Ladies and gentlemen, thank you for standing by, and welcome to Salarius Pharmaceuticals Q4 and Year-End 2020 Financial Results Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. . Please be advised that today’s conference may be recorded. I would now like to hand the conference over to your host, Jason Rando with Tiberend Strategic Advisors. Sir, please go ahead.

Good afternoon, everyone, and thank you for joining Salarius Pharmaceuticals 2020 fourth quarter and full-year financial and corporate results call. Earlier this afternoon, Salarius Pharmaceuticals issued a press release detailing its financial results for the 3 months and the full-year ended December 31, 2020, which we encourage listeners to read. The press release can be found in the News section of Solaris arma.com. Salarius also filed a 10-K this afternoon, which is available on Salariuspharma.com and sec.gov. Before beginning today's call, I would like to make the following statement. Today, we'll be making certain forward-looking statements about future expectations, plans, events and circumstances including statements about our strategy, future operations and the development of our lead investigational drug candidate, seclidemstat, and our expectations regarding our capital allocation and cash resources. These statements are based on our current expectations, and you should not place undue reliance on these statements. Actual results may differ materially due to our risks and uncertainties and including those detailed in the Risk Factors section of Salarius Pharmaceuticals 10-K filed with the SEC and other filings we make with the SEC from time to time. Salarius Pharmaceuticals disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise. With us on today's call is David Arthur, Director and CEO of Salarius' Pharmaceuticals, who will provide an update on spares' corporate and clinical achievements during the fourth quarter and its vision for the future; and Mark Rosenblum, CFO, who will review Salarius' fourth quarter and full-year 2020 financial results. David, please go ahead.

Thank you, Jason, and thank you to everyone joining our conference call today, including all of you who are joining for the first time. Today's call highlights an exciting time in the growth of Salarius. In just the past few weeks, we have achieved important clinical milestones in the development of our lead drug candidate, seclidemstat, and we have achieved significant milestones in financing Salarius. We have completed the dose escalation portion of the ewing sarcoma clinical trial and seclidemstat is now being investigated at the recommended Phase II dose in three distinct patient populations made up of viewing sarcoma and Ewing-related sarcomas, which, in the case of viewing-related sarcomas, include two patient populations made up of myxoid liposarcoma and other FET-translocated sarcomas. Each of these three patient groups, Ewing sarcoma, myxoid liposarcoma and FET-translocated sarcomas potentially represents a separate regulatory path to approval and the related commercial opportunity.

Thank you, David. For the three-month period ended December 31, 2020, Salarius reported a net loss of $1.8 million, or $0.10 per basic and diluted share compared to a net loss of $1.9 million and $0.46 per share in the fourth quarter of 2009. For the full-year, Salarius reported a net loss of $7.4 million and $0.50 per basic and diluted share versus a loss of $6.9 million, or $2.12 per basic and diluted share for the prior year. The loss from operations before other income for the three months ended December 31, 2020 decreased by $0.3 million compared to the loss from operations of overall $2.1 million for the same time spend last year, which was primarily due to an increase of $0.4 million in grant revenue and lower general and administrative costs, more than offsetting higher research and development expenditures. Increased research and development costs resulted from increased drug manufacturing costs. The decrease in general and administrative costs resulted from the absence of expenses related to Salarius' onetime transformation into a public company during 2019, which did not reoccur in the current period. This offsets higher personnel costs in the current period. Our December 31 balance sheet states the company had $11.1 million in cash and cash equivalents. The balance sheet was strengthened in early 2021 as the company raised over $30 million from both the sale of our common stock and underwritten public offering and warrants exercises. We also received $0.9 million in non-dilutive secret financing during Q1 2021. Salarius has an additional $4.8 million under the secret Grant, and we expect to receive a portion of that amount in 2021. The results of these funding activities is that Salarius has currently available cash of approximately $37 million, our strongest financial position to date. We believe Salarius has the financial resources available to advance our ongoing clinical trials through completion and beyond. With that, I'd like to return the call to David.

Thank you, Mark. As we have discussed, our goal as a company is to maximize the potential of seclidemstat, and by doing so, bring hope to patients and their families facing limited treatment options, while creating and building shareholder value. To that end, I would like to state that by midyear 2021 this year, we hope to have active clinical trials across 5 separate patient populations, evaluating seclidemstat as single-agent therapy and in up to 3 different combination therapies.

. Our first question comes from the line of Wangzhi Li of Ladenburg. Your line is open.

