Registration of securities, business combinations

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As filed with the Securities a nd Exchange Commission on February 28, 2017

Registration No. 333-215684

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



DIPEXIUM PHARMACEUTICALS, INC.

(Exact name of Registrant as specified in its charter)



Delaware 2834 46-4995704
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)

14 Wall Street, Suite 3D
New York, NY 10005
(212) 269-2834

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



David P. Luci, Esq.
President and Chief Executive Officer
DIPEXIUM PHARMACEUTICALS, INC.
14 Wall Street, Suite 3D
New York, NY 10005
(212) 269-2834

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



Copies to:

Ivan K. Blumenthal, Esq.
Daniel Bagliebter, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.
Chrysler Center, 666 Third Avenue
New York, NY 10017
Telephone: (212) 935-3000
Michael Laussade, Esq.
Jackson Walker L.L.P.
2323 Ross Ave, Suite 600
Dallas, TX 75201
Telephone: (214) 953-6000


Approximate date of commencement of proposed sale to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions under the Merger Agreement described herein.

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, please check the following box. o

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. o

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. o

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

Large accelerated filer o Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x

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

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

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



CALCULATION OF REGISTRATION FEE

Title of Each Class of Security Being Registered Amount
to be Registered (1)
Proposed Maximum
Offering Price Per Share
Proposed Maximum
Aggregate Offering Price (2)
Amount of Registration Fee (3)
Common stock, $0.001 par value per share 44,056,387 N/A (2) $ 14,538.61 $ 1.69 (4)

(1) Relates to common stock, $0.001 par value per share, of Dipexium Pharmaceuticals, Inc., a Delaware corporation (“Dipexium”), issuable to holders of common stock, $0.001 par value per share, of PLx Pharma Inc., a Delaware corporation (“PLx), in the proposed merger of Dipexium Acquisition Corp. (“AcquireCo”), a Delaware corporation and a wholly-owned subsidiary of Dipexium, with and into PLx. The amount of Dipexium common stock to be registered is based on the maximum number of shares of Dipexium common stock that are issuable pursuant to the merger, based on Dipexium’s and PLx’s shares outstanding as of immediately prior to the merger, assuming Dipexium’s closing cash exceeds the target set forth in the Agreement and Plan of Merger and Reorganization and without giving effect to a reverse stock split of the Dipexium common stock immediately prior to the closing of the merger.
(2) PLx has an accumulated capital deficit, therefore, pursuant to Rule 457(f)(2) of the Securities Act, the proposed maximum aggregate offering price is one-third of the aggregate par value of PLx capital stock being acquired in the proposed merger. There is no market for PLx’s securities.
(3) This fee has been calculated pursuant to Section 6(b) of the Securities Act of 1933, as amended.
(4) $1.48 previously paid.

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 that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.


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The information in this joint proxy statement/prospectus is not complete and may be changed. Dipexium may not sell its securities pursuant to the proposed transactions until the Registration Statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities and Dipexium is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated February 28, 2017

[GRAPHIC MISSING] [GRAPHIC MISSING]

PROPOSED MERGER
YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Dipexium Pharmaceuticals, Inc. and PLx Pharma Inc.

Dipexium Pharmaceuticals, Inc. (“Dipexium”) and PLx Pharma Inc. (“PLx”) have entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), pursuant to which a wholly-owned subsidiary of Dipexium will merge with and into PLx, with PLx surviving as a wholly-owned subsidiary of Dipexium (the “merger”).

At the effective time of the merger (the “Merger Effective Time”), each share of PLx common stock outstanding immediately prior to the Merger Effective Time will be converted into the right to receive shares of Dipexium common stock calculated pursuant to the Merger Agreement, the precise number of which will be determined by a formula that is subject to adjustments as described in this joint proxy statement/prospectus. Also, at the Merger Effective Time, each outstanding option, whether or not vested, to purchase PLx common stock unexercised immediately prior to the Merger Effective Time will be converted into an option to purchase Dipexium common stock pursuant to the terms of the Merger Agreement. All rights with respect to each PLx option will be assumed by Dipexium in accordance with its terms. Dipexium stockholders will continue to own and hold their existing shares of Dipexium common stock.

