in your name with Flex Pharma’s transfer agent, you are considered, with respect to those shares, the stockholder of record, and the proxy materials and proxy card are being sent directly to you by Flex Pharma. If you are a Flex Pharma stockholder of record, you may attend the special meeting to be held on [●], 2019 and vote your shares in person, rather than signing and returning your proxy.

If your shares of Flex Pharma’s common stock are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you together with a voting instruction card. As the beneficial owner, you are also invited to attend the special meeting. Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the special meeting unless you obtain a proxy from your broker issued in your name giving you the right to vote the shares at the special meeting.

Q: When and where is the special meeting of Flex Pharma stockholders being held?

A: The special meeting of Flex Pharma stockholders will be held at [●], at [●], local time, on [●], 2019. Subject to space availability, all Flex Pharma stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis.

Q: May I change my vote after I have submitted a proxy by telephone or via the internet or mailed my signed proxy card?

A: Any Flex Pharma stockholder of record voting by proxy, other than those Flex Pharma stockholders who have executed a voting agreement and irrevocable proxy, has the right to revoke the proxy (i) at any time before the polls close at the special meeting by sending a written notice stating that he, she or it would like to revoke his, her or its proxy to the Corporate Secretary of Flex Pharma, (ii) at any time before the polls close at the special meeting by providing a duly executed proxy card bearing a later date than the proxy

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being revoked, (iii) before [●] Eastern Time on [●] by submitting a proxy on a later date by telephone or via the internet (only your last telephone or internet proxy will be counted) or (iv) by attending the special meeting and voting in person. Attendance alone at the special meeting will not revoke a proxy. If a stockholder of Flex Pharma has instructed a broker to vote its shares of Flex Pharma’s common stock that are held in “street name,” the stockholder must follow directions received from its broker to change those instructions.

Q: Who will count the vote at the special meeting of Flex Pharma stockholders?

A: Votes will be counted by the inspector of elections appointed for the special meeting, who will separately count “FOR” and “AGAINST” votes and abstentions.

Q: Should Flex Pharma’s stockholders send in their stock certificates now?

A: No. After the merger is consummated, Flex Pharma’s stockholders will receive written instructions, as applicable, from Flex Pharma’s transfer agent for exchanging their certificates representing shares of Flex Pharma’s common stock for new certificates giving effect to the reverse stock split.

Q: Am I entitled to appraisal rights?

A: Neither Flex Pharma’s stockholders nor Salarius’ members are entitled to appraisal rights in connection with the merger or any of the proposals to be voted on at the special meeting.

Q: Who is paying for this proxy solicitation?

A: Flex Pharma will bear the cost of soliciting proxies, including the printing, mailing and filing of this proxy statement/prospectus/information statement, the proxy card and any additional information furnished to Flex Pharma’s stockholders. You will need to obtain your own internet access if you choose to access the proxy materials and/or vote over the internet. Flex Pharma and Salarius may use the services of its directors, officers and other employees to solicit proxies from Flex Pharma’s stockholders without additional compensation. In addition, Flex Pharma has engaged Innisfree M&A Incorporated, a proxy solicitation firm, to solicit proxies from Flex Pharma’s stockholders for a fee of $25,000 plus costs associated with solicitation campaigns. Flex Pharma will also reimburse Innisfree M&A Incorporated for reasonable out-of-pocket expenses. Arrangements will also be made with banks, brokers, nominees, custodians and fiduciaries who are record holders of Flex Pharma’s common stock for the forwarding of solicitation materials to the beneficial owners of Flex Pharma’s common stock. Flex Pharma will reimburse these banks, brokers, nominees, custodians and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.

Q: Who can provide me with additional information and help answer my questions?

A: If you are a Flex Pharma stockholder and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the merger and the other proposals being considered at the special meeting, including the procedures for voting your shares, you should contact Innisfree M&A Incorporated, Flex Pharma’s proxy solicitor, by telephone at [(XXX) XXX-XXXX].

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If you are a member of Salarius and would like additional copies of this proxy statement/prospectus/information statement without charge or if you have questions about the merger, including the procedures for voting your units, you should contact:

Salarius Pharmaceuticals, LLC

Tiberend Strategic Advisors, Inc.

Joshua Drumm, Ph.D. (Investors)

(212) 375-2664

jdrumm@tiberend.com

David Schemelia (Media)

(212) 375 6298

dschemelia@tiberend.com

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RISK FACTORS

The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus/information statement, you should carefully consider the material risks described below before deciding how to vote your shares of stock. Also, you should read and consider the risks associated with the business of Flex Pharma because these risks may affect the combined company—these risks can be found in Flex Pharma’s Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC. You should also read and consider the other information in this proxy statement/prospectus/information statement and the other documents incorporated by reference into this proxy statement/prospectus/information statement. Please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.

Risks Related to the Merger

The value of the merger consideration to be issued to Salarius’ current members at the closing, and the number of Warrants to be issued to Flex Pharma’s current stockholders after the closing, may have a greater or lesser value than at the time the Merger Agreement was signed.

The Merger Agreement values Flex Pharma at $10.5 million, subject to adjustment, on a dollar-for-dollar basis, based on Flex Pharma’s net cash balance at the closing of the merger compared to target net cash of $3.3 million. Also, the Merger Agreement values Salarius at $36.6 million, subject to adjustment, on a dollar-for-dollar basis, based on the sale of Series A Units pursuant to subscription agreements that Salarius entered into prior to the Merger Agreement compared to the target sale of $7.0 million of Series A Units.

Flex Pharma and Salarius based these values on arms-length negotiations and not on prevailing market prices in any trading market. Also, Flex Pharma’s net cash balance could be greater or less than the target net cash of $3.3 million and Salarius could sell more or less than $7.0 million of Series A Units.

The value of the merger consideration to be issued to Salarius’ current members could be worth less than Salarius’ value at the time the Merger Agreement if Flex Pharma’s net cash balance is substantially less than the target net cash or Salarius sells less than $7.0 million of Series A Units.

The Warrant Aggregate Value will decrease to the extent that Flex Pharma’s net cash balance is less than the target net cash value or Salarius sells more than $7.0 million worth of Series A Units. A decrease in the Warrant Aggregate Value will decrease the number of Warrants that Flex Pharma will issue to its current stockholders and, accordingly, (i) decrease Flex Pharma’s current stockholders’ ownership of the combined company (on a fully-diluted basis) and (ii) increase Salarius’ current members’ ownership of the combined company (on a fully-diluted basis).

The Warrant Aggregate Value will increase to the extent that Flex Pharma’s net cash balance is more than the target net cash value or Salarius sells less than $7.0 million worth of Series A Units. An increase in the Warrant Aggregate Value will increase the number of Warrants that Flex Pharma will issue to its current stockholders and, accordingly, (i) increase Flex Pharma’s current stockholders’ ownership of the combined company (on a fully-diluted basis) and (ii) decrease Salarius’ current members’ ownership of the combined company (on a fully-diluted basis).

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Failure to complete the merger may result in Flex Pharma and Salarius paying a termination fee and/or expenses to the other party and could harm the common stock price of Flex Pharma and future business and operations of each company.

If the merger is not completed, Flex Pharma and Salarius are subject to the following risks:

In addition, if the Merger Agreement is terminated and the board of directors of Flex Pharma or Salarius determines to seek another business combination, there can be no assurance that either Flex Pharma or Salarius will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the merger.

If the conditions to the merger are not met, the merger may not occur.

Even if the merger is approved by the stockholders of Flex Pharma and the members of Salarius, specified conditions must be satisfied or waived to complete the merger. These conditions are set forth in the Merger Agreement and described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” in this proxy statement/prospectus/information statement. Flex Pharma and Salarius cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the merger may not occur or could be delayed, and Flex Pharma and Salarius each may lose some or all of the intended benefits of the merger.

The merger may be completed even though material adverse changes may result from the announcement of the merger, industry-wide changes and other causes.

In general, either Flex Pharma or Salarius can refuse to complete the merger if there is a material adverse change affecting the other party between January 3, 2019, the date of the Merger Agreement, and the closing. However, certain types of changes do not permit either party to refuse to complete the merger, even if such change could be said to have a material adverse effect on Flex Pharma or Salarius, including changes from:

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If adverse changes occur and Flex Pharma and Salarius still complete the merger, the combined company stock price may suffer. This in turn may reduce the value of the merger to the stockholders of Flex Pharma, members of Salarius or both.

Some Flex Pharma and Salarius executive officers, directors and managers have interests in the merger that are different from yours and that may influence them to support or approve the merger without regard to your interests.

Certain officers, directors and managers of Flex Pharma and Salarius participate in arrangements that provide them with interests in the merger that are different from yours, including, among others, the continued service as a director of the combined company, severance and retention benefits, incentive payments upon achievement of key milestones relating to the merger, the acceleration of stock option vesting, certain indemnification and liability insurance coverage, and the potential ability to sell an increased number of shares of common stock of the combined company in accordance with Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.

For example, Flex Pharma has entered into employment agreements and amendments to employment agreements with each of its executive officers that provide for severance benefits. In addition, on June 14, 2018, Flex Pharma approved retention arrangements with its two remaining executive officers, which provide for retention payments if such officers are employed with Flex Pharma at the time of closing of the merger, upon delivery of an executed waiver and general release of any and all known claims. Each executive officer is also eligible to receive full payment of the officer’s annual performance bonus for fiscal year 2018 within 30 days of the closing of the merger, or no later than March 15, 2019, if the executive officer is an employee in good standing at the time of payment. In addition, on June 14, 2018, each executive officer received a stock option grant, subject to vesting, which vests in full upon execution of the Merger Agreement and termination of employment (other than for cause). The retention agreements also extended the exercisability period of previously issued stock option grants. The closing of the merger will also result in the acceleration of vesting of options to purchase shares of Flex Pharma common stock held by the Flex Pharma directors. For more information concerning the treatment of Flex Pharma options in connection with the merger, see the section entitled “The Merger Agreement—Treatment of Flex Pharma Stock Options and Awards” in this proxy statement/prospectus/information statement.

Certain of Salarius’ managers and executive officers are expected to become managers and executive officers of Flex Pharma upon the closing of the merger and all of Flex Pharma’s and Salarius’ directors, managers and executive officers are entitled to certain indemnification and liability insurance coverage. Additionally, Salarius has entered into employment agreements with each of its executive officers that provide for severance benefits. For more information, see the section entitled “Management Following the Merger – Severance and Change in Control Benefits.”

These interests, among others, may influence the officers and directors of Flex Pharma and Salarius to support or approve the merger. For more information concerning the interests of Flex Pharma’s and Salarius’ executive officers, managers and directors, see the sections entitled “The Merger—Interests of Flex Pharma’s Directors and Executive Officers in the Merger” and “The Merger—Interests of Salarius Managers and Executive Officers in the Merger” in this proxy statement/prospectus/information statement.

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The market price of Flex Pharma’s common stock following the merger may decline as a result of the merger.

The market price of Flex Pharma’s common stock may decline as a result of the merger for a number of reasons including if:

Flex Pharma’s current stockholders and Salarius’ current members may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the merger, Flex Pharma’s stockholders and Salarius’ members will have experienced substantial dilution of their ownership interests in their respective companies without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the merger.

During the pendency of the merger, Flex Pharma and Salarius may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.

Covenants in the Merger Agreement impede the ability of Flex Pharma and Salarius to make acquisitions, subject to certain exceptions relating to fiduciaries duties, as set forth elsewhere in this proxy statement/prospectus/information statement, or complete other transactions that are not in the ordinary course of business pending completion of the merger. As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into certain extraordinary transactions, such as a merger, sale of assets or other business combination outside the ordinary course of business, with any third party, subject to certain exceptions described elsewhere in this proxy statement/prospectus/information statement. Any such transactions could be favorable to such party’s stockholders or members.

Certain provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of Flex Pharma and Salarius from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except, with respect to Flex Pharma, in limited circumstances when Flex Pharma’s board of directors determines in good faith, based on advice of outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under applicable law.

If the Merger Agreement is terminated under certain circumstances (including termination because of a decision by Flex Pharma’s board of directors to approve or recommend another transaction), Flex Pharma may be required to pay Salarius a termination fee of $350,000 and/or reimburse Salarius’ expenses up to a maximum of $200,000. Also, if the Merger Agreement is terminated under certain circumstances (including terminating because of a decision by Salarius’ board of managers to approve or recommend another transaction), Salarius may be required to pay Flex Pharma a termination fee of $350,000 or $1,000,000 (depending on the circumstances).

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These termination fee and expense reimbursement may discourage third parties from submitting alternative takeover proposals to Flex Pharma or its stockholders, or Salarius or its members, and may cause the respective boards of directors to be less inclined to recommend an alternative proposal.

Because the lack of a public market for Salarius’ membership units makes it difficult to evaluate the fairness of the merger, the members of Salarius may receive consideration in the merger that is less than the fair market value of the Salarius membership units or Flex Pharma may pay more than the fair market value of the Salarius membership units.

The outstanding membership units of Salarius are privately held and are not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Salarius. Because the percentage of Flex Pharma equity to be issued to Salarius members was determined based on negotiations between the parties, it is possible that the value of the Flex Pharma common stock to be received by Salarius members will be less than the fair market value of Salarius, or Flex Pharma may pay more than the aggregate fair market value for Salarius.

The number of shares of Flex Pharma’s common stock into which the outstanding membership units of Salarius will convert does not adjust based on the market price of Flex Pharma common stock. Therefore, the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

The calculation of the number of shares of Flex Pharma’s common stock into which each outstanding membership unit of Salarius will convert (which we refer to as the “conversion ratio”) is complex. Any changes in the market price of Flex Pharma common stock before the completion of the merger will not affect the conversion ratios. Therefore, if before the completion of the merger the market price of Flex Pharma common stock declines from the market price on the date of the Merger Agreement, then Salarius’ members could receive merger consideration with substantially lower value. Similarly, if before the completion of the merger the market price of Flex Pharma common stock increases from the market price on the date of the Merger Agreement, then Salarius’ members could receive merger consideration with substantially higher value.

Salarius members and Flex Pharma stockholders will have reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company as compared to their current ownership and voting interest in the respective companies following the completion of the merger.

After the completion of the merger, the current members of Salarius and stockholders of Flex Pharma will own a smaller percentage of the combined company than their ownership of their respective companies prior to the merger. Immediately after the merger, Salarius members will own approximately 80.1% of the common stock of Flex Pharma (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush), with Flex Pharma stockholders, whose shares of Flex Pharma common stock will remain outstanding after the merger, owning approximately 19.9% of the common stock of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush). These estimates are based on the currently anticipated conversion ratios and are subject to adjustment. In addition, it is expected that the combined company will have a board of directors consisting of seven members, six of whom will be designated by Salarius and one of whom will be designated by Flex Pharma. Consequently, stockholders of Flex Pharma and members of Salarius will be able to exercise less influence over the management and policies of the combined company than they currently exercise over the management and policies of their respective companies.

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Risks Related to the Reverse Stock Split

The reverse stock split may not increase Flex Pharma’s stock price over the long-term.

The principal purpose of the reverse stock split is to increase the per-share market price of Flex Pharma’s common stock above the minimum bid price requirement under the Nasdaq Listing Rules so that the listing of the combined company and the shares of Flex Pharma common stock being issued in the merger on either Nasdaq Global Market or Nasdaq Capital Market will be approved. It cannot be assured, however, that the reverse stock split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of Flex Pharma’s common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio chosen by Flex Pharma’s board of directors, or result in any permanent or sustained increase in the market price of Flex Pharma’s common stock, which is dependent upon many factors, including Flex Pharma’s business and financial performance, general market conditions, and prospects for future success. Thus, while the stock price of the combined company might meet the continued listing requirements for the Nasdaq Capital Market or the Nasdaq Global Market initially, it cannot be assured that it will continue to do so.

The reverse stock split may decrease the liquidity of Flex Pharma’s common stock.

Although Flex Pharma’s board of directors believes that the anticipated increase in the market price of Flex Pharma’s common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for Flex Pharma’s common stock.

The reverse stock split may lead to a decrease in Flex Pharma’s overall market capitalization.