Hi. Thanks for taking my question, and thanks for the comprehensive update and summary in creations on all the progress. My first question is read into the expansion cohort, the Ewing-related sarcoma. You mentioned the two different patient population, myxoid liposarcoma and other sarcoma. Just want to clarify, is there a number of patient allocation for these different type of sarcoma or just a mix?

Thank you for the question. Dr. Mirza, would you like to take that?

Yes. Hi, David, thanks. So yes, we have allocated around 10 to 15 for myxoid liposarcoma and around 10 to 15 in other FET-translocated sarcoma patients. And the reason being so that we could -- we are able to see a clear signal of activity.

Got it. And the reason you think about is myxoid liposarcoma, is it based on the myxoid liposarcoma you saw from the dose escalation portion?

That's correct. In our advanced solid tumor, that is still undergoing dose escalation. We have observed -- we have seen -- we have observed a good signal and for reasons of confidentiality and the fact that we have submitted this to an upcoming oncology conference. I can't go into details, but we have seen a strong signal in patients. And based on that, these additional 10 to 15 patients will supplement that signal. And so we should be able to get a very strong signal for further development or, in fact, potential discussion with health authorities on the next steps.

Got it. It's helpful. I know you're under embargo for the conference presentation, but any color on what should we expect in terms of number of patients or what kind of data and timing is at the conference later this year? Any further color you can share?

Yes. Unfortunately, the embargo is quite broad. We can't discuss or disclose anything that was submitted in the abstract. And I apologize, I won't be able to tell you the details...

Got it. No problem. Yes, yes, I understand. I mean then maybe shift gear to -- you are going to have multiple trials ongoing later this year. And just – and, of course, you now have a strong balance sheet. Just any color on what time -- for what kind of stage the current cash can fund all these trials through with completion of this trials or mid of those trials? And I understand there are two trials that will be investigated sponsor, so maybe customized. Any color on the cash runway into the year relating to the completion or progress of other trials?

David, would you like to take that?

Actually, Wangzhi, thanks for the question. I'm going to toss that one to Mark because he is the master of our recent financial transactions and is managing our $37 million in available cash. Mark?

Thanks, Wangzhi. We get the tag team because I'm sitting right next to David. So really, the way we look at it, Wangzhi, is we're going to have some readouts, probably at the end of Q4, certainly in Q1 2022. And at that time, we will have substantial cash available to -- first of all, we'll have substantial cash available to complete all the clinical trials that we're currently conducting. And then when that information takes us to a place that says we are -- we have several different trials on the Board, so we won't discuss what they are. But when we make the decision to pivot to a particular trial, we'll have sufficient cash to make great headway into whatever trial we select to use. And that -- so we're in very good shape right through the end of 2021, really well past 2022 as well. This recent cash raise really set us in a different position. A frequently asked question is, do you guys have sufficient capital to complete the trials that you're currently conducting? When we have non-deal road shows, when we have investor roadshows, that's a very common question. You guys have sufficient cash to complete the plan you're currently on. And now we can say emphatically, yes, we do. So I hope that helps you.

Okay. That’s great. Thanks for taking my question.

Thank you, Wangzhi.

Thank you. Our next question comes from the line of Aydin Huseynov of Benchmark Company. Your line is open.

Hi, good afternoon. Thanks for taking my question and congratulations with the strong quarter and actually the strong year. So I just wanted to go back to Ewing sarcoma and Ewing-related sarcoma trial. So you have a combo with chemotherapy in second and third-line, and then you have a single agent for Ewing-related sarcomas in the third-line. So why did you decide not to combine Ewing-related sarcomas with chemo, just like you did with Ewing sarcoma itself?

Nadeem, would you like to take that one?

Yes, sure. It's a very valid question. So for the myxoid liposarcoma, there is -- there are two drugs that are currently approved. What we have observed in these patients as a single agent that those patients have failed those standard treatment and still had significant clinical activity. So we want to further establish single-agent activity for the myxoid liposarcoma. And if we are able to show what we observed in the preliminary, I think, it will be a relatively a good path to regulatory approval as a single agent. We do have some internal discussions have been going on. So we are looking at further combinations as well, but we're not ready to disclose them at this time. Regarding the FET translocation to sarcoma, there is no standard treatment for those patients. So - and these patients are treated with different chemotherapies and a different regimen. So it will be difficult to select a single or a couple of chemotherapy regimens that one would want to combine with. And among those patients in the FET translocated patients who had failed multiple lines of prior treatments, chemotherapies and other agents, we have observed a significant clinical activity as a single agent and following the same logical path of thinking if we can show similar activity in additional patients that would be regulatory -- potential regulatory path for approval for a single agent.