Subject to the terms of the Merger Agreement, the percentage of the combined organization that Dipexium stockholders will own as of the closing of the merger is subject to adjustment at the closing based on the level of Dipexium’s cash as of a certain determination date. On a pro forma basis, based upon the number of shares of Dipexium common stock to be issued in the merger, (i) current Dipexium stockholders will own 23.25% of the combined organization and current PLx stockholders will own 76.75% of the combined organization if Dipexium’ s cash as of a certain determination date is greater than or equal to $12.5 million, and (ii) current Dipexium stockholders will own approximately 22.5% of the combined organization and current PLx stockholders will own 77.5% of the combined organization if Dipexium’s cash as of a certain determination date is greater than or equal to $12 million but less than $12.5 million.

Dipexium and PLx estimate that, assuming no additional issuance of common stock, Dipexium will have 11,129,747 shares of common stock outstanding immediately prior to the merger. Dipexium and PLx also expect that, assuming the conversion of an estimated $2,485,860 of convertible bridge notes outstanding including accrued interest as of March 31, 2017, PLx will have an aggregate of 5,882,897 shares of common stock outstanding immediately prior to the merger. If the share numbers and the underlying assumptions outlined above are accurate, and assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, PLx stockholders as of the Merger Effective Time will be entitled to receive a maximum of 44,056,387 shares of Dipexium common stock on a fully diluted basis, which includes 5,720,592 shares of common stock underlying options, and each outstanding share of PLx common stock will be converted into the right to receive 6.5165 shares of Dipexium common stock as a result of the merger. Assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the total number of shares of Dipexium common stock outstanding after the merger would be 57,319,479 on a fully diluted basis. If the number of shares of outstanding common stock of Dipexium or PLx differs from the amounts set forth above, the exchange ratio will be modified and the number of shares of Dipexium common stock to which holders of PLx’s common stock are entitled may be greater or less.

For illustrative purposes only, assuming Dipexium’s net cash is determined to be greater than or equal to $12.5 million, the exchange ratio for the PLx common stock would be approximately 6.2452 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 624 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares. Assuming Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the exchange ratio for the PLx common stock would be approximately 6.5165 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 651 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares.

Shares of Dipexium common stock are currently listed on The NASDAQ Capital Market under the symbol “DPRX”. Prior to consummation of the merger, Dipexium has submitted an initial listing application with The NASDAQ Capital Market pursuant to NASDAQ “reverse merger” rules. After completion of the merger, Dipexium will be renamed “PLx Pharma Inc.” and expects to trade on The NASDAQ Capital Market under the symbol “PLXP”. On February 24, 2017, the last trading day before the date of this joint proxy statement/prospectus, the closing sale price of Dipexium common stock was $1.20 per share.

As part of its 2017 annual stockholders meeting, Dipexium will be seeking the stockholder approvals necessary to complete the merger and related matters. The Dipexium annual stockholders meeting will be held at 10:00 a.m., local time, on [•], 2017, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., the Chrysler Center, 666 Third Avenue, 32 nd Floor, New York, New York 10017, unless postponed or adjourned to a later date. At the annual meeting, Dipexium will ask its stockholders to, among other things:

1. Approve the issuance of shares of Dipexium common stock to PLx stockholders by virtue of the merger, as contemplated by the Agreement and Plan of Merger and Reorganization, dated as of December 22, 2016 by and among Dipexium, Dipexium Acquisition Corp. (“AcquireCo”) and PLx, a copy of which is attached as Annex A to this joint proxy statement/prospectus of which this notice forms a part.
2. Authorize an amendment to Dipexium’s amended and restated certificate of incorporation to (a) increase the number of authorized shares of common stock from 30,000,000 to 100,000,000, as described in this joint proxy statement/prospectus, the approval of which is necessary to enable Dipexium to issue the required number of shares of Dipexium common stock to PLx stockholders in connection with the merger, and (b) change the name of Dipexium to “PLx Pharma Inc.” subject to the consummation of the merger. Dipexium currently expects, based on the assumed number of shares of Dipexium common stock and PLx common stock to be outstanding as of March 31, 2017, and assuming that Dipexium’s cash at closing is greater than or equal to $12 million but less than $12.5 million (the maximum PLx equity percentage of 77.5%) and the issuance of an additional 317,074 shares of common stock of PLx for conversion of bridge notes outstanding plus accrued interest, that Dipexium will issue to PLx stockholders a maximum of 44,056,387 shares of Dipexium common stock, on a fully diluted basis, including 5,720,592 shares of common stock underlying options, as a result of the merger.


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3. Authorize an amendment to Dipexium’s amended and restated certificate of incorporation effecting a reverse stock split of Dipexium common stock, at a ratio ranging from 1-for-2 to 1-for-8.
4. Elect Robert J. DeLuccia, David P. Luci, Jack H. Dean, Michael Duffy, Thomas Harrison, William J. McSherry, Jr. and Barry Kagan as directors to serve for a term that expires at the 2017 Annual Meeting of Stockholders, or until his successor is elected and qualified or until his earlier resignation or removal; (provided, however, that, if the merger is completed, the board of directors will be reconstituted as provided in the Merger Agreement).
5. Approve, on an advisory basis, the golden parachute compensation that may be paid or become payable to Dipexium’s named executive officers as disclosed in this joint proxy statement/prospectus.
6. Ratify the selection of CohnReznick LLP, an independent registered public accounting firm, as the independent auditor of Dipexium Pharmaceuticals, Inc. for the fiscal year ending December 31, 2017.
7. Consider and vote on a proposal to adjourn the annual meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the annual meeting to approve the items under 1, 2 and 3 above.
8. Transact such other business as may properly come before the stockholders at the Dipexium annual stockholders meeting or any adjournment or postponement thereof.

As part of the special meeting of stockholders of PLx, PLx will be seeking the stockholder approvals necessary to complete the merger and related matters. The PLx special stockholders meeting will be held at 10:00 a.m., local time, on [•], 2017, at PLx’s offices at 8285 El Rio, Suite 130, Houston, TX 77054, unless postponed or adjourned to a later date. At the special meeting, PLx will ask its stockholders to, among other things:

1. Consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger and Reorganization by and among Dipexium, AcquireCo and PLx, dated as of December 22, 2016 and to approve the transactions contemplated thereby.
2. Authorize an amendment to PLx’s 2015 Omnibus Incentive Plan to increase the number of shares of PLx common stock authorized for issuance thereunder from 1,000,000 to 1,450,000.
3. Transact any other business that may properly come before the special meeting or any adjournment or postponement thereof.

As described in the accompanying joint proxy statement/prospectus, certain PLx stockholders who, in the aggregate, own approximately 35% of the outstanding shares of PLx common stock are parties to voting agreements with Dipexium and PLx whereby the stockholders agreed to vote in favor of the adoption of the Merger Agreement. Also, certain Dipexium stockholders who, in the aggregate, own approximately 33% of the outstanding shares of Dipexium common stock, are parties to voting agreements with Dipexium and PLx whereby such stockholders agreed to vote in favor of the issuance of Dipexium common stock in the merger as contemplated by the Merger Agreement. In addition, certain PLx stockholders who, in the aggregate, own approximately 62% of the outstanding shares of PLx common stock on an as-converted to common stock basis, are parties to lock-up agreements, whereby such stockholders agreed not to, except in limited circumstances, sell or transfer, or engage in swap or similar transactions with respect to, shares of PLx capital stock and stock options, including, as applicable, shares of Dipexium received in the merger and issuable upon exercise of certain options, from the Merger Effective Time until 120 days after the closing date of the merger. Further, certain Dipexium stockholders who, in the aggregate, own approximately 36% of the outstanding shares of Dipexium common stock, are parties to lock-up agreements, whereby such stockholders agreed not to, except in limited circumstances, sell or transfer, or engage in swap or similar transactions with respect to, shares of Dipexium capital stock and stock options from the Merger Effective Time until 120 days after the closing date of the merger.