Should the market price of Flex Pharma’s common stock decline after the reverse stock split, the percentage decline may be greater, due to the smaller number of shares outstanding, than it would have been prior to the reverse stock split. A reverse stock split is often viewed negatively by the market and, consequently, can lead to a decrease in Flex Pharma’s overall market capitalization. If the per share market price does not increase in proportion to the reverse stock split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of Flex Pharma’s common stock will remain the same after the reverse stock split is effected, or that the reverse stock split will not have an adverse effect on Flex Pharma’s stock price due to the reduced number of shares outstanding after the reverse stock split.

Risks Related to Flex Pharma

For risks related to the business of Flex Pharma, in addition to the risk factors noted below, please refer to the section entitled “Item 1A. Risk Factors” set forth in Flex Pharma’s Annual Report on Form 10-K for the year ended December 31, 2017 and the section entitled “Item 1A. Risk Factors” set forth in Flex Pharma’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, as filed with the SEC on March 7, 2018 and November 5, 2018, respectively, and included elsewhere in this proxy statement/prospectus/information statement and are incorporated by reference herein.

There is no assurance that the proposed merger between Flex Pharma and Salarius will be completed in a timely manner or at all. If the merger with Salarius is not consummated, Flex Pharma’s business could suffer materially and its stock price could decline.

The consummation of the proposed merger between Flex Pharma and Salarius is subject to a number of closing conditions, including the approval by Flex Pharma’s stockholders of several merger-related matters and

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other customary closing conditions. The parties are targeting a closing of the transaction in the first half of 2019, however, there can be no assurance that the proposed merger will be consummated on their desired timeframe, or at all.

If the proposed merger between Flex Pharma and Salarius is not consummated, Flex Pharma may be subject to a number of material risks, and its business and stock price could be adversely affected, as follows:

If the merger is not completed, Flex Pharma’s Board of Directors may decide to pursue a dissolution, liquidation or winding-up of the company. In such an event, the amount of cash available for distribution to its stockholders will depend heavily on the timing of such liquidation, distribution or winding-up as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

There can be no assurance that the merger will be completed. If the merger is not completed, Flex Pharma’s board of directors would likely decide to pursue a dissolution, liquidation or winding-up of the company. In such an event, the amount of cash available for distribution to its stockholders will depend heavily on the timing of such decision, as with the passage of time the amount of cash available for distribution will be reduced as Flex Pharma continues to fund its operations. In addition, if Flex Pharma dissolves, liquidates or winds-up, it would be required under Delaware corporate law to pay its outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions to its stockholders. Flex Pharma’s commitments and contingent liabilities may include: (i) any pending litigation against Flex Pharma, and other various claims and legal actions arising in the ordinary course of business and (ii) payments to certain employees. As a result of this requirement, a portion of Flex Pharma’s assets may need to be reserved pending the resolution of such obligations. In addition, Flex Pharma may be subject to litigation or other claims related to its dissolution, liquidation or winding-up. If a dissolution, liquidation or winding-up were pursued, Flex Pharma’s board of directors, in consultation with its advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of its common stock could lose all or a significant portion of their investment in the event of its liquidation, dissolution or winding up.

If Flex Pharma fails to continue to meet all applicable Nasdaq Global Market or Nasdaq Capital Market requirements and Nasdaq determines to delist Flex Pharma’s common stock, the delisting could prevent the closing of the merger and adversely affect the market liquidity of its common stock and the market price of Flex Pharma’s common stock could decrease.

On August 13, 2018, Flex Pharma received a letter from the listing qualifications department of The Nasdaq Stock Market, noting that for the prior 30 consecutive business days the bid price of its common stock had closed below $1.00 per share, the minimum closing bid price required by the continued listing requirements of Nasdaq Listing Rule 5450(a)(1). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), Flex Pharma was provided a period of 180 calendar days, or until February 11, 2019, to regain compliance. In order to regain compliance with the minimum closing bid price rule, the closing bid price of Flex Pharma’s common stock must be at least $1.00 or higher for a minimum of 10 consecutive business days during the 180-day compliance period. On February 12, 2019, Flex Pharma received a letter from the listing qualifications department of The Nasdaq Stock Market, noting that Flex Pharma’s transfer to the Nasdaq Capital Market was approved and that Flex Pharma was granted

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an additional 180 period, or until August 12, 2019, to regain compliance with the minimum closing bid price requirement.

On September 27, 2018, Flex Pharma received a letter from the listing qualifications department of The Nasdaq Stock Market, noting that for the prior 30 consecutive business days the market value of its common stock was below $5 million, the minimum amount required by the continued listing requirements of Nasdaq Listing Rule 5450(b)(1)(C). In accordance with Nasdaq Listing Rule 5810(c)(3)(D), Flex Pharma has been provided a period of 180 calendar days, or until March 26, 2019, to regain compliance. In order to regain compliance with the minimum market value rule, the market value of Flex Pharma’s common stock must meet or exceed $5 million for a minimum of 10 consecutive business days during the 180-day grace period. On November 26, 2018, Flex Pharma received a letter from Nasdaq notifying Flex Pharma that it regained compliance with Nasdaq Listing Rule 5450(b)(1)(C). The letter noted that for the last 10 consecutive business days from the date of the letter, the market value of the Flex Pharma’s publicly held shares was $5 million or greater.

If Flex Pharma does not regain compliance prior to the expiration of the 180-day compliance period, and if it appears to Nasdaq that Flex Pharma will not be able to cure the deficiency, or if Flex Pharma fails to comply with other listing requirements in the future, Nasdaq will provide Flex Pharma with a written notification that its securities are subject to delisting from Nasdaq. At that time, Flex Pharma may appeal the delisting determination to a Nasdaq hearings panel.

The failure to maintain Flex Pharma’s listing on Nasdaq could have an adverse effect on the market price and liquidity of its shares of common stock and reduce its ability to raise additional capital. In addition, if Flex Pharma’s common stock is delisted from Nasdaq and the trading price remains below $5.00 per share, trading in Flex Pharma’s common stock might also become subject to the requirements of certain rules promulgated under the Exchange Act, which require additional disclosure by broker-dealers in connection with any trade involving a stock defined as a “penny stock” (generally, any equity security not listed on a national securities exchange or quoted on Nasdaq that has a market price of less than $5.00 per share, subject to certain exceptions).

As a result of the closure of Flex Pharma’s Phase 2 studies and the reductions in Flex Pharma’s workforce announced in June 2018, Flex Pharma has only four employees remaining as of the date of this filing. If Flex Pharma is unable to retain the remaining employees, Flex Pharma’s ability to consummate the planned merger transaction may be delayed or seriously jeopardized.

On June 13, 2018, Flex Pharma announced workforce reductions, and current headcount has been reduced to four employees. Flex Pharma’s cash conservation activities may yield unintended consequences, such as attrition beyond the planned workforce reductions and reduced employee morale, which may cause the remaining employees to seek alternate employment. Competition among biotechnology companies for qualified employees is intense, and the ability to retain the remaining employees is critical to Flex Pharma’s ability to effectively manage its business and to consummate the planned merger transaction. Additional attrition could have a material adverse effect on Flex Pharma’s business and ability to consummate the merger. In addition, as a result of the reduction in Flex Pharma’s workforce, Flex Pharma faces an increased risk of employment litigation.

Flex Pharma is an early stage company with a limited commercial history and a history of net losses. Flex Pharma expects to incur net losses in the future and may never achieve sustained profitability or even revenue.

Flex Pharma is a clinical stage biotechnology company that has announced an end to its Phase 2 clinical trials of FLX-787 due to oral tolerability concerns observed in the two studies. Flex Pharma currently has no foreseeable path to significant revenue with its current clinical assets. Flex Pharma has historically incurred substantial net losses. Flex Pharma incurred losses attributable to stockholders of $19.9 million and $34.4 million for the nine months ended September 30, 2018 and for the year ended December 31, 2017, respectively. Flex Pharma expects its losses to continue. These losses have had, and will continue to have, an adverse effect on Flex

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Pharma’s working capital, total assets and stockholders’ equity. Because of the numerous risks and uncertainties associated with Flex Pharma’s business, Flex Pharma may never become profitable. Even if Flex Pharma did achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. Flex Pharma’s inability to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and cash flows.

Flex Pharma’s business to date has been almost entirely dependent on the clinical success of FLX-787. With the failure of FLX-787, Flex Pharma has no immediate prospects for significant revenue or profitability.

Due to the early stage nature of Flex Pharma’s business and its limited marketing activities to date, with the failure of FLX-787 it is not likely Flex Pharma has any immediate prospects for significant revenue or profitability.

The loss of Flex Pharma’s key members of its executive management team could adversely affect its business.

Flex Pharma cannot make any assurances that any of the key remaining members of its management team will remain with Flex Pharma in the event the merger is not consummated. Accordingly, Flex Pharma may be unable to execute any reasonable salvage strategy or properly execute a liquidation, dissolution or winding up of the company.

Declining general economic or business conditions may have a negative impact on Flex Pharma’s business.

Continuing concerns over U.S. health care reform legislation and energy costs, geopolitical issues, such as the government shut down or Brexit, the availability and cost of credit in the United States and other countries have in the past and may in the future contribute to increased volatility and diminished expectations for the global economy. These factors, if combined with low business and consumer confidence and high unemployment, could precipitate an economic slowdown and recession. If the economic climate deteriorates, Flex Pharma’s business, as well as the financial condition of Flex Pharma’s suppliers and Flex Pharma’s third-party suppliers, could be adversely affected, resulting in a negative impact on Flex Pharma’s business, financial condition and results of operations.

Flex Pharma depends on its information technology and telecommunications systems, and any failure of these systems could harm its business.

Flex Pharma depends on information technology and telecommunications systems for significant aspects of its operations. These information technology and telecommunications systems support a variety of functions, including research and development activities and Flex Pharma’s general and administrative activities. Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of its systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive and liability-creating problems. Despite the precautionary measures Flex Pharma has taken to prevent unanticipated problems that could affect its information technology and telecommunications systems, failures or significant downtime of Flex Pharma’s information technology or telecommunications systems or those used by its third-party service providers could prevent Flex Pharma from processing all manner of significant data, conducting research and development activities and managing the administrative aspects of Flex Pharma’s business.

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Risks Related to Flex Pharma’s Financial Condition

Flex Pharma has incurred significant losses since its inception and anticipates that it will continue to incur significant losses for the foreseeable future.

Flex Pharma has generated limited revenue from sales of HOTSHOT, and has generated no revenue from any of its drug product candidates. Flex Pharma has incurred net losses in each year since its inception on February 24, 2014, including a consolidated net loss of $34.4 million for the year ended December 31, 2017. As of September 30, 2018, Flex Pharma had an accumulated deficit of approximately $131.0 million. Its prior losses, combined with expected future losses, have had and may continue to have an adverse effect on its stockholders’ equity and working capital.

To date, Flex Pharma has financed its operations with net proceeds from the private placement of its preferred stock and its initial public offering. The amount of its future net losses will depend, in part, on the rate of its future expenditures and its ability to generate revenue.

The net losses Flex Pharma incurs may fluctuate significantly from quarter-to-quarter and year-to-year, such that a period-to-period comparison of its results of operations may not be a good indication of its future performance. In any particular quarter or quarters, its operating results could be below the expectations of investors, which could cause its stock price to decline.

If the merger is not completed, Flex Pharma would need to raise substantial additional funding to the extent it continues its drug development efforts, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force it to delay, limit or terminate its drug development efforts or other operations.

Flex Pharma has generated limited revenue from sales of HOTSHOT, and has generated no revenue from any of its drug product candidates. Flex Pharma has incurred net losses in each year since its inception on February 26, 2014, including a consolidated net loss of $34.4 million for the year ended December 31, 2017. As of September 30, 2018, Flex Pharma had an accumulated deficit of approximately $131.0 million. If the merger is not completed, Flex Pharma will require substantial additional capital to fund its research and development and expenses related to its consumer brand and HOTSHOT. Flex Pharma had unrestricted cash and cash equivalents of $13.0 million at September 30, 2018. Flex Pharma’s current operating plan assumes limited research and development activities and that it will continue to sell HOTSHOT. In the event that the merger is not completed, Flex Pharma would likely pursue a liquidation, dissolution or winding-up of Flex Pharma, or may seek to complete an alternate strategic transaction or may elect to continue to market HOTSHOT and operate its consumer business. Based on the Company’s operating plan, the Company believes that its existing cash and cash equivalents will be sufficient to allow the Company to fund its current operating plan for at least 12 months from November 5, 2018, the date the consolidated financial statements for the third quarter of 2018 were issued.

Flex Pharma cannot predict to what extent it will resume drug development activities for FLX-787 or other drug product candidates. Further, only a small minority of all research and development programs ultimately result in commercially successful drugs. Clinical failure can occur at any stage of clinical development and clinical trials may produce negative or inconclusive results, and Flex Pharma may decide, or regulators may require it, to conduct additional clinical or preclinical trials. In addition, data obtained from trials are susceptible to varying interpretations, and regulators may not interpret its data as favorably as it does, which may delay, limit or prevent regulatory approval. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a drug candidate. Further, even if Flex Pharma completes the development of FLX-787 or any future drug product candidate and gains marketing approvals from the FDA and comparable foreign regulatory authorities in a timely manner, it cannot be sure that such drug product candidate will be commercially successful in the pharmaceutical market. If the results of clinical trials, the anticipated or actual timing of marketing approvals, or the market acceptance of any drug product candidate, if approved, do not meet the expectations of

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investors or public market analysts, the market price of its common stock would likely decline. Further, even if Flex Pharma resumes drug development activities, it will need substantial additional financing to complete the development of FLX-787 or any other drug product candidates it may develop.

Flex Pharma expects to incur losses for the foreseeable future. Its ability to achieve profitability in the future is dependent upon achieving a level of revenues adequate to support its cost structure. Flex Pharma may never achieve profitability, and unless and until it does, Flex Pharma will continue to need to raise additional capital. If Flex Pharma raises additional capital through the sale of equity or convertible debt securities, the issuance of those securities could result in substantial dilution for Flex Pharma’s current stockholders and the terms may include liquidation or other preferences that adversely affect the rights of its current stockholders, further diminishing current stockholders ability to realize any value for their stock holdings. Furthermore, the issuance of additional securities, whether equity or debt, by Flex Pharma, or the possibility of such issuance, may cause the market price of Flex Pharma’s common stock to decline further and existing stockholders may not agree with its financing plans or the terms of such financings. There can be no assurances, however, that additional funding will be available on terms acceptable to Flex Pharma, or at all.

If Flex Pharma is unable to raise capital when needed, it could be forced to delay, reduce or eliminate its development efforts, which could materially adversely affect its business, financial condition and results of operations, or it may be required to cease operations.

Regulatory Risks Relating to Flex Pharma’s Business

Flex Pharma is required to comply with laws governing the transmission, security and privacy of health information that require significant compliance costs, and any failure to comply with these laws could result in material criminal and civil penalties.

Under the administrative simplification provisions of the federal Health Insurance Portability and Accountability Act of 1996, (which we refer to as “HIPAA”), the U.S. Department of Health and Human Services has issued regulations which establish uniform standards governing the conduct of certain electronic health care transactions and protecting the privacy and security of Protected Health Information, (which we refer to as “PHI”), used or disclosed by health care providers and other covered entities. Three principal regulations with which Flex Pharma is currently required to comply have been issued in final form under HIPAA: privacy regulations, security regulations and standards for electronic transactions.

The privacy regulations cover the use and disclosure of PHI by health care providers. It also sets forth certain rights that an individual has with respect to his or her PHI maintained by a health care provider, including the right to access or amend certain records containing PHI or to request restrictions on the use or disclosure of PHI. Flex Pharma has also implemented policies, procedures and standards to comply appropriately with the final HIPAA security regulations, which establish requirements for safeguarding the confidentiality, integrity and availability of PHI, which is electronically transmitted or electronically stored. The HIPAA privacy and security regulations establish a uniform federal “floor” and do not supersede state laws that are more stringent or provide individuals with greater rights with respect to the privacy or security of, and access to, their records containing PHI. As a result, Flex Pharma is required to comply with both HIPAA privacy regulations and varying state privacy and security laws. Almost all U.S. states now require notification to affected individuals and state authorities, as well as the media in certain cases, in the event of a breach of the security of personal information (including PHI in a few states), often with significant financial penalties for noncompliance.