Right. Appreciate that. And -- yes, you did. I just wanted to follow-up on that. So what do you see there as a success. Where does -- can you remind us what the standard of care stands for those 2 kind of groups of patients? Second, third-line in sarcoma and kind of third-line plus Ewing-related sarcoma. Is there kind of ORR specific number? Or is there overall survival number that you're targeting?

Yes. So I cannot disclose what we are aiming for what we observe, but I can tell you what the benchmarks are for Ewing sarcoma. The benchmark is around 5 to 6 months median PFS. For myxoid liposarcoma, in earlier lines of patients, now I remember, we have patients that have failed with standard treatment but in myxoid liposarcoma, the range of median PFS is around 3.5 to 4 months. That's the median PFS. For FET translocated sarcoma, as I mentioned, there's no clear good benchmark, but what we have observed when we looked at the literature, it averages around median of 2 to 3 months. And in our study, we have seen much, much significant prolongation of these progression-free survival time point.

Apologies, again, I'm going to probably go a little bit different that, but do you envision able to pathway as a single-arm study in any of those Ewing-related sarcoma cohorts of trials?

Well, yes, that will be a discussion with the health authorities. Based on those patients have exhausted all treatment options, if these patients represents a highly unmet need, and I think that regulators would take a view of that and when you present them with the data, showing that these patients have failed either standard treatments available or de facto standards that people use currently. And once they have failed those treatments and yet single agent, seclidemstat provides additional benefit in terms of prolonging their time to tumor progression, I would certainly hope that the regulators would take that into account for potential approval.

Okay. All right. And for advanced solid tumors, are there indications that you see as the most promising in your opinion for seclidemstat? And are you planning to apply biomarker-based kind of selection work forward in the Phase II?

Daniela, would you like to comment on biomarkers and what we're currently reviewing?

Yes. Happy to. So in our advanced solid tumor trial, we did enroll, as you know, these Ewing-related sarcoma patients. And based off the signal mentioned by David and Nadeem, is why we're now expanding the Ewing sarcoma trial to include these additional patients. So already, the FET solid tumor trial has given us an indication of patients that may respond better to seclidemstat. In addition, we're conducting preclinical work to identify if there are sensitizing mutations to seclidemstat. That work is ongoing, and we hope to report results in the next few months.

All right. I appreciate that. And another question I have -- sorry, this is the last one. About the -- you mentioned the additive effect of chemotherapy and are you planning to share that data? Are you planning to publish that data? And if there is additional -- there is additive effect to chemotherapy, why wouldn't you try all the trials with chemotherapy instead of trying -- as a single agent?

So Daniela, why don't you start with the internal additive data and our plans to offer that and additional work, and then I'll address the second part of the question.

Yes, happy to. So we have done in vitro experiments, combining the chemo regimen, topotecan and cyclophosphamide with seclidemstat and seen additivity. The mechanism there is topotecan and cyclophosphamide or DNA damage agents and LSD1 has been implicated as well in the DNA damage response. And it may also expose more DNA through its chromatin reconfiguration to the effects of DNA damage and agents. So we feel quite strongly about combining with topotecan and cyclophosphamide from a mechanistic point of view. But then also importantly, our safety profile does not have significant overlapping toxicity concerns with the chemo regimen, which means that moving forward in clinic, that's a good strategy as you don't have those overlapping talks concerns. And I'll let David mention why we're taking the strategy of continuing to pursue single agent and some of the other Ewing-related sarcomas before combining with chemo?

So Aydin, thanks for the question. The short answer is we have not taken anything off the table. We're going to follow the science and always try and do what's in the best interest of achieving the most positive in outcomes. So where we are now with the myxoid Ewing-related sarcomas, is we're following the results that we observed in the subset of patients. And we're fortifying those results with greater patient numbers. And by continuing in single agent therapy, as Nadeem mentioned earlier, if we see results that we're hoping to see, we could have potentially both a single agent and a combination therapy approach to treating those types of Ewing-related sarcomas. While this is going on, our -- we're working here in our lab internally to identify what chemotherapy agents might be the best combination choices should we decide and head that direction. So looking back to my how I started the answer to the question, we're keeping all options on the table. But right now, we like the fact that we're pursuing single agent therapy and see where that takes us, which sets up the option of having in a number of directions in the near future.

