DCOY

Business Context and Reporting Period

Company: Decoy Therapeutics Inc. (formerly Salarius Pharmaceuticals, Inc.)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: A pre-clinical stage biotechnology company focused on peptide conjugate therapeutics via the proprietary IMP 3 ACT platform. The company completed a merger with Legacy Decoy in November 2025 and changed its name in January 2026. It has no approved products and no revenue from product sales.

Key Financial Metrics

Debt & Liquidity: The company has no long-term debt listed on the balance sheet. Current liabilities include $1.33M in accounts payable and $3.0M in deferred revenue. Approximately $2.7M of cash is restricted for use under a Gates Foundation Grant Agreement.

Material Changes vs. Prior Period

• Revenue: Grant revenue of $227,629 was recognized in the current quarter and six-month period, compared to $0 in the same periods of 2025. This is attributed to the Gates Foundation grant.
• Operating Expenses: Total operating expenses increased significantly. For the six months ended June 30, 2026, expenses were $4.9M compared to $2.7M in 2025.
  • R&D: Increased from $192K (2025) to $2.05M (2026), driven by the addition of the IMP 3 ACT (Designable Multi-Antivirals) program following the merger.
  • G&A: Increased from $2.49M (2025) to $2.86M (2026), primarily due to the inclusion of Legacy Decoy's operations.
• Net Loss: Net loss for the six months ended June 30, 2026, was $4.6M, a 72% increase from $2.7M in the prior year period.
• Capital Structure: The company executed a 1-for-12 reverse stock split effective March 6, 2026, and a 1-for-15 split in August 2025. Historical share data has been recast.

Guidance, Outlook, Risks, and Unusual Items

• Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern. Cash resources are expected to be sufficient only through late 2026. Additional capital is required to fund operations and development.
• Recent Financing: In June 2026, the company closed a private placement raising approximately $3.5 million in gross proceeds. This included the sale of common stock/pre-funded warrants and milestone-based warrants (Series A, B, and C) with potential future proceeds of up to $17.5 million if specific clinical milestones are met.
• Outlook: The company anticipates filing an IND application (or European CTA) in the first half of 2027. It is seeking strategic alternatives, including out-licensing, for its SP-2577 program.
• Risks:
  • Nasdaq Listing: The company faces potential delisting risks under a new SEC-approved Nasdaq rule requiring a minimum $5 million market value of listed securities. The company's current market value is below this threshold.
  • Funding: Failure to raise additional capital could force the company to cease operations or liquidate assets.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the $8.3M cash balance (including $2.7M restricted) to fund operations through late 2026 as stated by management.
• Nasdaq Compliance: Monitor the status of the SEC stay on the new $5 million market value listing rule and the company's market capitalization to assess delisting risk.
• Financing Milestones: Review the specific clinical milestones required to exercise the Series A, B, and C warrants from the June 2026 private placement to understand potential dilution and future capital inflows.
• Grant Restrictions: Confirm the specific usage restrictions on the $2.7M of cash held under the Gates Foundation Grant Agreement.
• Merger Integration: Assess the progress of integrating Legacy Decoy's IMP 3 ACT platform with existing Salarius assets (SP-3164 and SP-2577).