The Health Information Technology for Economic and Clinical Health Act, (which we refer to as the “HITECH Act”), enacted pursuant to the American Recovery and Reinvestment Act of 2009, (which we refer to as “ARRA”), made sweeping changes to the health information privacy and security regulations of HIPAA by expanding the scope and application of the statute. These changes include, among other things: (1) establishing an affirmative obligation to provide patient data breach notification in the event of the unauthorized acquisition,

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access, use or disclosure of unsecured PHI; (2) elaborating upon the standard for “minimum necessary” uses and disclosures of PHI by a covered entity; (3) restricting certain uses of PHI for marketing purposes (by expanding the definition of marketing activities requiring authorization); (4) prohibiting certain sales of PHI; (5) establishing an affirmative obligation to provide an accounting of disclosures made for payment, treatment and health care operations (up to three years made through an electronic health record); (6) requiring covered entities to agree to individuals’ requests to restrict disclosure of PHI in certain circumstances; (7) applying the security regulations and certain provisions of the privacy regulations to business associates; and (8) modifying an individuals’ right to access PHI in an electronic format. The U.S. Department of Health and Human Services issued modifications to the HIPAA Regulations, effective March 26, 2013, implementing some of these changes including the obligation to provide patient data breach notifications, which subject the company to additional administrative requirements in the United States. With regard to the accounting of disclosures, the HITECH Act provides for removing the exception in the existing HIPAA privacy regulations’ accounting of disclosures of PHI requirement for disclosures of PHI for payment, treatment, and health care operations purposes made through an electronic health record (within the past three years). The U.S. Department of Health and Human Services issued proposed regulations to implement this provision of the HITECH Act in May 2011, but those regulations have not been finalized.

The HITECH Act also implemented measures to strengthen enforcement of HIPAA and increased applicable penalties for HIPAA violations. Penalties are now tiered and range from $100 to $50,000 per violation with an annual cap for the same violations of $25,000 to $1,500,000. The Office for Civil Rights of the U.S. Department of Health and Human Services, (which we refer to as the “OCR”), has increased enforcement activities and has recently levied large penalties for violations. In addition, as mandated by the HITECH Act, OCR has begun an audit program to assess compliance by covered entities and their business associates with the HIPAA privacy and security rules and breach notification standards.

Flex Pharma seeks to comply with HIPAA privacy regulations and state privacy laws. Given the complexity of HIPAA, the HITECH Act and state privacy restrictions, the possibility that the regulations may change, and the fact that the regulations are subject to changing and potentially conflicting interpretation, Flex Pharma’s ability to comply with HIPAA, the HITECH Act and state privacy requirements is uncertain and the costs of compliance are significant. To the extent that Flex Pharma or its third-party billing company submit electronic health care claims and payment transactions that do not comply with the electronic data transmission standards established under HIPAA and the HITECH Act, payments to Flex Pharma may be delayed or denied. Additionally, the costs of complying with any changes to HIPAA, the HITECH Act and state privacy restrictions may have a negative impact on Flex Pharma’s operations. Flex Pharma could be subject to criminal penalties and civil sanctions for failing to comply with HIPAA, the HITECH Act and state privacy restrictions, which could result in the incurrence of significant monetary penalties.

If Flex Pharma ever again pursued clinic studies or placed a product or products in the market for use by patients, a host of federal and state healthcare regulations would apply to Flex Pharma’s business, which would create operational risk and potential liability.

Intellectual Property Risks Related to Flex Pharma’s Business

If Flex Pharma is unable to maintain intellectual property protection, its competitive position could be harmed.

Flex Pharma’s ability to protect its proprietary discoveries and technologies affects its ability to monetize any of its remaining assets. Currently, Flex Pharma relies on a combination of issued U.S. patents, U.S. and foreign patent applications, copyrights, trademarks and trademark applications, confidentiality or non-disclosure agreements, material transfer agreements, licenses, work-for-hire agreements and invention assignment agreements to protect its intellectual property rights. Flex Pharma also maintains certain company know-how, trade secrets and technological innovations designed to provide Flex Pharma with a competitive advantage in the market place as trade secrets.

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To the extent there is any remaining value in any of these intellectual property assets, it may be lost if Flex Pharma is unable to protect its intellectual property.

Flex Pharma may face intellectual property infringement claims that could be time-consuming and costly to defend, and could result in Flex Pharma’s loss of significant rights and the assessment of treble damages.

From time to time Flex Pharma may face intellectual property infringement, misappropriation, or invalidity/non- infringement claims from third parties. Some of these claims may lead to litigation. The outcome of any such litigation can never be guaranteed, and an adverse outcome could affect Flex Pharma negatively. For example, were a third party to succeed on an infringement claim against Flex Pharma, it may be required to pay substantial damages (including up to treble damages if such infringement were found to be willful). Potential damages could easily consume all or most of Flex Pharma’s remaining cash. In addition, Flex Pharma could face an injunction, barring Flex Pharma from conducting the allegedly infringing activity. The outcome of the litigation could require Flex Pharma to enter into a license agreement which may not be under acceptable, commercially reasonable, or practical terms or Flex Pharma may be precluded from obtaining a license at all.

Finally, Flex Pharma could initiate claims to assert or defend its own intellectual property against third parties. If one or more of its patents were held to be invalid or not infringed, Flex Pharma might not be able to exclude others from offering similar or identical products or services. Any intellectual property litigation, irrespective of whether Flex Pharma is the plaintiff or the defendant, and regardless of the outcome, is expensive and time-consuming, and could divert its management’s attention from its business and negatively affect its operating results or financial condition.

Risks Related to Ownership of Flex Pharma’s Common Stock

The price of Flex Pharma’s common stock may be volatile and fluctuate substantially, which could result in substantial losses for Flex Pharma stockholders.

Flex Pharma’s stock price has been and is likely in the future to be volatile. The stock market in general and the market for smaller clinical biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, Flex Pharma stockholders may not be able to sell their common stock at or above the price they paid for it. The market price for Flex Pharma’s common stock may be influenced by many factors, including:

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Anti-takeover provisions in Flex Pharma’s charter documents and under Delaware law could make an acquisition of Flex Pharma more difficult and may prevent attempts by Flex Pharma’s stockholders to replace or remove Flex Pharma’s management.

Provisions in Flex Pharma’s certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management. These provisions include a classified board of directors, a prohibition on actions by written consent of Flex Pharma’s stockholders and the ability of the board of directors to issue preferred stock without stockholder approval. In addition, because Flex Pharma is incorporated in Delaware, it is governed by the provisions of Section 203 of the Delaware General Corporation Law (which we refer to as the “DGCL”), which prohibits stockholders owning in excess of 15% of the outstanding voting stock from merging or combining with Flex Pharma, subject to limited exceptions. Although Flex Pharma believes these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirors to negotiate with Flex Pharma’s board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by Flex Pharma’s stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management.

If Flex Pharma’s shares become subject to the penny stock rules, it may be more difficult to sell Flex Pharma shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The OTC Bulletin Board does not meet such requirements. If the price of Flex Pharma’s common stock remains less than $5.00 and Flex Pharma is not listed on a national securities exchange, its common stock may be deemed a penny stock. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive: (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for common stock, and therefore stockholders may have difficulty selling their shares.

An active trading market for Flex Pharma’s common stock may not develop.

Prior to Flex Pharma’s initial public offering on January 28, 2015, there was no public market for its common stock. The listing of Flex Pharma’s common stock on the Nasdaq Capital Market or the Nasdaq Global Market does not assure that a meaningful, consistent and liquid trading market exists. Although Flex Pharma’s common stock is listed on the Nasdaq Capital Market or the Nasdaq Global Market, trading volume in its common stock has been limited and an active trading market for Flex Pharma’s shares may never develop or be sustained. If an active market for Flex Pharma’s common stock does not develop, it may be difficult for investors to sell their shares without depressing the market price for the shares or at all.

Reports published by securities or industry analysts, including projections in those reports that exceed actual results, could adversely affect Flex Pharma’s common stock price and trading volume.

Securities research analysts may establish and publish their own periodic projections for Flex Pharma’s business. These projections may vary widely from one another and may not accurately predict the results Flex Pharma actually achieves. Flex Pharma’s stock price may decline if actual results do not match securities

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research analysts’ projections. Similarly, if one or more of the analysts who writes reports on Flex Pharma downgrades its stock or publishes inaccurate or unfavorable research about its business, Flex Pharma’s stock price could decline. If one or more of these analysts ceases coverage of the company or fails to publish reports on Flex Pharma regularly, Flex Pharma’s stock price or trading volume could decline. If no or a limited number of securities or industry analysts cover Flex Pharma, the trading price for its stock and the trading volume could be adversely affected.

Future sales of Flex Pharma’s common stock, or the perception that future sales may occur, may cause the market price of its common stock to decline, even if its business is doing well.

Sales of substantial amounts of Flex Pharma’s common stock in the public market, or the perception that these sales may occur, could materially and adversely affect the price of its common stock and could impair its ability to raise capital through the sale of additional equity securities. Flex Pharma maintains a shelf registration statement on Form S-3 with the SEC pursuant to which Flex Pharma may, from time to time, sell up to an aggregate of $125 million of its common stock, preferred stock, debt securities and warrants. Sales of securities under the registration statement will result in dilution of its stockholders and could cause its stock price to fall.

Flex Pharma is an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make its common stock less attractive to investors.

Flex Pharma is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, (which we refer to as the “JOBS Act”), and may remain an emerging growth company for up to five years. For so long as Flex Pharma remains an emerging growth company, Flex Pharma is permitted and intends to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

Flex Pharma has taken advantage of reduced reporting burdens in its periodic disclosure reports. In particular, Flex Pharma has not included all of the executive compensation related information that would be required if Flex Pharma were not an emerging growth company. Flex Pharma cannot predict whether investors will find Flex Pharma’s common stock less attractive if Flex Pharma relies on these exemptions. If some investors find Flex Pharma’s common stock less attractive as a result, there may be a less active trading market for its common stock and its stock price may be more volatile.

Since the initial public offering on January 28, 2015, Flex Pharma has incurred significantly increased costs and its management has had to devote substantial time as a result of operating as a public company; and such costs are expected to further increase after Flex Pharma is no longer an “emerging growth company.”

As a public company, Flex Pharma incurs significant legal, accounting and other expenses that Flex Pharma did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and

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Consumer Protection Act, the listing requirements of the Nasdaq Capital Market or the Nasdaq Global Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Flex Pharma’s management and other personnel have had to devote a substantial amount of time to these compliance initiatives since becoming a public company. Moreover, these rules and regulations have increased its legal and financial compliance costs and have made certain activities more time-consuming and costly.

Because Flex Pharma is still a relatively new public company and in the aftermath of the termination of its clinical studies, Flex Pharma cannot yet predict or estimate the costs Flex Pharma may incur in the future with respect to these compliance initiatives or the timing of such costs. In addition, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, (which we refer to as “Section 404”), as an emerging growth company, Flex Pharma is not required to include an attestation report on internal control over financial reporting issued by its independent registered public accounting firm in its annual report. To achieve compliance with Section 404 within the prescribed period, Flex Pharma will be engaged in a process to document and evaluate its internal control over financial reporting, which is both costly and challenging. In this regard, Flex Pharma will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite Flex Pharma’s efforts, there is a risk that Flex Pharma will not be able to conclude, within the prescribed timeframe or at all, that its internal control over financial reporting is effective as required by Section 404. If Flex Pharma identifies one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of its financial statements.

Because Flex Pharma does not anticipate paying any cash dividends on its capital stock in the foreseeable future, if ever, capital appreciation, if any, will be Flex Pharma’s sole source of gain.

Flex Pharma does not anticipate paying future dividends on its capital stock. Flex Pharma currently intends to retain all of its future earnings, if any, to finance the growth and development of its business. In addition, the terms of any future debt agreements may preclude Flex Pharma from paying dividends. As a result, capital appreciation, if any, on the common stock will be Flex Pharma’s stockholders’ sole source of gain for the foreseeable future.

Risks Related to Salarius

Risks Related to Salarius’ Financial Condition and Capital Requirements

Salarius has incurred losses since its inception, has a limited operating history on which to assess its business, and anticipates that it will continue to incur significant losses for the foreseeable future.

Salarius is a clinical development-stage biopharmaceutical company with limited operating history. Salarius has no products approved for commercial sale and has not generated any revenue from product sales. From inception to September 30, 2018, Salarius has raised net cash proceeds of approximately $4.2 million from the sale of membership units and received $9.6 million in grants, primarily from the Cancer Prevention and Research Institute of Texas (which we refer to as “CPRIT”). Salarius has never been profitable and has incurred operating losses in each year since inception. Salarius’ net losses were $0.5 million for the nine months ended September 30, 2018, and $1.7 million and $1.2 million for the years ended December 31, 2017 and 2016, respectively. As of September 30, 2018, Salarius had a members’ deficit of $1.4 million. As of September 30,

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2018, Salarius had cash and cash equivalents of $4.8 million. In addition, Salarius held $1.3 million in escrow related to the sales of Series A Preferred units. These funds were being held in escrow until the minimum financing threshold of $2.0 million was achieved. These amounts are classified as restricted cash on Salarius’ balance sheet as of September 30, 2018 included elsewhere in this proxy statement/prospectus/information statement. The minimum funding threshold was achieved subsequent to September 30, 2018.

Salarius will continue to require substantial additional capital to continue its clinical development and potential commercialization activities. Accordingly, Salarius will need to raise substantial additional capital to continue to fund its operations. The amount and timing of its future funding requirements will depend on many factors, including the pace and results of its clinical development efforts. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on its financial condition and its ability to develop its product candidates.

Salarius has devoted substantially all of its financial resources to identify, acquire, and develop its product candidates, including conducting clinical trials and providing general and administrative support for its operations. To date, Salarius has financed its operations primarily through the sale of privately-placed equity securities. The amount of its future net losses will depend, in part, on the rate of its future expenditures and its ability to obtain funding through equity or debt financings, strategic collaborations, or grants. Biopharmaceutical product development is a highly speculative and competitive undertaking and involves a substantial degree of risk. Salarius expects losses to increase as it completes Phase 1 development and advances into Phase 2 development of its lead product candidates. It may be several years, if ever, before Salarius completes pivotal clinical trials and has a product candidate approved for commercialization. Salarius expects to invest significant funds into the research and development of its current product candidates to determine the potential to advance these product candidates to regulatory approval. Large sums of money will be expected before Salarius knows if it has a clinically successful product candidate.

If Salarius obtains regulatory approval to market a product candidate, its future revenue will depend upon the size of any markets in which its product candidates may receive approval, and its ability to achieve sufficient market acceptance, pricing, reimbursement from third-party payors, and adequate market share for its product candidates in those markets. Even if Salarius obtains adequate market share for its product candidates, because the potential markets in which its product candidates may ultimately receive regulatory approval could be very small, Salarius may never become profitable despite obtaining such market share and acceptance of its products.

Salarius expects to continue to incur significant expenses and increasing operating losses for the foreseeable future and its expenses will increase substantially if and as Salarius:

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Further, the net losses Salarius incurs may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of its results of operations may not be a good indication of its future performance.

Salarius has never generated any revenue from product sales and may never generate revenue or be profitable.

Salarius has no products approved for commercialization and has never generated any revenue. Salarius’ ability to generate revenue and achieve profitability depends on its ability, alone or with strategic collaborators, to successfully complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize one or more of its product candidates. Salarius does not anticipate generating revenue from product sales for the foreseeable future. Salarius’ ability to generate future revenue from product sales depends heavily on its success in many areas, including but not limited to:

Even if one or more of the product candidates that Salarius develops is approved for commercial sale, Salarius anticipates incurring significant costs associated with commercializing any approved product candidate. Portions of its current pipeline of product candidates have been in-licensed from third parties, which make the commercial sale of such in-licensed products potentially subject to additional royalty and milestone payments to such third-parties. Salarius will also have to develop, contract for or acquire manufacturing capabilities to continue development and potential commercialization of its product candidates. Salarius will need to develop or procure its drug product in a commercially feasible manner in order to successfully commercialize any future approved product; if any. Additionally, if Salarius is not able to generate revenue from the sale of any approved products, Salarius may never become profitable.

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Raising additional capital may cause dilution to Salarius’ members, restrict its operations or require Salarius to relinquish rights.