After careful consideration, the Dipexium and PLx boards of directors have approved the Merger Agreement and the respective proposals referred to above, and each of the Dipexium and PLx boards of directors has determined that it is advisable to enter into the merger. The board of directors of Dipexium recommends that its stockholders vote “FOR” the proposals described in the accompanying joint proxy statement/prospectus, and the board of directors of PLx recommends that its stockholders vote “FOR” the proposals described in the accompanying joint proxy statement/prospectus.

More information about Dipexium, PLx and the proposed transaction is contained in this joint proxy statement/prospectus. Dipexium and PLx urge you to read the accompanying joint proxy statement/prospectus carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “ RISK FACTORS ” BEGINNING ON PAGE 26 .

This joint proxy statement/prospectus incorporates important business and financial information about Dipexium that is not included in or delivered with this document. You may obtain this information without charge through the Securities and Exchange Commission (“SEC”) website ( www.sec.gov ) or upon your written or oral request by contacting the Chief Executive Officer of Dipexium Pharmaceuticals, Inc., 14 Wall Street, Suite 3D, New York, New York 10005 or by calling (212) 269-2834.


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To ensure timely delivery of these documents, any request should be made no later than [•  ] to receive them before the Dipexium annual meeting.

For additional details about where you can find information about Dipexium, please see the section entitled “Where You Can Find More Information” in this joint proxy statement/prospectus.

Dipexium and PLx are excited about the opportunities the merger brings to both Dipexium and PLx stockholders, and thank you for your consideration and continued support.

David P. Luci Natasha Giordano
President and Chief Executive Officer President and Chief Executive Officer
Dipexium Pharmaceuticals, Inc. PLx Pharma Inc.

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

The accompanying joint proxy statement/prospectus is dated [•  ], and is first being mailed to Dipexium and PLx stockholders on or about [•  ], 2017.


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[GRAPHIC MISSING]

DIPEXIUM PHARMACEUTICALS, INC.
14 Wall Street, Suite 3D
New York, NY 10005
(212) 269-2834

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [•  ], 2017

To the stockholders of Dipexium Pharmaceuticals, Inc.:

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Dipexium Pharmaceuticals, Inc. (“Dipexium”), will be held on [•  ], 2017, beginning at 10:00 a.m., Eastern Time, at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., the Chrysler Center, 666 Third Avenue, 32 nd Floor, New York, New York 10017 for the following purposes

1. To approve the issuance of shares of Dipexium common stock to PLx stockholders by virtue of the merger, as contemplated by the Agreement and Plan of Merger and Reorganization, dated as of December 22, 2016 by and among Dipexium, Dipexium Acquisition Corp. and PLx, a copy of which is attached as Annex A to this joint proxy statement/prospectus of which this notice forms a part;
2. To authorize an amendment to Dipexium’s amended and restated certificate of incorporation to (a) increase the number of authorized shares of common stock from 30,000,000 to 100,000,000, as described in the joint proxy statement/prospectus, the approval of which is necessary to enable Dipexium to issue the required number of shares of Dipexium common stock to PLx stockholders in connection with the merger, and (b) change the name of Dipexium to “PLx Pharma Inc.” subject to the consummation of the merger. Dipexium currently expects, based on the assumed number of shares of Dipexium common stock and PLx common stock to be outstanding as of March 31, 2017, and assuming that Dipexium’s cash at closing is greater than or equal to $12 million but less than $12.5 million (the maximum PLx equity percentage of 77.5%) and the issuance of an additional 317,074 shares of common stock of PLx for conversion of bridge notes outstanding plus accrued interest, that Dipexium will issue to PLx stockholders a maximum of 44,056,387 shares of Dipexium common stock, on a fully diluted basis, including 5,720,592 shares of common stock underlying options, as a result of the merger;
3. To authorize an amendment to Dipexium’s amended and restated certificate of incorporation effecting a reverse stock split of Dipexium common stock, at a ratio ranging from 1-for-2 to 1-for-8;
4. To elect Robert J. DeLuccia, David P. Luci, Jack H. Dean, Michael Duffy, Thomas Harrison, William J. McSherry, Jr. and Barry Kagan as directors to serve for a term that expires at the 2017 Annual Meeting of Stockholders, or until his successor is elected and qualified or until his earlier resignation or removal; (provided, however, that, if the merger is completed, the board of directors will be reconstituted as provided in the Merger Agreement);
5. To approve, on an advisory basis, the golden parachute compensation that may be paid or become payable to Dipexium’s named executive officers as disclosed in this joint proxy statement/prospectus;
6. To ratify the selection of CohnReznick LLP, an independent registered public accounting firm, as the independent auditor of Dipexium Pharmaceuticals, Inc. for the fiscal year ending December 31, 2017;
7. To consider and vote on a proposal to adjourn the annual meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the annual meeting to approve the items under 1, 2 and 3 above; and
8. To transact such other business as may properly come before the stockholders at the Dipexium annual stockholders meeting or any adjournment or postponement thereof.

