DCOY — Q2 2026 Financial Report Analysis

Decoy Therapeutics (formerly Salarius Pharmaceuticals) lost $2.37 million in the second quarter of 2026, up from $0.96 million a year earlier. Almost all of that jump comes from the November 2025 merger with private company Decoy: the year-ago figures are Salarius on its own, and research spending now includes Decoy's nasal antiviral program. The company has no products for sale. It ended June with $8.3 million in cash, of which $2.7 million can only be spent on Gates Foundation grant work. Its own 10-Q says there is "substantial doubt" it can keep operating for another year without new money.

At a glance

• $2.65 million cash used by operations in Q2 (our figure: $5.54 million for the half-year minus $2.89 million in Q1). That is the real quarterly spending rate, and it is a bit higher than the $2.37 million accounting loss.
• About $5.6 million of usable cash at June 30 ($8.3 million total minus $2.7 million restricted to the Gates grant). At the Q2 rate that covers roughly two quarters. Management's own estimate is "into late 2026".
• $4.46 loss per share, against $81.21 a year ago. This drop says nothing about the business. The year-ago share count (11,794 weighted shares, adjusted for two reverse splits) was tiny compared with today's 531,968, because the merger and its financings issued many new shares.

What the company is now

Decoy is a pre-clinical biotech, meaning none of its drug candidates has been tested in humans yet. Its main program uses the company's IMP³ACT peptide platform to design "Designable Multi-Antivirals" (D-MAV) against respiratory viruses. Its Gates Foundation grant pays for a nasally inhaled pan-coronavirus antiviral. Two older small-molecule drugs came with Salarius:

• Seclidemstat (SP-2577) has FDA fast-track status for Ewing sarcoma. Support for MD Anderson's trial ended in December 2025, no more patients will be enrolled, and the company is looking at out-licensing it.
• SP-3164, a protein degrader, is to be folded into a new peptide-based degrader concept (P-PROTACs).

The money now goes to the antiviral platform. In Q2, $1.28 million of the $1.30 million R&D bill went to IMP³ACT. SP-2577 got $26 thousand and SP-3164 got nothing.

Q2 2026 results

n/m = not meaningful. Operating margin is left out because grant revenue is too small for a margin to mean anything.

Over the first half, the net loss was $4.60 million, against $2.67 million a year earlier. R&D was $2.05 million, against $0.19 million. G&A rose only 15%, to $2.86 million, because 2025's first half already carried $2.49 million of G&A.

The filing explains the R&D rise in one line: it is "primarily related to the Merger in November 2025 and the resulting addition of the IMP³ACT (Designable Multi-Antivirals) program." The G&A rise was "primarily attributable to the inclusion of Legacy Decoy's operations." So the year-over-year percentages compare two different companies. The useful comparison is with Q1 2026. Total operating expenses rose from $2.28 million in Q1 to $2.63 million in Q2, and the net loss rose from $2.22 million to $2.37 million. Management says R&D will keep rising as it works toward a filing to start human trials.

Takeaway: Decoy is running a roughly $2.5–2.7 million-a-quarter research program on about $5.6 million of cash it can freely spend. It is paying for each step with small, warrant-heavy financings. Since quarter-end, that has meant cutting the warrant exercise price from $5.91 to $3.25 to bring money in sooner. For shareholders, the main question is how much more dilution comes before the first human trial, more than any scientific result in the next year.

What the headline numbers hide

• Cash going out is larger than the loss. Operations used $5.54 million in the first half against a $4.60 million net loss. Three things widened the gap. The company paid down $0.65 million of accrued bills and $0.24 million of payables. Prepaid expenses grew by $0.27 million. And the $0.23 million of grant revenue brought in no new cash: it is booked from a $3.5 million Gates payment received back in 2023 and held as deferred revenue (now $3.0 million). On the other side, $0.42 million of stock-based pay was a cost that used no cash. The cash-flow figure is the better guide to spending.
• The "loss from operations" line in the filing's income statement equals total operating expenses ($2.63 million) and does not subtract grant revenue. Netting it gives $2.40 million, which is the figure we use. The net loss of $2.37 million is correct either way.
• The restricted cash is shrinking. The Gates-restricted portion fell from $3.0 million at March 31 to $2.7 million at June 30. Grant-funded work is being spent down, and that money was never available for general costs.
• The per-share loss is distorted by share count, not improved by results. After two reverse splits (1-for-15 in August 2025, 1-for-12 in March 2026) and the merger's preferred stock and financing, the year-ago per-share figures cannot be compared with today's. Share count is also about to rise sharply (see below). The balance sheet shows 531,968 common shares at both December and June, so the June placement apparently came in mostly as pre-funded warrants, which are shares bought in advance and issued later.
• Equity is close to the Nasdaq minimum. Stockholders' equity fell to $4.32 million at June 30 from $5.89 million at year-end. The filing names the $2.5 million minimum for staying listed as a risk. It also warns that a proposed Nasdaq rule requiring at least $5 million of listed market value could lead to "imminent" delisting if approved. The SEC stayed that rule on July 29, 2026, pending review. The company says its stock currently trades below that threshold.
• Runway guidance did not move. Both the Q1 and Q2 10-Qs say cash lasts "into late 2026", even though $3.5 million came in at the end of June. That fits with the money being spent about as fast as it arrives.

Financing: how the company is funding itself

On June 29 Decoy closed a $3.5 million private placement at $5.91 per share with one institutional investor. That investor also got three sets of "milestone" warrants, which are rights to buy more shares at a fixed price once certain events happen:

Under the deal, the company cannot use its at-the-market or equity-line programs for 180 days.

The terms have already changed. An 8-K filed September 23, 2026 says the holder agreed to exercise all Series B warrants (1,184,434 shares) in cash. In return, Decoy cut the exercise price from $5.91 to $3.25 and also repriced the Series A and C warrants to $3.25. This raised about $3.85 million gross, instead of the ~$7.0 million the Series B warrants would have raised at $5.91 after the MHRA milestone. As a sweetener, the company issued new five-year warrants for up to 2,368,868 more shares at $3.25, exercisable immediately. Common shares outstanding were 531,968 at June 30, but the June placement, the exercised Series B warrants, the remaining Series A and C warrants and the new warrants together cover about 5.9 million shares, more than ten times that count, if all are issued or exercised.

Outlook

Management says it is working toward an IND (US) or CTA (EU) filing, the application needed to start human trials, "during the first half of 2027", and expects R&D spending to rise until then. It gives no other financial guidance.

Our read:

• Before the September money, usable cash at June 30 covered about two quarters at the Q2 spending rate, consistent with management's "into late 2026".
• The ~$3.85 million gross from the September warrant exercise adds very roughly one more quarter (before placement-agent fees), which takes the company into early 2027.
• That is still short of the targeted trial filing. Reaching it almost certainly needs another raise, more warrant exercises (Series A pays out at the CTA filing, now at $3.25), or a partner, for example an out-license of seclidemstat.

What to watch in the Q3 10-Q, expected around mid-November 2026:

• Quarterly operating cash burn against the ~$2.65 million Q2 level.
• Whether stockholders' equity stays above Nasdaq's $2.5 million floor.
• Whether the "into late 2026" runway language moves.
• Any concrete step on the antiviral CTA.

This is our first report on Decoy, so there is no earlier outlook to check against.