To the extent that Salarius raises additional capital through the sale of equity, convertible debt or other securities convertible into equity the ownership interest of Salarius’ members will be diluted, and the terms of these new securities may include liquidation or other preferences that adversely affect rights of Salarius’ equity holders. Debt financing, if available at all, would likely involve agreements that include covenants limiting or restricting Salarius’ ability to take specific actions, such as incurring additional debt, making capital expenditures, making additional product acquisitions, or declaring dividends. If Salarius raises additional funds through strategic collaborations or licensing arrangements with third parties, Salarius may have to relinquish valuable rights to its product candidates or future revenue streams or grant licenses on terms that are not favorable to Salarius. Salarius cannot be assured that it will be able to obtain additional funding if and when necessary to fund its entire portfolio of product candidates to meet its projected plans. If Salarius is unable to obtain funding on a timely basis, Salarius may be required to delay or discontinue one or more of its development programs or the commercialization of any product candidates or be unable to expand its operations or otherwise capitalize on potential business opportunities, which could materially harm Salarius’ business, financial condition, and results of operations.

Salarius has also historically received funds from state and federal government grants for research and development including CPRIT. The grants have been, and any future government grants and contracts Salarius may receive may be, subject to the risks and contingencies set forth below under the risk factor titled “Reliance on government funding for Salarius’ programs may add uncertainty to its research and commercialization efforts with respect to those programs that are tied to such funding and may impose requirements that limit its ability to take specified actions, increase the costs of commercialization and production of product candidates developed under those programs and subject it to potential financial penalties, which could materially and adversely affect its business, financial condition and results of operations.” Although Salarius might apply for government contracts and grants in the future, it cannot assure you that it will be successful in obtaining additional grants for any product candidates or programs. Failure to receive additional government grants in the future may substantially harm Salarius’ business.

Risks Related to the Development of Salarius’ Product Candidates

Clinical trials are costly, time consuming and inherently risky, and Salarius may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

Clinical development is expensive, time consuming and involves significant risk. Salarius cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of development. Events that may prevent successful or timely completion of clinical development include but are not limited to:

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Any inability to successfully complete clinical development and obtain regulatory approval for its product candidates could result in additional costs to Salarius or impair its ability to generate revenue. In addition, if Salarius makes manufacturing or formulation changes to its product candidates, Salarius may need to conduct additional pre-clinical trials or the results obtained from such new formulation may not be consistent with previous results obtained. Clinical trial delays could also shorten any periods during which its products have patent protection and may allow competitors to develop and bring products to market before Salarius does, which could impair its ability to successfully commercialize its product candidates and may harm its business and results of operations.

The approach Salarius is taking to discover and develop novel oncology therapeutics using epigenetic enzymes to moderate transcription factors and thereby control abnormal protein expression is unproven and may never lead to marketable products.

The scientific discoveries that form the basis for Salarius’ efforts to discover and develop its current product candidates are relatively recent. To date, neither Salarius nor any other company has received regulatory approval to market therapeutics using epigenetic enzymes. The scientific evidence to support the feasibility of developing drugs based on these discoveries is both preliminary and limited. Successful development of therapeutic products by Salarius will require solving a number of issues. In addition, any product candidates that Salarius develops may not demonstrate in patients the chemical and pharmacological properties ascribed to them in laboratory and pre-clinical trials, and they may interact with human biological systems in unforeseen, ineffective or even harmful ways. For instance, Salarius’ clinical and pre-clinical data to date is not validated and Salarius has no way of knowing if after validation Salarius’ clinical trial data will be complete and consistent. If Salarius does not successfully develop and commercialize product candidates based upon this technological approach, it may not become profitable and the value of its capital stock may decline.

Further, Salarius’ focus on epigenetic enzyme technology for developing product candidates as opposed to multiple, more proven technologies for drug development increases the risk associated with its business. If Salarius is not successful in developing an approved product using its technology, it may not be able to identify and successfully implement an alternative product development strategy. In addition, work by other companies pursuing similar technologies may encounter setbacks and difficulties that regulators and investors may attribute to Salarius’ product candidates, whether appropriate or not.

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Salarius’ therapeutic product candidates are based on a relatively novel technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval, if at all.

Salarius has concentrated its research and development efforts to date on a limited number of product candidates based on its epigenetic enzyme therapeutic platform and identifying its initial targeted disease indications. Salarius’ future success depends on its successful development of viable product candidates. Currently, only one of its product candidates Seclidemstat, a reversible LSD1 inhibitor, is in Phase 1 clinical development, and the remainder of its product candidates are in pre-clinical development. There can be no assurance that Salarius will not experience problems or delays in developing its product candidates and that such problems or delays will not cause unanticipated costs, or that any such development problems can be solved.

The clinical trial and manufacturing requirements of the FDA, the European Medicines Agency, (which we refer to as the “EMA”), and other regulatory authorities, and the criteria these regulators use to determine the safety and efficacy of a product candidate, vary substantially according to the type, complexity, novelty and intended use and market of the product candidate. The regulatory approval process for novel product candidates such as epigenetic enzyme therapeutics can be more expensive and take longer than for other, better known or more extensively studied product candidates. It is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for Salarius’ product candidates in either the United States or the European Union or how long it will take to commercialize its product candidates, even if approved for marketing. Approvals by the European Commission may not be indicative of what the FDA, and vice versa, may require for approval and different or additional pre-clinical trials or clinical trials may be required to support regulatory approval in each respective jurisdiction. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product candidate to market could decrease Salarius’ ability to generate sufficient product revenue, and Salarius’ business, financial condition, results of operations and prospects may be harmed.

Salarius’ product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial viability of an approved label, or result in significant negative consequences following marketing approval, if any.

Undesirable side effects caused by its product candidates could cause Salarius or regulatory authorities to interrupt, delay, or terminate clinical trials or even if approved, result in a restrictive label or delay regulatory approval by the FDA or comparable foreign authorities.

In addition, to date Salarius’ product candidates have been studied in only a very limited number of patients. Salarius may experience a high rates or severity of adverse events and comparable or high rates of discontinuation in testing in its future clinical trials. There is no guarantee that severe side effects will not be identified through ongoing clinical trials of Salarius’ product candidates for current and other indications. Undesirable side effects and negative results for other indications may negatively impact the development and potential for approval of Salarius’ product candidates for their proposed indications.

Additionally, even if one or more of its product candidates receives marketing approval, and Salarius or others later identify undesirable side effects caused by such products, potentially significant negative consequences could result, including but not limited to:

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Any of these events could prevent Salarius from achieving or maintaining market acceptance of a product candidate, even if approved, and could significantly harm or cause the complete failure of its business, results of operations, and prospects.

Salarius’ product development program may not uncover all possible adverse events that patients who take its product candidates may experience. The number of subjects exposed to Seclidemstat or its other product candidates and the average exposure time in the clinical development program may be inadequate to detect rare adverse events, or chance findings, that may only be detected once the product is administered to more patients and for greater periods of time.

Clinical trials by their nature use a sample of the potential patient population. However, with a limited number of subjects and limited duration of exposure, Salarius cannot be fully assured that rare and severe side effects of Seclidemstat or its other product candidates will be uncovered. Such rare and severe side effects may only be uncovered with a significantly larger number of patients exposed to the drug. If such safety problems occur or are identified after Seclidemstat or another product candidate reaches the market, the FDA may require that Salarius amend the labeling of the product or recall the product, or may even withdraw approval for the product.

Salarius is heavily dependent on the success of its product candidates, which are in the early stages of clinical development. Some of its product candidates may produce results in pre-clinical or clinical settings, or for other indications than those for which Salarius contemplates conducting development and seeking FDA approval, and Salarius cannot give any assurance that it will generate data for any of its product candidates sufficient to receive regulatory approval in its planned indications, which will be required before they can be commercialized.

Salarius has invested substantially all of its efforts and financial resources to identify, acquire and develop its portfolio of product candidates. Its future success is dependent on its ability to successfully further develop, obtain regulatory approval for, and commercialize one or more product candidates. Salarius currently generates no revenue from sales of any products, and Salarius may never be able to develop or commercialize a product candidate.

Salarius currently has one product candidate in Phase 1 clinical trials for advanced solid tumors – Seclidemstat. This is only one of the multiple indications for which Salarius plans to develop this product candidate. There can be no assurance that the data that Salarius develops for its product candidates in its planned indications will be sufficient to obtain regulatory approval.

In addition, none of its product candidates have advanced into a pivotal clinical trial for Salarius’ proposed indications and it may be years before any such clinical trial is initiated and completed, if at all. Salarius is not permitted to market or promote any of its product candidates before it receives regulatory approval from the FDA or comparable foreign regulatory authorities, and Salarius may never receive such regulatory approval for any of its product candidates. Salarius cannot be certain that any of its product candidates will be successful in clinical trials or receive regulatory approval. Further, its product candidates may not receive regulatory approval even if they are successful in clinical trials. If Salarius does not receive regulatory approvals for its product candidates, Salarius may not be able to continue its operations.

Product development involves a lengthy and expensive process with an uncertain outcome, and results of earlier pre-clinical and clinical trials may not be predictive of future clinical trial results.

Clinical testing is expensive and generally takes many years to complete, and the outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of pre-clinical trials and early

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clinical trials of Salarius’ product candidates may not be predictive of the results of larger, later-stage controlled clinical trials. Product candidates that have shown promising results in early-stage clinical trials may still suffer significant setbacks in subsequent clinical trials. Salarius’ clinical trials to date have been conducted on a small number of patients in limited numbers of clinical sites for a limited number of indications. Salarius will have to conduct larger, well-controlled trials in its proposed indications to verify the results obtained to date and to support any regulatory submissions for further clinical development. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles despite promising results in earlier, smaller clinical trials. Moreover, clinical data are often susceptible to varying interpretations and analyses. Salarius does not know whether any Phase 1, Phase 2, Phase 3, or other clinical trials Salarius may conduct will demonstrate consistent or adequate efficacy and safety with respect to the proposed indication for use sufficient to receive regulatory approval or market its drug candidates.

Salarius may use its financial and human resources to pursue a particular research and/or development program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

Because Salarius has limited financial and human resources, it may forego or delay pursuit of opportunities with some programs or product candidates or for other indications that later prove to have greater commercial potential. Salarius’ resource allocation decisions may cause it to fail to capitalize on viable commercial products or more profitable market opportunities. Salarius’ spending on current and future research and development programs and future product candidates for specific indications may not yield any commercially viable products. Salarius may also enter into additional strategic collaboration agreements to develop and commercialize some of its programs and potential product candidates in indications with potentially large commercial markets. If Salarius does not accurately evaluate the commercial potential or target market for a particular product candidate, it may relinquish valuable rights to that product candidate through strategic collaborations, licensing or other royalty arrangements in cases in which it would have been more advantageous for Salarius to retain sole development and commercialization rights to such product candidate, or Salarius may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.

Salarius may find it difficult to enroll patients in its clinical trials given the limited number of patients who have the diseases for which its product candidates are being studied. Difficulty in enrolling patients is a common hurdle faced by early stage biotechnology companies and could, and often does, delay or prevent clinical trials of product candidates.

Identifying and qualifying patients to participate in clinical trials of Salarius’ product candidates is essential to its success. The timing of Salarius’ clinical trials depends in part on the rate at which Salarius can recruit patients to participate in clinical trials of its product candidates, and Salarius may experience delays in its clinical trials if Salarius encounters difficulties in enrollment, clinical enrollment is inherently difficult, and often time consuming.

The eligibility criteria of Salarius’ planned clinical trials may further limit the available eligible trial participants as Salarius expects to require that patients have specific characteristics that Salarius can measure or meet the criteria to assure their conditions are appropriate for inclusion in its clinical trials. Salarius may not be able to identify, recruit, and enroll a sufficient number of patients to complete its clinical trials in a timely manner because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical trials, and the willingness of physicians to participate in its planned clinical trials. If patients are unwilling to participate in Salarius’ clinical trials for any reason, the timeline for conducting trials and obtaining regulatory approval of its product candidates may be delayed.

If Salarius experiences delays in the completion of, or termination of, any clinical trials of its product candidates, the commercial prospects of its product candidates could be harmed, and its ability to generate product revenue from any of these product candidates could be delayed or prevented. In addition, any delays in

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completing its clinical trials would likely increase its overall costs, impair product candidate development and jeopardize its ability to obtain regulatory approval relative to its current plans. Any of these occurrences may harm its business, financial condition, and prospects significantly.

Salarius may face potential product liability, and, if successful claims are brought against it, Salarius may incur substantial liability and costs which could be greater than its insurance coverage or overall resources. If the use or misuse of Salarius’ product candidates harms patients, or is perceived to harm patients even when such harm is unrelated to its product candidates, Salarius’ regulatory approvals, if any, could be revoked or otherwise negatively impacted and Salarius could be subject to costly and damaging product liability claims. If Salarius is unable to obtain adequate insurance or is required to pay for liabilities resulting from a claim excluded from, or beyond the limits of, its insurance coverage, a material liability claim could adversely affect its financial condition.

The use or misuse of Salarius’ product candidates in clinical trials and the sale of any products for which Salarius may obtain marketing approval exposes Salarius to the risk of potential product liability claims. Product liability claims might be brought against Salarius by consumers, healthcare providers, pharmaceutical companies or others selling or otherwise coming into contact with its product candidates and approved products, if any. There is a risk that Salarius’ product candidates may induce adverse events. If Salarius cannot successfully defend against product liability claims, it could incur substantial liability and costs. Patients with the diseases targeted by Salarius’ product candidates may already be in severe and advanced stages of disease and have both known and unknown significant preexisting and potentially life-threatening health risks. During the course of treatment, patients may suffer adverse events, including death, for reasons that may be related to Salarius’ product candidates. Such events could subject Salarius to costly litigation, require it to pay substantial amounts of money to injured patients, delay, negatively impact or end its opportunity to receive or maintain regulatory approval to market its products, or require Salarius to suspend or abandon its commercialization efforts. Even in a circumstance in which an adverse event is unrelated to Salarius’ product candidates, the investigation into the circumstance may be time-consuming or inconclusive. These investigations may delay Salarius’ regulatory approval process or impact and limit the type of regulatory approvals its product candidates receive or maintain. As a result of these factors, a product liability claim, even if successfully defended, could have a material adverse effect on Salarius’ business, financial condition or results of operations.

Although Salarius has product liability insurance, which covers its clinical trials in the United States, for up to $1 million per occurrence, up to an aggregate limit of $3 million, its insurance may be insufficient to reimburse it for any expenses or losses Salarius may suffer. Salarius will also likely be required to increase its product liability insurance coverage for the advanced clinical trials that it plans to initiate. If Salarius obtains marketing approval for any of its product candidates, it will need to expand its insurance coverage to include the sale of commercial products. There is no way to know if Salarius will be able to continue to obtain product liability coverage and obtain expanded coverage if it requires it, in sufficient amounts to protect it against losses due to liability, on acceptable terms, or at all. Salarius may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limits of, its insurance coverage. Where Salarius has provided indemnities in favor of third parties under its agreements with them, there is also a risk that these third parties could incur liability and bring a claim under such indemnities. An individual may bring a product liability claim against Salarius alleging that one of its product candidates causes, or is claimed to have caused, an injury or is found to be unsuitable for consumer use. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties. Claims could also be asserted under state consumer protection acts. Any product liability claim brought against Salarius, with or without merit, could result in:

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Product liability claims may subject Salarius to the foregoing and other risks, which could have a material adverse effect on its business, financial condition or results of operations.

Risks Related to Regulatory Approval of Salarius’ Product Candidates and Other Legal Compliance Matters

A potential breakthrough therapy designation by the FDA for Salarius’ product candidates may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that Salarius’ product candidates will receive marketing approval.

Salarius may seek a breakthrough therapy designation from the FDA for some of its product candidates. A breakthrough therapy is defined as a drug or biological product that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug or biological product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs or biological products that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Drugs designated as breakthrough therapies by the FDA could also be eligible for accelerated approval.

Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if Salarius believes one of its product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of Salarius’ product candidates qualify and are designated as breakthrough therapies, the FDA may later decide that the drugs or biological products no longer meet the conditions for designation and the designation may be rescinded.

Salarius may seek Fast Track designation for one or more of its product candidates, but it might not receive such designation, and even if Salarius does, such designation may not actually lead to a faster development or regulatory review or approval process.