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The proposals are described in more detail in the accompanying joint proxy statement/prospectus, which you should read carefully in its entirety before voting. Proposal Nos. 1 and 2 are conditioned upon each other, and the approval of each such proposal is a condition to the completion of the merger. The issuance of Dipexium common stock in connection with the merger and the amendments to the amended and restated certificate of incorporation of Dipexium will not take place unless both of these proposals are approved by the Dipexium stockholders and the merger is completed. Therefore, the completion of the merger cannot proceed without the approval of Proposal Nos. 1 and 2.

The board of directors of Dipexium has fixed the close of business on [•  ], 2017 as the record date for determining stockholders entitled to notice of, and to vote at, the annual meeting and any adjournment or postponement thereof. Only holders of record of shares of Dipexium common stock at the close of business on the record date are entitled to notice of, and to vote at, the annual meeting. At the close of business on the record date, Dipexium had [•  ] shares of common stock outstanding and entitled to vote.

The affirmative vote of a majority of the votes properly cast at the Dipexium annual meeting is required for approval of Proposal Nos. 1, 5, 6 and 7. The affirmative vote of a majority of the shares of outstanding Dipexium common stock on the record date is required for approval of Proposal Nos. 2 and 3. The affirmative vote of a plurality of the votes properly cast at the Dipexium annual meeting is required for approval of Proposal No. 4. Even if you plan to attend the annual meeting in person, Dipexium requests that you sign and return the enclosed proxy and thus ensure that your shares will be represented at the annual meeting if you are unable to attend. If you sign, date and mail your proxy card without indicating how you wish to vote, your shares will be voted in favor of Proposal Nos. 1 through 7. If you fail to return your proxy card and you do not vote in person at the annual meeting, the effect will be the same as if your shares were voted against the adoption of Proposal Nos. 2 and 3 and your shares will not be counted for purposes of determining whether a quorum is present at the annual meeting. If you do attend the Dipexium annual meeting and wish to vote in person, you may withdraw your proxy and vote in person.

All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. If you attend, you will be asked to present valid picture identification such as a driver’s license or passport. If your Dipexium stock is held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and this joint proxy statement/prospectus is being forwarded to you by your broker or nominee. As a result, your name does not appear on the list of stockholders. If your stock is held in street name, in addition to picture identification, you should bring with you a letter or account statement showing that you were the beneficial owner of the stock on the record date, in order to be admitted to the meeting.

If you are a stockholder of record, please submit a proxy card or, for shares held in street name, the voting instruction form you receive from your broker or nominee, as soon as possible so your shares can be voted at the meeting. You may submit your proxy card or voting instruction form by mail. If you are a stockholder of record, you may also vote over the Internet or by telephone. If your shares are held in street name, you will receive instructions from your broker or other nominee explaining how to vote your shares, and you may also have the choice of instructing the record holder as to the voting of your shares over the Internet or by telephone. Follow the instructions on the voting instruction form you received from your broker or nominee.