Our next question comes from Hunter Diamond of Diamond Equity Research.

Firstly, great presentation. I think one of the best ones I've heard from you, David, and the management team and a lot of positive developments. My question relates to what do you view as the potential of seclidemstat in hematological malignancies? And what that is sort of driving that?

Hunter, thanks for the question. Daniela, would you like to take that?

Yes, happy to. Thanks for the question, Hunter. So LSD1 as a target has been well-validated for hem malignancies due to LSD1's role in blocking differentiation and then driving malignant cell growth. And we've seen other companies with LSD1 inhibitors showing clinical proof-of-concept in hem indications, specifically in AML. At Salarius, what we've done is we studied seclidemstat in a variety of heme malignancies, AML, myelodysplastic syndrome. And we've seen that seclidemstat has an antiproliferative effect and also that it shows synergistic effects when combined with a commonly used agent in the space, azacitidine. And then as we mentioned before, one of the benefits of seclidemstat is that we have a manageable safety profile, and we have not seen significant heme talks that some of these other LSD1 inhibitors will often face in clinics. So we think the combination of our activity in the preclinical model, coupled with our advantage in terms of more manageable heme safety profile will give us an advantage in pursuing seclidemstat within the hematological malignancy indication. And we're looking forward to formally announcing a trial in the space and initiating that trial in the next few months.

Great. Thank you very much, Daniela, for the update. So my next question is maybe more high level. Obviously, the company is in the best financial position since we've covered the company and in its history, and it has, as you stated money for existing trials. I guess I'm just trying to understand -- and I don't know how much you can comment on this. Obviously, you're very positive, as stated on the prospects of each subpopulation populations. How do you view the company as sort of -- are you looking at -- and I know I may have asked this before, but are you looking at sort of other assets to acquire at this point? Is it more of stuff would come inbound? Or do you think there's just so many sort of prospects for a smaller public company at this point that you're just trying to advance sort of these new indications that you already have this quarter?

So Hunter, thanks for the question. The answer is, I'm constantly looking at all areas that will first support the development of seclidemstat and ensure that we are maximizing its potential for patients and ultimately, shareholders. We're -- we want to do is best for patients and create value for shareholders. Now having said that, we're approached constantly by other organizations that have seen our ability to develop assets and advance them. And they want to talk to us about potentially assisting with their assets and moving them forward. So we take a lot of calls, we take a lot of meetings and I can't comment or commit one way or another of what might happen in the future. But first and foremost, it's all about seclidemstat. And -- but if the right opportunity were to come along to increase the pipeline. We'd certainly evaluate that opportunity with full force.

Absolutely. Yes. No, I'm just thinking very high level because, as you know, there's only sort of a few companies where you play in epigenetics, right? I mean, you can almost count them on a hands, public companies that have access to funding. So I would think -- I guess what I'm hearing is generally, you're feeling that there are a lot of opportunities if and when if something arises? It seems like it's a great time to be in the epigenetics market as a whole.

I think it's an outstanding time. It's even better than great. It's an outstanding time. We have a genetic deal. There's -- there are a lot of companies that are developing other epigenetic drugs going after other targets. I think in the LSD1 space or the LSD1 inhibitor space, we're really well positioned. There are other companies that have recently announced preclinical programs in the LSD1 space. Many of them are pursuing reversibility in their LSD1 inhibitor. So everything we're seeing at a high level indicates that we're heading in the right direction, and we just want to head down that path as quickly as we can.

Absolutely. Yes. No, in this call, it really affirms, I mean, sort of the direction. And I think the strategies are advancing.

At this time, I'd like to turn the call back over to Salarius' CEO, David author, for closing remarks. Sir?

Thank you. Hopefully, what you've heard me say 2 or 3 times is that Salarius has never been on a stronger footing than it is right now, operationally, clinically and financially. We entered 2021 and with a great deal of momentum. And now we have the resources to maintain that momentum as we advance and we hope to continue to expand our clinical programs and continue the development of seclidemstat. And as I mentioned earlier, hopefully, what you have seen or heard, as I have gone through today's review, is that I've painted a very positive picture of what we think the future could look like. I'd like to thank our employees for their dedication and loyalty and for our stakeholders for their continued support as we continue to work to bring hope to patients and their families battling these devastating cancers that we believe are well suited to treatment with seclidemstat. I appreciate your time and attention today, and I would like to extend my sincere wishes of good health to all. Thank you, and I look forward to talking in the future. Take care.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.