If a product candidate is intended for the treatment of a serious condition and nonclinical or clinical data demonstrate the potential to address unmet medical need for this condition, a product sponsor may apply for FDA Fast Track designation. If Salarius seeks Fast Track designation for a product candidate, Salarius may not receive it from the FDA. However, even if Salarius receives Fast Track designation, Fast Track designation does

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not ensure that Salarius will receive marketing approval or that approval will be granted within any particular timeframe. Salarius may not experience a faster development or regulatory review or approval process with Fast Track designation compared to conventional FDA procedures. In addition, the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from Salarius’ clinical development program. Fast Track designation alone does not guarantee qualification for the FDA’s priority review procedures.

Even if Salarius obtains regulatory approval for a product, Salarius will remain subject to ongoing regulatory requirements.

If any of Salarius’ product candidates are approved, Salarius will be subject to ongoing regulatory requirements with respect to manufacturing, labeling, packaging, storage, marketing, advertising, promotion, sampling, record-keeping, conduct of post-marketing clinical trials, and submission of safety, efficacy and other post-approval information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities.

Manufacturers and manufacturers’ facilities are required to continuously comply with FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices, (which we refer to as “cGMP”), regulations and corresponding foreign regulatory manufacturing requirements. As such, Salarius and its contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any new drug application (which we refer to as “NDA”) or marketing authorization application.

Any regulatory approvals that Salarius receives for its product candidates may be subject to limitations on the approved indicated uses for which the product candidate may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. Salarius will be required to report adverse reactions and production problems, if any, to the FDA and comparable foreign regulatory authorities. Any new legislation addressing drug safety issues could result in delays in product development or commercialization, or increased costs to assure compliance. If its original marketing approval for a product candidate was obtained through an accelerated approval pathway, Salarius could be required to conduct a successful post-marketing clinical trial in order to confirm the clinical benefit for its products. An unsuccessful post-marketing clinical trial or failure to complete such a trial could result in the withdrawal of marketing approval.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, the regulatory agency may impose restrictions on that product or Salarius, including requiring withdrawal of the product from the market. If Salarius fails to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

Any government investigation of alleged violations of law would be expected to require Salarius to expend significant time and resources in response and could generate adverse publicity. Any failure to comply with

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ongoing regulatory requirements may significantly and adversely affect its ability to develop and commercialize its products and the value of Salarius and its operating results would be adversely affected.

Healthcare legislative reform measures may have a material adverse effect on Salarius’ business, financial condition or results of operations.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs or otherwise change or reform the provision of healthcare products and services to the patient population. For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Health Care Reform Law, was passed, which substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The Health Care Reform Law, among other things, addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected, increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extends the rebate program to individuals enrolled in Medicaid managed care organizations, establishes annual fees and taxes on manufacturers of specified branded prescription drugs, and promotes a new Medicare Part D coverage gap discount program.

In addition, other legislative changes have been proposed and adopted in the United States since the Health Care Reform Law was enacted and Salarius expects that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand or lower pricing for its product candidates, or additional pricing pressures.

Salarius may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws. If Salarius is unable to comply, or has not fully complied, with such laws, it could face substantial penalties.

If Salarius obtains FDA approval for any of its product candidates and begins commercializing those products in the United States, its operations may be subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act, and physician sunshine laws and regulations. These laws may impact, among other things, its proposed sales, marketing, and education programs. In addition, Salarius may be subject to patient privacy regulation by both the federal government and the states in which Salarius conduct its business. The laws that may affect its ability to operate include:

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Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of Salarius’ business activities could be subject to challenge under one or more of such laws. In addition, recent health care reform legislation has strengthened these laws. For example, the Health Care Reform Law, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover, the Health Care Reform Law provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

If Salarius’ operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to Salarius, Salarius may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment, and the curtailment or restructuring of its operations, any of which could adversely affect its ability to operate Salarius’ business and its results of operations.

Reliance on government funding for Salarius’ programs may add uncertainty to its research and commercialization efforts with respect to those programs that are tied to such funding and may impose requirements that limit its ability to take specified actions, increase the costs of commercialization and production of product candidates developed under those programs and subject Salarius to potential financial penalties, which could materially and adversely affect its business, financial condition and results of operations.

During the course of Salarius’ development of its product candidates, it has been funded in part through federal and state grants, including but not limited to the funding it received from CPRIT. In addition to the funding Salarius has received to date, it intends to continue to apply for federal and state grants to receive additional funding in the future. Contracts and grants funded by the U.S. government, state governments and their related agencies include provisions that reflect the government’s substantial rights and remedies, many of which are not typically found in commercial contracts, including powers of the government to:

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In addition to those powers set forth above, the government funding Salarius may receive could also impose requirements to make payments based upon sales of its products, if any, in the future.

Salarius may not have the right to prohibit the U.S. government from using specified technologies developed by it, and Salarius may not be able to prohibit third-party companies, including its competitors, from using those technologies in providing products and services to the U.S. government. The U.S. government generally takes the position that it has the right to royalty-free use of technologies that are developed under U.S. government contracts. These and other provisions of government grants may also apply to intellectual property Salarius licenses now or in the future.

In addition, government contracts and grants normally contain additional requirements that may increase Salarius’ costs of doing business, reduce its profits, and expose it to liability for failure to comply with these terms and conditions. These requirements include, for example:

If Salarius fails to maintain compliance with any such requirements that may apply to it now or in the future, Salarius may be subject to potential liability and to termination of Salarius’ contracts.

If Salarius fails to comply with environmental, health and safety laws and regulations, Salarius could become subject to fines or penalties or incur costs and liabilities that could have a material adverse effect on its business, financial condition or results of operations.

Salarius’ research and development activities and its third-party manufacturers’ and suppliers’ activities involve the controlled storage, use, and disposal of hazardous materials, including the components of its product candidates and other hazardous compounds. Salarius and its manufacturers and suppliers are subject to laws and

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regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at Salarius’ and its manufacturers’ facilities pending their use and disposal. Salarius cannot eliminate the risk of contamination, which could cause an interruption of its commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling, and disposal of these materials and specified waste products. Although Salarius believes that the safety procedures utilized by it and its third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, Salarius cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, Salarius may be held liable for any resulting damages and such liability could exceed its resources and state or federal or other applicable authorities may curtail Salarius’ use of specified materials and/or interrupt its business operations. Furthermore, environmental laws and regulations are complex, change frequently, and have tended to become more stringent. Salarius cannot predict the impact of such changes and cannot be certain of its future compliance. Salarius does not currently carry biological or hazardous waste insurance coverage.

Risks Related to Salarius’ Intellectual Property

Salarius may not be successful in obtaining or maintaining necessary rights to its targets, product compounds and processes for its development pipeline through acquisitions and in-licenses.

Presently, Salarius has rights to the intellectual property, through licenses from third parties and under patents and patent applications that Salarius owns, to modulate only a subset of the known epigenetic enzyme targets. Because Salarius’ programs may involve a range of targets, including targets that require the use of proprietary rights held by third parties, the growth of its business may depend in part on Salarius’ ability to acquire, in-license or use these proprietary rights. In addition, Salarius’ product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. Salarius may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that it identifies. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that Salarius may consider attractive. These established companies may have a competitive advantage over Salarius due to their size, cash resources and greater clinical development and commercialization capabilities.

For example, Salarius has previously and may continue to collaborate with academic institutions worldwide to accelerate its pre-clinical and clinical research or development under written agreements with these institutions. Typically, these institutions provide an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, Salarius may be unable to negotiate a license within the specified time frame or under terms that are acceptable to it. If Salarius is unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking Salarius’ ability to pursue its program.

In addition, companies that perceive Salarius to be a competitor may be unwilling to assign or license rights to it. Salarius also may be unable to license or acquire third-party intellectual property rights on terms that would allow it to make an appropriate return on its investment. If Salarius is unable to successfully obtain rights to third-party intellectual property rights, its business, financial condition and prospects for growth could suffer.

Salarius intends to rely on patent rights for its product candidates and any future product candidates. If Salarius is unable to obtain or maintain exclusivity from the combination of these approaches, Salarius may not be able to compete effectively in its markets.

Salarius relies or will rely upon a combination of patents, trade secret protection, and confidentiality agreements to protect the intellectual property related to its technologies and product candidates. Its success

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depends in large part on its and its licensors’ ability to obtain regulatory exclusivity and maintain patent and other intellectual property protection in the United States and in other countries with respect to its proprietary technology and products.

Salarius has sought to protect its proprietary position by filing patent applications in the United States and abroad related to its product candidates that are important to its business. This process is expensive and time consuming, and Salarius may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that Salarius will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which legal principles remain unsolved. The patent applications that Salarius owns or in-licenses may fail to result in issued patents with claims that cover its product candidates in the United States or in other foreign countries. There is no assurance that all potentially relevant prior art relating to its patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover Salarius’ product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, Salarius’ patents and patent applications may not adequately protect its intellectual property, provide exclusivity for its product candidates, or prevent others from designing around the Salarius claims. Any of these outcomes could impair Salarius’ ability to prevent competition from third parties, which may have an adverse impact on its business.

Salarius, independently or together with its licensors, has filed several patent applications covering various aspects of its product candidates. Salarius cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or licensed to Salarius after patent issuance could deprive Salarius of rights necessary for the successful commercialization of any product candidates that Salarius may develop. Further, if Salarius encounters delays in regulatory approvals, the period of time during which Salarius could market a product candidate under patent protection could be reduced.

If Salarius cannot obtain and maintain effective protection of exclusivity from its regulatory efforts and intellectual property rights, including patent protection or data exclusivity, for its product candidates, Salarius may not be able to compete effectively and its business and results of operations would be harmed.

Salarius may not have sufficient patent term protections for its product candidates to effectively protect its business.

Patents have a limited term. In the United States, the statutory expiration of a patent is generally 20 years after it is filed. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Even if patents covering its product candidates are obtained, once the patent life has expired for a product candidate, Salarius may be open to competition from generic medications. In addition, upon issuance in the United States any patent term can be adjusted based on specified delays caused by the applicant(s) or the U.S. Patent and Trademark Office (which we refer to as the “USPTO”).

Patent term extensions under the Hatch-Waxman Act in the United States and under supplementary protection certificates in Europe may be available to extend the patent or data exclusivity terms of Salarius’ product candidates. Salarius will likely rely on patent term extensions, and Salarius cannot provide any assurances that any such patent term extensions will be obtained and, if so, for how long. As a result, Salarius may not be able to maintain exclusivity for its product candidates for an extended period after regulatory approval, if any, which would negatively impact its business, financial condition, results of operations and

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prospects. If Salarius does not have sufficient patent terms or regulatory exclusivity to protect its product candidates, its business and results of operations will be adversely affected.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing Salarius’ ability to protect its products, and recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of its patent applications and the enforcement or defense of its issued patents.

As is the case with other biotechnology companies, Salarius’ success is heavily dependent on patents and the ability to enforce and protect these patients. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in specified circumstances and weakened the rights of patent owners in specified situations. In addition to increasing uncertainty with regard to Salarius’ ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken Salarius’ ability to obtain new patents or to enforce Salarius’ existing patents and patents that it might obtain in the future. Some of Salarius’ patent claims may be affected by the recent U.S. Supreme Court decision in Association for Molecular Pathology v. Myriad Genetics. In Myriad, the Supreme Court held that unmodified isolated fragments of genomic sequences, such as the DNA constituting the BRCA1 and BRCA2 genes, are not eligible for patent protection because they constitute a product of nature. The exact boundaries of the Supreme Court’s decision remain unclear as the Supreme Court did not address other types of nucleic acids.

On December 16, 2014, the USPTO issued guidance to patent examiners titled 2014 Interim Guidance on Patent Subject Matter Eligibility (Fed. Reg. 79 (241): 74618-33. These guidelines instruct USPTO examiners on the ramifications of the Prometheus and Myriad rulings and apply the Myriad ruling to natural products and principles including all naturally occurring nucleic acids. In addition, the USPTO continues to provide updates to its guidance and this is a developing area. The recent USPTO guidance could make it impossible for Salarius to pursue similar patent claims in patent applications Salarius may prosecute in the future.

Salarius’ patent portfolio contains claims of various types and scope, including chemically modified mimics, as well as methods of medical treatment. The presence of varying claims in Salarius’ patent portfolio significantly reduces, but may not eliminate, its exposure to potential validity challenges under Myriad or future judicial decisions. However, it is not yet clear what, if any, impact this recent Supreme Court decision or future decisions will have on the operation of Salarius’ business.

For Salarius’ U.S. patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patent law. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. The USPTO has promulgated regulations and developed procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, did not come into effect until March 16, 2013. Accordingly, it is not yet clear what, if any, impact the Leahy-Smith Act will have on the operation of Salarius’ business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of its patent applications and the enforcement or defense of its issued patents, all of which could have a material adverse effect on Salarius’ business, financial condition or results of operations.

An important change introduced by the Leahy-Smith Act is that, as of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention. A third party that files a patent

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application in the USPTO after that date but before Salarius could therefore be awarded a patent covering an invention of Salarius’ even if Salarius had made the invention before it was made by the third party. This will require Salarius to be cognizant going forward of the time from invention to filing of a patent application. Furthermore, Salarius’ ability to obtain and maintain valid and enforceable patents depends on whether the differences between its technology and the prior art allow its technology to be patentable over the prior art. Since patent applications in the United States and most other countries are confidential for a period of time after filing, Salarius cannot be certain that it was the first to either (i) file any patent application related to its product candidates or (ii) invent any of the inventions claimed in its patents or patent applications.

Among some of the other changes introduced by the Leahy-Smith Act are changes that limit where a patentee may file a patent infringement suit and new procedures providing opportunities for third parties to challenge any issued patent in the USPTO. Included in these new procedures is a process known as Inter Partes Review, or IPR, which has been generally used by many third parties over the past two years to invalidate patents. The IPR process is not limited to patents filed after the Leahy-Smith Act was enacted, and would therefore be available to a third party seeking to invalidate any of Salarius’ U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate Salarius’ patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.

If Salarius is unable to maintain effective proprietary rights for its product candidates or any future product candidates, Salarius may not be able to compete effectively in its proposed markets.

In addition to the protection afforded by patents, Salarius relies on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that Salarius elects not to patent, processes for which patents are difficult to enforce and any other elements of its product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. Salarius seeks to protect its proprietary technology and processes, in part, by entering into confidentiality agreements with its employees, consultants, scientific advisors, and contractors. Salarius also seeks to preserve the integrity and confidentiality of its data and trade secrets by maintaining physical security of its premises and physical and electronic security of its information technology systems. While Salarius has confidence in these individuals, organizations and systems, agreements or security measures may be breached, and Salarius may not have adequate remedies for any breach. In addition, its trade secrets may otherwise become known or be independently discovered by competitors.

Although Salarius expects all of its employees and consultants to assign their inventions to Salarius, and all of its employees, consultants, advisors, and any third parties who have access to its proprietary know- how, information, or technology to enter into confidentiality agreements, Salarius cannot provide any assurances that all such agreements have been duly executed or that its trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to its trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of Salarius’ trade secrets could impair its competitive position and may have a material adverse effect on its business, financial condition or results of operations. Additionally, if the steps taken to maintain its trade secrets are deemed inadequate, Salarius may have insufficient recourse against third parties for misappropriating the trade secret.

Third-party claims of intellectual property infringement may prevent or delay Salarius’ development and commercialization efforts.

Salarius’ commercial success depends in part on its ability to develop, manufacture, market and sell its product candidates and use its proprietary technology without infringing the patent rights of third parties.

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Numerous third-party U.S. and non-U.S. issued patents and pending applications exist in the area of epigenetic enzyme inhibitors and related technologies. Salarius is aware of U.S. and foreign patents and pending patent applications owned by third parties that cover therapeutic uses of epigenetic inhibitors. Salarius is currently monitoring these patents and patent applications. Salarius may in the future pursue available proceedings in the U.S. and foreign patent offices to challenge the validity of these patents and patent applications. In addition, or alternatively, Salarius may consider whether to seek to negotiate a license of rights to technology covered by one or more of such patents and patent applications. If any patents or patent applications cover its product candidates or technologies, Salarius may not be free to manufacture or market its product candidates, as planned, absent such a license, which may not be available to Salarius on commercially reasonable terms, or at all.