THE DIPEXIUM BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, DIPEXIUM AND ITS STOCKHOLDERS AND HAS APPROVED EACH SUCH PROPOSAL. THE DIPEXIUM BOARD OF DIRECTORS RECOMMENDS THAT DIPEXIUM STOCKHOLDERS VOTE “FOR” EACH SUCH PROPOSAL.

By Order of the Dipexium Board of Directors,

David P. Luci
President and Chief Executive Officer

New York, New York
[•  ], 2017

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PLX PHARMA INC.
8285 El Rio Street, Ste. 130
Houston, Texas 77054

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the stockholders of PLx Pharma Inc.:

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of PLx Pharma Inc. (“PLx”), will be held on [•  ], 2017, beginning at 10:00 a.m., local time, at PLx’s offices at 8285 El Rio, Suite 130, Houston, TX 77054 for the following purposes:

1. To consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger and Reorganization by and among Dipexium, AcquireCo and PLx, dated as of December 22, 2016 and to approve the transactions contemplated thereby;
2. To authorize an amendment to PLx’s 2015 Omnibus Incentive Plan to increase the number of shares of PLx common stock authorized for issuance thereunder from 1,000,000 to 1,450,000; and
3. To transact any other business that may properly come before the special meeting or any adjournment or postponement thereof.

The proposals are described in more detail in the accompanying joint proxy statement/prospectus, which you should read carefully in its entirety before voting.

The board of directors of PLx has authorized the officers of PLx to fix the close of business on [•  ], 2017 as the record date for determining 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 common stock are entitled to notice of, and to vote at, the special meeting. Holders of shares of common stock vote on a basis of one vote per share.

At the close of business on the record date, PLx had outstanding and entitled to vote [•  ] shares of common stock.

Your vote is important. The affirmative vote of the holders of a majority of PLx common stock is the only vote of the holders of any class or series of PLx capital stock necessary for approval of Proposal No. 1 and Proposal No. 2.

Even if you plan to attend the special meeting in person, PLx requests that you sign and return the enclosed proxy and thus ensure that your shares will be represented at the special meeting if you are unable to attend. If you sign, date and mail your proxy card without indicating how you wish to vote, your shares will be voted as a vote “FOR” Proposal No. 1 and Proposal No. 2 as the PLx board of directors recommends and your shares will be counted for purposes of determining whether a quorum is present at the special meeting. If you do attend the PLx special meeting and wish to vote in person, you may withdraw your proxy and vote in person. If you do not return your proxy and you do not vote in person at the special meeting, the effect will be the same as if you voted against Proposal No. 1 and Proposal No. 2.

All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. If you attend, you will be asked to present valid picture identification such as a driver’s license or passport.

If you are a stockholder of record, please submit a proxy card as soon as possible so your shares can be voted at the meeting.