It is also possible that Salarius has failed to identify relevant third-party patents or applications. For example, applications filed before November 29, 2000 and applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Moreover, it is difficult for industry participants, including Salarius, to identify all third-party patent rights that may be relevant to its product candidates and technologies because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. Salarius may fail to identify relevant patents or patent applications or may identify pending patent applications of potential interest but incorrectly predict the likelihood that such patent applications may issue with claims of relevance to its technology. In addition, Salarius may be unaware of one or more issued patents that would be infringed by the manufacture, sale or use of a current or future product candidate, or Salarius may incorrectly conclude that a third-party patent is invalid, unenforceable or not infringed by its activities. Additionally, pending patent applications that have been published can, subject to specified limitations, be later amended in a manner that could cover Salarius’ technologies, its product candidates or the use of its product candidates.

There have been many lawsuits and other proceedings involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, and reexamination proceedings before the USPTO and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which Salarius is developing product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that its product candidates may be subject to claims of infringement of the patent rights of third parties.

Parties making claims against Salarius may obtain injunctive or other equitable relief, which could effectively block its ability to further develop and commercialize one or more of its product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from its business. In the event of a successful claim of infringement against Salarius, Salarius may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign its infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

Salarius may not be successful in meeting its obligations under its existing license agreements necessary to maintain its product candidate licenses in effect. In addition, if required in order to commercialize its product candidates, Salarius may be unsuccessful in obtaining or maintaining necessary rights to its product candidates through acquisitions and in-licenses.

Salarius currently has rights to the intellectual property, through licenses from third parties and under patents that Salarius does not own, to develop and commercialize its product candidates. Because its programs may require the use of proprietary rights held by third parties, the growth of its business will likely depend in part on its ability to maintain in effect these proprietary rights. Any termination of license agreements with third parties with respect to its product candidates would be expected to negatively impact its business prospects.

Salarius may be unable to acquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that Salarius identifies as necessary for its product candidates.

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The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that Salarius may consider attractive. These established companies may have a competitive advantage over Salarius due to their size, cash resources, and greater clinical development and commercialization capabilities. In addition, companies that perceive Salarius to be a competitor may be unwilling to assign or license rights to Salarius. Even if Salarius is able to license or acquire third-party intellectual property rights that are necessary for its product candidates, there can be no assurance that they will be available on favorable terms.

Salarius collaborates with academic institutions worldwide to identify product candidates, accelerate its research and conduct development. Typically, these institutions have provided Salarius with an option to negotiate an exclusive license to any of the institution’s rights in the patents or other intellectual property resulting from the collaboration. Regardless of such option, Salarius may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to Salarius. If Salarius is unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking its ability to pursue a program of interest to Salarius.

If Salarius is unable to successfully obtain and maintain rights to required third-party intellectual property, Salarius may have to abandon development of that product candidate or pay additional amounts to the third-party, and its business and financial condition could suffer.

The patent protection and patent prosecution for some of Salarius’ product candidates is dependent on third parties.

While Salarius normally seeks and gains the right to fully prosecute the patents relating to its product candidates, there may be times when patents relating to its product candidates are controlled by its licensors. If future licensors fail to appropriately and broadly prosecute and maintain patent protection for patents covering any of its product candidates, its ability to develop and commercialize those product candidates may be adversely affected and Salarius may not be able to prevent competitors from making, using, importing, and selling competing products. In addition, even where Salarius now has the right to control patent prosecution of patents and patent applications Salarius has licensed from third parties, Salarius may still be adversely affected or prejudiced by actions or inactions of its licensors in effect from actions prior to Salarius assuming control over patent prosecution.

If Salarius fails to comply with obligations in the agreements under which Salarius licenses intellectual property and other rights from third parties or otherwise experience disruptions to its business relationships with its licensors, Salarius could lose license rights that are important to its business.

Salarius is a party to intellectual property licenses and supply agreements that are important to its business and may enter into additional license agreements in the future. Salarius’ existing agreements impose, and Salarius expects that future license agreements will impose, various diligence, milestone payment, royalty, purchasing, and other obligations on it. If Salarius fails to comply with its obligations under these agreements, or Salarius is subject to a bankruptcy, its agreements may be subject to termination by the licensor, in which event Salarius would not be able to develop, manufacture, or market products covered by the license or subject to supply commitments.

Salarius may be involved in lawsuits to protect or enforce its patents or the patents of its licensors, which could be expensive, time consuming, and unsuccessful.

Competitors may infringe Salarius’ patents or the patents of its licensors. If Salarius or one of its licensing partners were to initiate legal proceedings against a third party to enforce a patent covering one of its product candidates, the defendant could counterclaim that the patent covering its product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or

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unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description, clarity or non- enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability is unpredictable.

Interference proceedings provoked by third parties or brought by Salarius or declared by the USPTO may be necessary to determine the priority of inventions with respect to Salarius’ patents or patent applications or those of its licensors. An unfavorable outcome could require Salarius to cease using the related technology or to attempt to license rights to it from the prevailing party. Salarius’ business could be harmed if the prevailing party does not offer Salarius a license on commercially reasonable terms. Its defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract its management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on its ability to raise the funds necessary to continue its clinical trials, continue its research programs, license necessary technology from third parties, or enter into development partnerships that would help Salarius bring its product candidates to market.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Salarius’ confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of its common stock.

Salarius may be subject to claims that its employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or that its employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Salarius employs individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including Salarius’ competitors or potential competitors. Although Salarius has written agreements and makes every effort to ensure that its employees, consultants, and independent contractors do not use the proprietary information or intellectual property rights of others in their work for Salarius, Salarius may in the future be subject to any claims that its employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties. Litigation may be necessary to defend against these claims. If Salarius fails in defending any such claims, in addition to paying monetary damages, Salarius may lose valuable intellectual property rights or personnel, which could adversely impact its business. Even if Salarius is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Salarius may not be able to protect its intellectual property rights throughout the world.

Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and its intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Competitors may use Salarius’ technologies in jurisdictions where Salarius has not obtained patent protection to develop its own products and may also export infringing products to territories where Salarius has patent protection, but enforcement is not as strong as that in the United States. These products may compete with its products and its patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of some countries, particularly some developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those

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relating to biotechnology products, which could make it difficult for Salarius to stop the infringement of its patents or marketing of competing products in violation of its proprietary rights generally. Proceedings to enforce Salarius’ patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert Salarius’ efforts and attention from other aspects of its business, could put Salarius’ patents at risk of being invalidated or interpreted narrowly and its patent applications at risk of not issuing and could provoke third parties to assert claims against Salarius. Salarius may not prevail in any lawsuits that Salarius initiates and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, its efforts to enforce its intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Salarius develops or licenses.

Risks Related to Salarius’ Reliance on Third Parties

Salarius relies on or will rely on third parties to conduct its clinical trials, manufacture its product candidates and perform other services. If these third parties do not successfully perform and comply with regulatory requirements, Salarius may not be able to successfully complete clinical development, obtain regulatory approval or commercialize its product candidates and its business could be substantially harmed.

Salarius has relied upon and plans to continue to rely upon third-parties such as CROs, hospitals, etc. to conduct, monitor and manage its ongoing clinical programs. Salarius relies on these parties for execution of clinical trials and manages and controls only some aspects of their activities. Salarius remains responsible for ensuring that each of its trials is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and its reliance on these third parties does not relieve Salarius of its regulatory responsibilities. Salarius and its CROs and other vendors are required to comply with all applicable laws, regulations and guidelines, including those required by the FDA and comparable foreign regulatory authorities for all of its product candidates in clinical development. If Salarius or any of its CROs or vendors fail to comply with applicable laws, regulations and guidelines, the results generated in its clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require Salarius to perform additional clinical trials before approving its marketing applications. Salarius cannot be assured that its CROs and other vendors will meet these requirements, or that upon inspection by any regulatory authority, such regulatory authority will determine that efforts, including any of its clinical trials, comply with applicable requirements. Its failure to comply with these laws, regulations and guidelines may require Salarius to repeat clinical trials, which would be costly and delay the regulatory approval process.

If any of Salarius’ relationships with these third-parties terminate, Salarius may not be able to enter into arrangements with alternative third parties in a timely manner or do so on commercially reasonable terms. In addition, third parties may not prioritize Salarius’ clinical trials relative to those of other customers and any turnover in personnel or delays in the allocation of third party employees may negatively affect its clinical trials. If third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, Salarius’ clinical trials may be delayed or terminated and Salarius may not be able to meet its current plans with respect to its product candidates. CROs, in particular, may also involve higher costs than anticipated, which could negatively affect Salarius’ financial condition and operations.

In addition, Salarius does not currently have, nor does Salarius currently plan to establish the capability to manufacture product candidates for use in the conduct of its clinical trials, and Salarius lacks the resources and the capability to manufacture any of its product candidates on a clinical or commercial scale without the use of third-party manufacturers. Salarius plans to rely on third-party manufacturers and their responsibilities will include purchasing from third-party suppliers the materials necessary to produce its product candidates for its clinical trials and regulatory approval. There are expected to be a limited number of suppliers for the active ingredients and other materials that Salarius expects to use to manufacture its product candidates, and Salarius may not be able to identify alternative suppliers to prevent a possible disruption of the manufacture of its product candidates for its clinical trials, and, if approved, ultimately for commercial sale. Although Salarius generally does not expect to begin a clinical trial unless Salarius believes it has a sufficient supply of a product candidate to

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complete the trial, any significant delay or discontinuity in the supply of a product candidate, or the active ingredient or other material components in the manufacture of the product candidate could delay completion of its clinical trials and potential timing for regulatory approval of its product candidates, which would harm its business and results of operations.

Salarius expects to rely on third parties to manufacture its clinical product supplies, and Salarius intends to rely on third parties to produce and process its product candidates, if approved, and Salarius’ commercialization of any of its product candidates could be stopped, delayed or made less profitable if those third parties fail to obtain approval of government regulators, fail to provide Salarius with sufficient quantities of drug product, or fail to do so at acceptable quality levels or prices.

Salarius does not currently have nor does it currently plan to develop the infrastructure or capability internally to manufacture its clinical supplies for use in the conduct of Salarius’ clinical trials, and Salarius lacks the resources and the capability to manufacture any of its product candidates on a clinical or commercial scale. Salarius currently relies on outside vendors to manufacture its clinical supplies of its product candidates and plans to continue relying on third parties to manufacture its product candidates on a commercial scale, if approved.

Salarius does not yet have sufficient information to reliably estimate the cost of the commercial manufacturing of its product candidates and its current costs to manufacture its drug products is not commercially feasible, and the actual cost to manufacture its product candidates could materially and adversely affect the commercial viability of its product candidates. As a result, Salarius may never be able to develop a commercially viable product.

In addition, Salarius’ reliance on third-party manufacturers exposes Salarius to the following additional risks:

Each of these risks could delay Salarius’ clinical trials, the approval, if any of its product candidates by the FDA or the commercialization of its product candidates or result in higher costs or deprive Salarius of potential product revenue. In addition, Salarius relies on third parties to perform release testing on its product candidates prior to delivery to patients. If these tests are not appropriately conducted and test data are not reliable, patients could be put at risk of serious harm and could result in product liability suits.

The manufacture of medical products is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of

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medical products often encounter difficulties in production, particularly in scaling up and validating initial production and absence of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Furthermore, if contaminants are discovered in Salarius’ supply of its product candidates or in the manufacturing facilities, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination. Salarius cannot be assured that any stability or other issues relating to the manufacture of its product candidates will not occur in the future. Additionally, Salarius’ manufacturers may experience manufacturing difficulties due to resource constraints or as a result of labor disputes or unstable political environments. If Salarius’ manufacturers were to encounter any of these difficulties, or otherwise fail to comply with their contractual obligations, Salarius’ ability to provide its product candidates to patients in clinical trials would be jeopardized. Any delay or interruption in the supply of clinical trial supplies could delay the completion of clinical trials, increase the costs associated with maintaining clinical trial programs and, depending upon the period of delay, require Salarius to commence new clinical trials at additional expense or terminate clinical trials completely.

Salarius may be unable to realize the potential benefits of any collaboration.

Even if Salarius is successful in entering into a collaboration with respect to the development and/or commercialization of one or more product candidates, there is no guarantee that the collaboration will be successful. Collaborations may pose a number of risks, including:

As a result, a collaboration may not result in the successful development or commercialization of Salarius’ product candidates.

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Salarius enters into various contracts in the normal course of its business in which Salarius indemnifies the other party to the contract. In the event Salarius has to perform under these indemnification provisions, it could have a material adverse effect on its business, financial condition and results of operations.

In the normal course of business, Salarius periodically enters into academic, commercial, service, collaboration, licensing, consulting and other agreements that contain indemnification provisions. With respect to Salarius’ academic and other research agreements, Salarius typically indemnifies the institution and related parties from losses arising from claims relating to the products, processes or services made, used, sold or performed pursuant to the agreements for which Salarius has secured licenses, and from claims arising from Salarius’ or its sublicensees’ exercise of rights under the agreement. With respect to Salarius’ collaboration agreements, Salarius indemnifies its collaborators from any third-party product liability claims that could result from the production, use or consumption of the product, as well as for alleged infringements of any patent or other intellectual property right by a third party. With respect to consultants, Salarius indemnifies them from claims arising from the good faith performance of their services.

Should Salarius’ obligation under an indemnification provision exceed applicable insurance coverage or if Salarius were denied insurance coverage, Salarius’ business, financial condition and results of operations could be adversely affected. Similarly, if Salarius is relying on a collaborator to indemnify Salarius and the collaborator is denied insurance coverage or the indemnification obligation exceeds the applicable insurance coverage, and if the collaborator does not have other assets available to indemnify Salarius, its business, financial condition and results of operations could be adversely affected.

Risks Related to Commercialization of Salarius’ Product Candidates

Salarius currently has limited marketing and sales experience. If Salarius is unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell its product candidates, Salarius may be unable to generate any revenue.

Although some of its employees may have marketed, launched, and sold other pharmaceutical products in the past while employed at other companies, Salarius has no experience selling and marketing its product candidates and Salarius currently has no marketing or sales organization. To successfully commercialize any products that may result from its development programs, Salarius will need to find one or more collaborators to commercialize its products or invest in and develop these capabilities, either on its own or with others, which would be expensive, difficult and time consuming. Any failure or delay in the timely development of Salarius’ internal commercialization capabilities could adversely impact the potential for success of its products.

If commercialization collaborators do not commit sufficient resources to commercialize its future products and Salarius is unable to develop the necessary marketing and sales capabilities on its own, Salarius will be unable to generate sufficient product revenue to sustain or grow its business. Salarius may be competing with companies that currently have extensive and well-funded marketing and sales operations, particularly in the markets its product candidates are intended to address. Without appropriate capabilities, whether directly or through third-party collaborators, Salarius may be unable to compete successfully against these more established companies.

Salarius may attempt to form collaborations in the future with respect to its product candidates, but it may not be able to do so, which may cause it to alter its development and commercialization plans.

Salarius may attempt to form strategic collaborations, create joint ventures or enter into licensing arrangements with third parties with respect to its programs that it believes will complement or augment its existing business. Salarius may face significant competition in seeking appropriate strategic collaborators, and the negotiation process to secure appropriate terms is time consuming and complex. Salarius may not be successful in its efforts to establish such a strategic collaboration for any product candidates and programs on terms that are acceptable to it, or at all. This may be because Salarius’ product candidates and programs may be deemed to be at too early of a stage of development for collaborative effort, its research and development

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pipeline may be viewed as insufficient, the competitive or intellectual property landscape may be viewed as too intense or risky, and/or third parties may not view its product candidates and programs as having sufficient potential for commercialization, including the likelihood of an adequate safety and efficacy profile.

Any delays in identifying suitable collaborators and entering into agreements to develop and/or commercialize Salarius’ product candidates could delay the development or commercialization of its product candidates, which may reduce their competitiveness even if they reach the market. Absent a strategic collaborator, Salarius would need to undertake development and/or commercialization activities at its own expense. If Salarius elects to fund and undertake development and/or commercialization activities on its own, it may need to obtain additional expertise and additional capital, which may not be available to it on acceptable terms or at all. If Salarius is unable to do so, it may not be able to develop its product candidates or bring them to market and its business may be materially and adversely affected.

If the market opportunities for its product candidates are smaller than Salarius believes they are, Salarius may not meet its revenue expectations and, assuming approval of a product candidate, its business may suffer.

Given the small number of patients who have the diseases that Salarius is targeting, its eligible patient population and pricing estimates may differ significantly from the actual market addressable by its product candidates. For example, based off data from the National Institute of Health (NIH) and physician collaborators, Salarius believes that there are approximately 500 Ewing sarcoma patients diagnosed annually in the United States. Because the patient populations in the market for its product candidates may be small, Salarius must be able to successfully identify patients and acquire a significant market share to achieve profitability and growth, which would negatively affect its revenue and operating results.

Salarius faces substantial competition and its competitors may discover, develop or commercialize products faster or more successfully than Salarius.

The development and commercialization of new drug products is highly competitive. Salarius faces competition from major pharmaceutical companies, specialty pharmaceutical companies, biotechnology companies, universities and other research institutions worldwide with respect to oncology therapies and the other product candidates that it may seek to develop or commercialize in the future. The list of companies working on some form of cancer treatment is almost limitless with big and small companies working on every aspect of oncology therapies worldwide.

If Salarius’ competitors obtain marketing approval from the FDA or comparable foreign regulatory authorities for their product candidates more rapidly than Salarius, it could result in its competitors establishing a strong market position before Salarius is able to enter the market.

Many of Salarius’ competitors have materially greater name recognition and financial, manufacturing, marketing, research and drug development resources than it does. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in its competitors. Large pharmaceutical companies in particular have extensive expertise in pre-clinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with Salarius’ competitors. Failure of Seclidemstat or other product candidates to effectively compete against established treatment options or in the future with new products currently in development would harm Salarius’ business, financial condition, results of operations and prospects.

The commercial success of any of Salarius’ current or future product candidates will depend upon the degree of market acceptance by physicians, patients, third-party payors, and others in the medical community.

Even with the approvals from the FDA and comparable foreign regulatory authorities, the commercial success of Salarius’ products will depend in part on the health care providers, patients, and third-party payors

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accepting its product candidates as medically useful, cost-effective, and safe. Any product that Salarius brings to the market may not gain market acceptance by physicians, patients and third-party payors. The degree of market acceptance of any of Salarius’ products will depend on a number of factors, including but not limited to:

Even if a product displays a favorable efficacy and safety profile upon approval, market acceptance of the product remains uncertain. Efforts to educate the medical community and third-party payors on the benefits of the products may require significant investment and resources and may never be successful. If its products fail to achieve an adequate level of acceptance by physicians, patients, third-party payors, and other health care providers, Salarius will not be able to generate sufficient revenue to become or remain profitable.

Salarius may not be successful in any efforts to identify, license, discover, develop, or commercialize additional product candidates.

Although a substantial amount of Salarius’ effort will focus on the continued clinical testing, potential approval, and commercialization of its existing product candidates, the success of Salarius’ business is also expected to depend in part upon its ability to identify, license, discover, develop, or commercialize additional product candidates. Research programs to identify new product candidates require substantial technical, financial, and human resources. Salarius may focus its efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. Salarius’ research programs or licensing efforts may fail to yield additional product candidates for clinical development and commercialization for a number of reasons, including but not limited to the following:

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If any of these events occur, Salarius may be forced to abandon its development efforts for a program or programs, or Salarius may not be able to identify, license, discover, develop, or commercialize additional product candidates, which would have a material adverse effect on its business, financial condition or results of operations and could potentially cause Salarius to cease operations.

Failure to obtain or maintain adequate reimbursement or insurance coverage for products when approved to market, if any, could limit Salarius’ ability to market those products and decrease its ability to generate revenue.

The pricing, coverage, and reimbursement of Salarius’ approved products, if any, must be sufficient to support its commercial efforts and other development programs and the availability and adequacy of coverage and reimbursement by third-party payors, including governmental and private insurers, are essential for most patients to be able to afford expensive treatments. Sales of Salarius’ approved products, if any, will depend substantially, both domestically and abroad, on the extent to which the costs of its approved products, if any, will be paid for or reimbursed by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or government payors and private payors. If coverage and reimbursement are not available, or are available only in limited amounts, Salarius may have to subsidize or provide products for free or Salarius may not be able to successfully commercialize its products.

In addition, there is significant uncertainty related to the insurance coverage and reimbursement for newly approved products. In the United States, the principal decisions about coverage and reimbursement for new drugs are typically made by Centers for Medicare and Medicaid Services, (which we refer to as “CMS”), an agency within the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new drug will be covered and reimbursed under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for novel product candidates such as Salarius’ and what reimbursement codes its product candidates may receive if approved.

Outside the United States, international operations are generally subject to extensive governmental price controls and other price-restrictive regulations, and Salarius believes the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of products. In many countries, the prices of products are subject to varying price control mechanisms as part of national health systems. Price controls or other changes in pricing regulation could restrict the amount that Salarius is able to charge for its products, if any. Accordingly, in markets outside the United States, the potential revenue may be insufficient to generate commercially reasonable revenue and profits.

Moreover, increasing efforts by governmental and private payors in the United States and abroad to limit or reduce healthcare costs may result in restrictions on coverage and the level of reimbursement for new products and, as a result, they may not cover or provide adequate payment for its products. Salarius expects to experience pricing pressures in connection with products due to the increasing trend toward managed healthcare, including the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs has and is expected to continue to increase in the future. As a result, profitability of Salarius’ products, if any, may be more difficult to achieve even if they receive regulatory approval.

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Risks Related to Salarius’ Business Operations

Salarius’ future success depends in part on its ability to retain its president and chief executive officer and to attract, retain, and motivate other qualified personnel.

Salarius is a small company with a limited number of employees performing multiple tasks each. Salarius is highly dependent on David J. Arthur, its president and chief executive officer, the loss of whose services may adversely impact the achievement of its objectives. Mr. Arthur could leave Salarius’ employment at any time, as he is an “at will” employee. Recruiting and retaining other qualified employees, consultants, and advisors for Salarius’ business, including scientific and technical personnel, will also be critical to Salarius success. There is currently a shortage of highly qualified personnel in Salarius’ industry, which is likely to continue. Additionally, this shortage of highly qualified personnel is particularly acute in the area where Salarius is located. As a result, competition for personnel is intense and the turnover rate can be high. Salarius may not be able to attract and retain personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for individuals with similar skill sets. In addition, failure to succeed in development and commercialization of Salarius’ product candidates may make it more challenging to recruit and retain qualified personnel. The inability to recruit and retain qualified personnel, or the loss of the services of Mr. Arthur may impede the progress of Salarius’ research, development, and commercialization objectives and would negatively impact Salarius’ ability to succeed in its product development strategy.

Salarius will need to expand its organization and Salarius may experience difficulties in managing this growth, which could disrupt its operations.

As of December 31, 2018, Salarius had ten employees. As Salarius’ development and commercialization plans and strategies develop, Salarius expects to need additional managerial, operational, sales, marketing, financial, legal, and other resources. Its management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these growth activities. Salarius may not be able to effectively manage the expansion of its operations, which may result in weaknesses in its infrastructure, operational mistakes, loss of business opportunities, loss of employees, and reduced productivity among remaining employees. Salarius’ expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates. If its management is unable to effectively manage its growth, its expenses may increase more than expected, its ability to generate and/or grow revenue could be reduced and Salarius may not be able to implement its business strategy. Salarius’ future financial performance and its ability to commercialize product candidates and compete effectively will depend, in part, on its ability to effectively manage any future growth.

Failure in Salarius’ information technology and storage systems could significantly disrupt the operation of Salarius’ business and/or lead to potential large liabilities.

Salarius’ ability to execute its business plan and maintain operations depends on the continued and uninterrupted performance of its information technology systems. Information technology systems are vulnerable to risks and damages from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security and back-up measures, some of Salarius’ and its vendors’ servers are potentially vulnerable to physical or electronic break-ins, including cyber-attacks, computer viruses and similar disruptive problems. These events could lead to the unauthorized access, disclosure and use of non- public information which in turn could lead to operational difficulties and liabilities. The techniques used by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world. As a result, Salarius may not be able to address these techniques proactively or implement adequate preventative measures. If its computer systems are compromised, it could be subject to fines, damages, litigation and enforcement actions, and it could lose trade secrets, the occurrence of which could harm its business. Despite precautionary measures to prevent unanticipated problems that could affect its information technology systems, sustained or repeated system failures that interrupt Salarius’ ability to generate and maintain data could adversely affect its ability to operate its business.

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Salarius’ principal members own a significant percentage of its stock and will be able to exert significant control over matters subject to member approval.

Salarius’ managers and executive officers currently beneficially own in excess of approximately 35% of Salarius’ outstanding equity, and together with the holders of more than 5% of Salarius’ outstanding equity, collectively own 46.9% of Salarius’ outstanding equity. Therefore, these equity holders have the ability and may continue to have the ability to influence Salarius through this ownership position. These equity holders may be able to determine some or all matters requiring equity holder approval. For example, these equity holders, acting together, may be able to control elections of directors, amendments of organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for Salarius’ membership units that you may believe are in your best interest as one of Salarius’ members.

Risks Related to the Combined Company

In determining whether you should approve the merger, the issuance of shares of Flex Pharma common stock and other matters related to the merger, as the case may be, you should carefully read the following risk factors in addition to the risks described above.

If any of the events described in “Risks Related to Flex Pharma” or “Risks Related to Salarius” occur, those events could cause potential benefits of the merger not to be realized.

Following completion of the merger, the combined company will be susceptible to many of the risks described in the sections herein entitled “Risks Related to Flex Pharma” and “Risks Related to Salarius.” To the extent any of the events in the risks described in those sections occur, those events could cause the potential benefits of the merger not to be realized and the market price of the combined company’s common stock to decline.

The historical financial information of Flex Pharma and Salarius presented herein may not be representative of their respective results or financial condition if they had been operated as a combined company, and as a result may not be representative of the combined company’s results or financial condition after the merger.

The historical financial information of Flex Pharma and Salarius included elsewhere in this proxy statement/prospectus/information statement reflect assumptions and allocations made by Flex Pharma and Salarius, respectively. The historical results and financial condition of Flex Pharma and Salarius presented herein may be different from those that would have resulted had Flex Pharma and Salarius been operated together as a combined company during the applicable periods or at the applicable dates. As a result, the historical financial information of Flex Pharma and Salarius are not indicative of future operating results or financial position of the combined company.

The unaudited pro forma condensed combined financial information presented herein may not be representative of the combined companies’ results after the merger.

The unaudited pro forma condensed combined financial information included elsewhere in this proxy statement has been presented for informational purposes only and is not necessarily indicative of the financial position or results of operations that actually would have occurred had the merger been completed as of the date indicated, nor is it indicative of future operating results or financial position. The unaudited pro forma condensed combined financial information has been derived from the historical financial statements of Flex Pharma and Salarius and adjustments and assumptions have been made regarding the combined company after giving effect to the merger. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the unaudited pro forma condensed combined financial information does not reflect all costs that are expected to be incurred by the

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combined company in connection with the merger. The assumptions used in preparing the unaudited pro forma condensed combined financial information may not ultimately be accurate, and other factors may affect the combined company’s results and financial condition following consummation of the merger. The unaudited pro forma condensed combined financial information does not reflect the costs of integration activities or transaction-related costs or incremental expenditures associated with the transaction. Accordingly, the unaudited pro forma condensed combined financial information included elsewhere in this proxy statement does not reflect what Flex Pharma’s or Salarius’ results or financial condition would have been had Flex Pharma and Salarius been a consolidated entity during all periods presented.

Failure by the combined company to comply with the initial listing standards of Nasdaq will prevent its stock from being listed on Nasdaq and may prevent the closing of the merger.

Flex Pharma, under the new name “Salarius Pharmaceuticals, Inc.,” will be required to meet the initial listing requirements of Nasdaq to maintain the listing and continued trading of its shares on Nasdaq. These initial listing requirements are more difficult to achieve than the continued listing requirements. Pursuant to the Merger Agreement, Flex Pharma agreed to use its commercially reasonable efforts to cause the shares of Flex Pharma common stock being issued in the merger to be approved for listing on Nasdaq at or prior to the effective time of the merger. Based on information currently available to Flex Pharma, Flex Pharma anticipates that its stock will be unable to meet the $4.00 minimum bid price (or, to the extent applicable, $3.00 minimum closing price) initial listing requirement at the closing of the merger unless it effects a reverse stock split. The board of directors of Flex Pharma intends to effect a reverse stock split of the shares of Flex Pharma common stock. In addition, often times a reverse stock split will not result in a trading price for the affected common stock that is proportional to the ratio of the split. If Flex Pharma is unable to satisfy Nasdaq listing requirements, Salarius is not obligated to close the merger. Also, following the merger, if the combined company is unable to satisfy Nasdaq listing requirements, Nasdaq may notify the combined company that its shares of common stock will not be listed on Nasdaq.

Upon a potential delisting from Nasdaq, if the combined company’s common stock is not then eligible for quotation on another market or exchange, trading of the shares could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it is likely that there would be significantly less liquidity in the trading of the combined company’s common stock; decreases in institutional and other investor demand for the shares, coverage by securities analysts, market making activity and information available concerning trading prices and volume; and fewer broker dealers willing to execute trades in the combined company’s common stock. Also, it may be difficult for the combined company to raise additional capital if the combined company’s common stock is not listed on a major exchange. The occurrence of any of these events could result in a further decline in the market price of the combined company’s common stock and could have a material adverse effect on the combined company.

The merger will result in changes to Flex Pharma’s board of directors and the combined company may pursue different strategies than either Flex Pharma or Salarius may have pursued independently.

If Flex Pharma and Salarius complete the merger, the composition of Flex Pharma’s board of directors will change in accordance with the Merger Agreement. Following completion of the merger, the combined company’s board of directors is expected to consist of seven members, one of whom shall be designed by Flex Pharma and the other six of whom shall be designated by Salarius. Currently, it is anticipated that the combined company will continue to advance the product and development efforts and business strategies of Salarius primarily. However, because the composition of the board of directors of the combined company will consist of directors from both Flex Pharma and Salarius, the combined company may determine to pursue certain business strategies that neither Flex Pharma nor Salarius would have pursued independently.

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Ownership of the combined company’s common stock may be highly concentrated, and it may prevent you and other stockholders from influencing significant corporate decisions.

Upon completion of the merger, Salarius’ current members are estimated to beneficially own or control approximately 80.1% of the combined company (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush). Accordingly, Salarius’ current members will have substantial influence over the outcome of a corporate action of the combined company requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of the combined company’s assets or any other significant corporate transaction. Salarius’ current members also may exert influence in delaying or preventing a change in control of the combined company, even if such change in control would benefit the other stockholders of the combined company.

The combined company’s management will be required to devote a substantial time to comply with public company regulations.

As a public company, the combined company will incur significant legal, accounting and other expenses that Salarius did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as rules implemented by the SEC and the Nasdaq Global Market and the Nasdaq Capital Market, impose various requirements on public companies, including those related to corporate governance practices. The combined company’s management and other personnel will need to devote a substantial amount of time to these requirements. Certain members of Salarius’ management, which will continue as the management of the combined company, do not have significant experience in addressing these requirements. Moreover, these rules and regulations will increase the combined company’s legal and financial compliance costs relative to those of Salarius and will make some activities more time-consuming and costly.

Among other things, Salarius’ management will be responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The combined company’s compliance with these requirements will require that it incur substantial accounting and related expenses and expend significant management efforts. The combined company will need to hire additional accounting and financial staff to comply with public company regulations. The costs of hiring such staff may be material and there can be no assurance that such staff will be immediately available to the combined company.

Moreover, if the combined company identifies deficiencies in its internal control over financial reporting that are deemed to be material weaknesses, investors could lose confidence in the accuracy and completeness of the combined company’s financial reports, the market price of the combined company’s common stock could decline and the combined company could be subject to sanctions or investigations by the Nasdaq Global Market or the Nasdaq Capital Market, as applicable, the SEC or other regulatory authorities.

The sale or availability for sale of a substantial number of shares of common stock of the combined company after the merger and after expiration of the lock-up period could adversely affect the market price of such shares after the merger.

Sales of a substantial number of shares of common stock of the combined company in the public market after the merger or after expiration of the lock-up period and other legal restrictions on resale, or the perception that these sales could occur, could adversely affect the market price of such shares and could materially impair the combined company’s ability to raise capital through equity offerings in the future. Flex Pharma and Salarius are unable to predict what effect, if any, market sales of securities held by significant stockholders, directors or officers of the combined company or the availability of these securities for future sale will have on the market price of the combined company’s common stock after the merger.

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Tax Risks Related to the Merger

In addition to reading the following risk factors, you are urged to read “Material U.S. Federal Income Tax Consequences of the Merger, the Reverse Stock Split and the Warrants” for a more complete discussion of the expected material U.S. federal income tax consequences of the merger, the reverse stock split and the distributions of the Warrants, and owning and disposing of common stock received in the merger.

No ruling has been requested with respect to the tax consequences of the merger.

Although it is intended that the merger will qualify as an exchange described in Section 351 of the Code and that the U.S. holders of units will generally not recognize any gain or loss as a result of the merger (other than gain that may be recognized with respect to cash received in lieu of fractional shares), no ruling has been or will be requested from the Internal Revenue Service, (which we refer to as the “IRS”), with respect to the tax consequences of the merger. Under certain circumstances, the merger may be treated as a taxable transaction, and result in tax liability, for a Salarius member, depending on such member’s particular situation. See “Material U.S. Federal Income Tax Consequences of the Merger, the Reverse Stock Split and the Warrants.”

Because the merger will result in an ownership change under Section 382 of the Code for Flex Pharma, pre-merger net operating loss carryforwards and certain other tax attributes will be subject to limitations.

If a corporation undergoes an “ownership change” within the meaning of Section 382 of the Code, the corporation’s net operating loss carryforwards and certain other tax attributes arising from before the ownership change are subject to limitations on use after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certain stockholders that exceeds fifty percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The merger will result in an ownership change for Flex Pharma and, accordingly, Flex Pharma’s net operating loss carryforwards and certain other tax attributes will be subject to limitations on their use after the merger. Additional ownership changes in the future could result in additional limitations on the combined company’s net operating loss carryforwards. Consequently, even if the combined company achieves profitability, it may not be able to utilize a material portion of Flex Pharma’s net operating loss carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations.

Salarius members will be allocated taxable income and gain of Salarius through the time of the merger and will not receive any additional distributions attributable to that income.

Salarius members will be allocated their proportionate share of Salarius’ taxable income and gain for the period ending at the time of the merger. Salarius members will have to report, and pay taxes on, such income even though they will not receive any additional cash distributions attributable to such income.

The U.S. federal income tax treatment of owning and disposing of common stock received in the merger will be different than the U.S. federal income tax treatment of owning and disposing of units.

Salarius is classified as a partnership for U.S. federal income tax purposes and, generally, is not subject to entity-level U.S. federal income taxes. Instead, each Salarius member is required to take into account its respective share of Salarius’ items of income, gain, loss and deduction in computing its federal income tax liability as if the Salarius member had earned such income directly, even if no cash distributions are made to the Salarius member. A pro rata distribution of cash by Salarius to a Salarius member who is a U.S. holder (as defined in “Material U.S. Federal Income Tax Consequences of the Merger, the Reverse Stock Split and the Warrants”) is generally not taxable for U.S. federal income tax purposes unless the amount of cash distributed is in excess of the Salarius member’s adjusted tax basis in its Units.

In contrast, Flex Pharma is classified as a corporation for U.S. federal income tax purposes and is subject to U.S. federal income tax on its taxable income. Any future distribution of cash by Flex Pharma to a stockholder

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who is a U.S. holder generally will be included in such U.S. holder’s income as ordinary dividend income to the extent of Flex Pharma’s current or accumulated “earnings and profits,” as determined under U.S. federal income tax principles and will be reported to such owner of Form 1099-DIV. A portion of the cash distributed to stockholders by Flex Pharma after the merger may exceed Flex Pharma’s current or accumulated earnings and profits. Cash distributions in excess of Flex Pharma’s current or accumulated earnings and profits will be treated as a non-taxable return of capital, reducing a U.S. holder’s adjusted tax basis in such stockholder’s common stock and, to the extent the cash distribution exceeds such stockholder’s adjusted tax basis, as gain from the sale or exchange of such common stock. See “Material U.S. Federal Income Tax Consequences of the Merger, the Reverse Stock Split and the Warrants.”

Flex Pharma and Salarius do not anticipate that the combined company will pay any cash dividends in the foreseeable future.

The current expectation is that the combined company will retain its future earnings (if any) to fund the development and growth of the combined company’s business. As a result, capital appreciation, if any, of the common stock of the combined company will be your sole source of gain, if any, for the foreseeable future.

Anti-takeover provisions in the combined company’s charter documents and under Delaware law could make an acquisition of the combined company more difficult and may prevent attempts by the combined company’s stockholders to replace or remove the combined company’s management.

Provisions in the combined company’s certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management. These provisions include a classified board of directors, a prohibition on actions by written consent of the combined company’s stockholders and the ability of the board of directors to issue preferred stock without stockholder approval. In addition, because the combined company will be incorporated in Delaware, it is governed by the provisions of Section 203 of the DGCL, which prohibits stockholders owning in excess of 15% of the outstanding combined company’s voting stock from merging or combining with the combined company, subject to limited exceptions. Although Flex Pharma and Salarius believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirors to negotiate with the combined company’s board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by the combined company’s stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management.

The market price of the combined company’s common stock is expected to be volatile, and the market price of its common stock may drop following the merger.

The market price of the combined company’s common stock following the merger could be subject to significant fluctuations. Market prices for securities of early-stage pharmaceutical, biotechnology and other life sciences companies have historically been particularly volatile. Some of the factors that may cause the market price of the combined company’s common stock to fluctuate include:

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Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. This historical volatility is even higher in the biotechnology market. These broad market fluctuations may also adversely affect the trading price of the combined company’s common stock.

In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm the combined company’s profitability and reputation.

Additionally, a decrease in the stock price of the combined company may cause the combined company’s common stock to no longer satisfy the continued listing standards of the Nasdaq Capital Market or the Nasdaq

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Global Market. If the combined company is not able to maintain the requirements for listing on the Nasdaq Capital Market or the Nasdaq Global Market, it could be delisted, which could have a materially adverse effect on its ability to raise additional funds as well as the price and liquidity of its common stock.

The combined company will incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies.

The combined company will incur significant legal, accounting and other expenses that Salarius did not incur as a private company, including costs associated with public company reporting requirements. The combined company will also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as new rules implemented by the SEC and The Nasdaq Stock Market LLC. These rules and regulations are expected to increase the combined company’s legal and financial compliance costs and to make some activities more time-consuming and costly. Estimates of the overall costs of public company compliance for a company like the combined company could exceed $1 million per year.

The combined company’s management team will consist of the executive officers of Salarius prior to the merger, none of whom have previously managed and operated a public company. These executive officers and other personnel will need to devote substantial time to gaining expertise regarding operations as a public company and compliance with applicable laws and regulations. These rules and regulations may also make it difficult and expensive for the combined company to obtain directors’ and officers’ liability insurance. As a result, it may be more difficult for the combined company to attract and retain qualified individuals to serve on the combined company’s board of directors or as executive officers of the combined company, which may adversely affect investor confidence in the combined company and could cause the combined company’s business or stock price to suffer.

The certificate of incorporation of the combined company will provide that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between the combined company and its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with the combined company or its directors, officers or other employees.

The certificate of incorporation of the combined company will provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on the combined company’s behalf, any action asserting a breach of fiduciary duty owed by any of its directors, officers or other employees to the combined company or its stockholders, any action asserting a claim against it arising pursuant to any provisions of the Delaware General Corporation Law, its certificate of incorporation or its bylaws, or any action asserting a claim against it that is governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the combined company or its directors, officers or other employees, which may discourage such lawsuits against the combined company and its directors, officers and other employees. If a court were to find the choice of forum provision contained in the bylaws to be inapplicable or unenforceable in an action, the combined company may incur additional costs associated with resolving such action in other jurisdictions.

An active trading market for the combined company’s common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all.

Prior to the merger, there has been no public market for Salarius’ equity. An active trading market for the combined company’s shares of common stock may never develop or be sustained. If an active market for its common stock does not develop or is not sustained, it may be difficult for its stockholders to sell their shares or sell their shares quickly at an attractive price or at all.

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Future sales of shares by existing stockholders could cause the combined company’s stock price to decline.

If stockholders of the combined company sell, or indicate an intention to sell, substantial amounts of the combined company’s common stock in the public market after restrictions on resale discussed in this proxy statement/prospectus/information statement lapse, the trading price of the common stock of the combined company could decline. Based on shares outstanding as of December 31, 2018 and shares expected to be issued upon completion of the merger, the combined company is expected to have outstanding a total of approximately 94.2 million shares of common stock immediately following the completion of the merger, without giving effect to any stock splits. Of the 94.2 million shares of common stock, [●] million shares, without giving effect to the stock split, will be available for sale in the public market beginning 90 days after any closing of the merger as a result of the expiration of lock-up or similar agreements between certain equity holders of the combined company and Salarius. All other outstanding shares of common stock will be freely tradable, without restriction, in the public market. If these shares are sold, the trading price of the combined company’s common stock could decline.

If the ownership of the combined company’s common stock is highly concentrated, it may prevent stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause the combined company’s stock price to decline.

Executive officers and directors of the combined company and their affiliates are expected to beneficially own or control approximately 11.8% of the outstanding shares of common stock of the combined company following the completion of the merger. Accordingly, these executive officers, directors and their affiliates, acting as a group, will have substantial influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of the combined company’s assets or any other significant corporate transactions. These stockholders may also delay or prevent a change of control of the combined company, even if such a change of control would benefit the other stockholders of the combined company. The significant concentration of stock ownership may adversely affect the trading price of the combined company’s common stock due to investors’ perception that conflicts of interest may exist or arise.

If equity research analysts do not publish research or reports, or publish unfavorable or inaccurate research or reports, about the combined company, its business or its market, its stock price and trading volume could decline.

The trading market for the combined company’s common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect not to provide research coverage of the combined company’s common stock after the completion of the merger, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the combined company will not have any control over the analysts or the content and opinions included in their reports. The price of the combined company’s common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the combined company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

The combined company will have broad discretion in the use of cash and may invest or spend its cash in ways with which stockholders do not agree and in ways that may not increase the value of stockholders’ investments.

The combined company will have broad discretion over the use of cash. Stockholders may not agree with the combined company’s decisions, and its use of cash may not yield any return on stockholders’ investments. The combined company’s failure to use its cash effectively could compromise its ability to pursue its growth strategy and the combined company might not be able to yield a significant return, if any, on its investment of cash.

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If the combined company fails to maintain proper and effective internal controls, its ability to produce accurate financial statements on a timely basis could be impaired.

The combined company will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of The Nasdaq Stock Market LLC. The Sarbanes-Oxley Act requires, among other things, that the combined company maintain effective disclosure controls and procedures and internal control over financial reporting. The combined company must perform system and process evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Annual Report on Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. As a private company, Salarius, has never been required to test its internal controls within a specified period. This will require that the combined company incur substantial professional fees and internal costs to expand its accounting and finance functions and that it expend significant management efforts. The combined company may experience difficulty in meeting these reporting requirements in a timely manner.

The combined company may discover weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. The combined company’s internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If the combined company is not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if it is unable to maintain proper and effective internal controls, the combined company may not be able to produce timely and accurate financial statements. If that were to happen, the market price of its common stock could decline and it could be subject to sanctions or investigations by The Nasdaq Stock Market LLC, the SEC, or other regulatory authorities.

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SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL INFORMATION AND DATA

The following tables present summary historical financial data for Flex Pharma and Salarius, summary unaudited pro forma condensed combined financial data for Flex Pharma and Salarius, and comparative historical and unaudited pro forma per share and per unit data for Flex Pharma and Salarius.

Selected Historical Consolidated Financial Data of Flex Pharma

The selected consolidated statements of operations data for the years ended December 31, 2017 and December 31, 2016, and the consolidated balance sheet data as of December 31, 2017 and December 31, 2016 are derived from Flex Pharma’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus/information statement. The selected consolidated statements of operations data for nine months ended September 30, 2018 and 2017 and the selected consolidated balance sheet data as of September 30, 2018 are derived from Flex Pharma’s unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement/prospectus/information statement. Flex Pharma’s unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP on the same basis as its audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal, recurring adjustments, necessary for the fair presentation of those unaudited interim condensed consolidated financial statements. Flex Pharma’s historical results are not necessarily indicative of the results that may be expected in any future period and the results for the nine months ended September 30, 2018 are not necessarily indicative of results to be expected for the full year ending December 31, 2018 or any other period.

The selected historical consolidated financial data below should be read in conjunction with the section titled “Flex Pharma Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors—Risks Related to Flex Pharma” and Flex Pharma’s consolidated financial statements and related notes included elsewhere in this proxy statement/prospectus/information statement.

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Selected Historical Consolidated Financial Data of Salarius

The selected statements of operations data for the years ended December 31, 2017 and 2016 and the selected balance sheet data as of December 31, 2017 and 2016 are derived from Salarius’ audited financial statements included elsewhere in this proxy statement/prospectus/information statement.

The selected statements of operations data for the nine months ended September 30, 2018 and 2017 and the selected balance sheet data as of September 30, 2018 are derived from Salarius’ audited interim financial statements and the nine months ended September 30, 2017 statement of operations and the balance sheet are derived from Salarius’ interim financial statements included elsewhere in this proxy statement/prospectus/information statement. Salarius’ unaudited interim condensed financial statements have been prepared in accordance with U.S. GAAP on the same basis as its audited annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal, recurring adjustments, necessary for the fair presentation of those unaudited interim condensed financial statements.

Salarius’ historical results are not necessarily indicative of the results that may be expected in any future period and the results for the nine months ended September 30, 2018 are not necessarily indicative of results to be expected for the full year ending December 31, 2018 or any other period.

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The selected historical financial data below should be read in conjunction with the sections titled “Salarius Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors—Risks Related to Salarius’ Financial Condition and Capital Requirements” and Salarius’ financial statements and related notes included elsewhere in this proxy statement/prospectus/information statement.

Selected Unaudited Pro Forma Condensed Combined Financial Data of Flex Pharma and Salarius

The following selected unaudited pro forma condensed combined financial data has been prepared using the acquisition method of accounting under U.S. GAAP. On January 4, 2019, Flex Pharma announced that it had entered into a definitive agreement to acquire all of the outstanding shares of Salarius pursuant to the offer and the merger. For accounting purposes, Salarius is considered to be acquiring Flex Pharma in the merger.

The unaudited pro forma condensed combined balance sheet combines the historical balance sheets of Salarius and Flex Pharma as of September 30, 2018, giving effect to the merger as if it had occurred on September 30, 2018. The unaudited pro forma condensed combined statement of operations combines the historical statements of income for Salarius and Flex Pharma for the year ended December 31, 2017 and for the nine months ended September 30, 2018, giving effect to the merger as if it had occurred on January 1, 2017. The pro forma financial information does not give effect to the costs of any integration activities or benefits that may result from the realization of future cost savings from operating efficiencies, or any other synergies that may result from the merger and changes in commodity and share prices. Additionally, the pro forma financial information does not give effect to the proposed reverse stock split described in Flex Pharma Proposal 2, beginning on page [●].

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The unaudited pro forma condensed combined financial information assumes that, at the Effective Time, each share of Salarius’ membership units will be converted into the right to receive shares of Flex Pharma common stock such that, immediately following the Effective Time, Salarius’ current members are expected to own approximately 80.1% of the Flex Pharma’s common stock (on a partially-diluted basis, excluding the effect of certain options, the dividend or distribution of rights and Warrants to Flex Pharma’s current stockholders and the possible issuance of a warrant to Wedbush), and is subject to adjustment to account for the occurrence of certain events discussed elsewhere in this proxy statement/prospectus/information statement.

The summary selected unaudited pro forma condensed combined financial information has been prepared for information purposes only and does not purport to represent what the actual results of operations or the consolidate financial position of Salarius would be had the merger occurred on the dates assumed, nor is this information necessarily indicative of future consolidate results of operations or financial position. The following information had been derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and the related noted included in this document.