By Order of the PLx Board of Directors,

Natasha Giordano
President and Chief Executive Officer

Houston, Texas
[•  ], 2017

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Page
INFORMATION ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS 1
QUESTIONS AND ANSWERS ABOUT THE MERGER 2
PROSPECTUS SUMMARY 11
The Companies 11
The Merger 11
Reasons for the Merger 12
Opinion of the Dipexium Financial Advisor 13
Overview of the Merger Agreement 14
Bridge Loan 16
Management Following Merger 16
Interests of Certain Directors, Officers and Affiliates of Dipexium and PLx 16
Material U.S. Federal Income Tax Consequences of the Merger 17
Risk Factors 18
Regulatory Approvals 19
NASDAQ Stock Market Listing 19
Anticipated Accounting Treatment 19
Appraisal Rights and Dissenters’ Rights 19
Comparison of Stockholders Rights 19
SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA 20
Selected Historical Financial Data of Dipexium 20
Selected Historical Financial Data of PLx 21
Selected Unaudited Pro Forma Condensed Combined Financial Data of Dipexium and PLx 22
Comparative Historical and Unaudited Pro Forma Per Share Data 23
MARKET PRICE INFORMATION 24
Dividends 24
Securities Authorized for Issuance under Equity Compensation Plans 25
RISK FACTORS 26
Risks Related to the Merger 26
Risks Related to Dipexium 33
Risks Related to PLx 43
Risks Related to the Combined Organization 59
FORWARD-LOOKING STATEMENTS 62
ANNUAL MEETING OF DIPEXIUM STOCKHOLDERS 63
Date, Time and Place 63
Purposes of the Dipexium Annual Meeting 63
Recommendation of the Dipexium Board of Directors 64
Record Date and Voting Power 65
Voting and Revocation of Proxies 65
Required Vote 66
Solicitation of Proxies 66
Other Matters 66
SPECIAL MEETING OF PLX STOCKHOLDERS 67
Date, Time and Place of the Special Meetings 67
Matters for Consideration 67
Board of Directors’ Recommendation 67
Record Date and Voting Power 67

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Page
Shares Beneficially Owned by Directors and Executive Officers 67
Quorum and Vote Required 68
Adjournment and Postponement 68
Voting of Proxies 68
Solicitation of Proxies and Expenses 69
PLx Stock Certificates 69
Assistance 69
THE MERGER 70
Background of the Merger 70
Opinion of the Dipexium Financial Advisor 77
Interests of the Dipexium Directors and Executive Officers in the Merger 86
Golden Parachute Compensation 87
Interests of the PLX Directors and Executive Officers in the Merger 91
Limitations of Liability and Indemnification 92
Stock Options 92
Form of the Merger 92
Merger Consideration 92
Effective Time of the Merger 93
Regulatory Approvals 93
Tax Treatment of the Merger 93
Material U.S. Federal Income Tax Consequences of the Merger to the Holders of PLx Common Stock 94
NASDAQ Stock Market Listing Application 96
Anticipated Accounting Treatment 97
Appraisal Rights and Dissenters’ Rights 97
THE MERGER AGREEMENT 98
Structure 98
Completion and Effectiveness of the Merger 98
Merger Consideration and Adjustment 98
Determination of Dipexium’s Cash 99
Dipexium Stock and Options 99
Procedures for Exchanging PLx Stock Certificates 99
Fractional Shares 100
Representations and Warranties 100
Material Adverse Effect 102
Covenants 103
Board Recommendations; Dipexium Annual Meeting and PLx Special Meeting 108
Third Party Acquisition Proposals 108
Disclosure Documents 110
Regulatory Approvals 110
Additional Agreements 111
Officers and Directors upon Completion of the Merger 111
Conditions to the Completion of the Merger 111
Indemnification 113
Termination of the Merger Agreement 113
Termination Fees; Effect of Termination 114
Obligations in Event of Termination 115
Expenses 115

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AGREEMENTS RELATED TO THE MERGER 116
Bridge Loan 116
Voting Agreements 116
Lock-Up Agreements 117
DIPEXIUM DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 118
Directors and Executive Officers 118
Corporate Governance 121
Report of the Audit Committee of Dipexium’s Board of Directors 125
Information About Auditors 125
DIPEXIUM EXECUTIVE COMPENSATION 126
Compensation Pursuant to Agreements and Plans 126
Summary Compensation Table 128
Outstanding Equity Awards at Fiscal Year-End Table 128
MANAGEMENT AFTER THE MERGER 129
Directors Continuing After the Merger 129
Executive Officers 131
EXECUTIVE COMPENSATION OF THE COMBINED ORGANIZATION OFFICERS 133
Compensation Pursuant to Agreements and Plans 133
Summary Compensation Table 134
Oustanding Equity Awards at December 31, 2016 135
MATTERS BEING SUBMITTED TO A VOTE OF DIPEXIUM STOCKHOLDERS 136
Dipexium Proposal No. 1: Approval of the Merger and the Issuance of Common Stock in the Merger 136
Dipexium Proposal No. 2: Amendment to the Amended and Restated Certificate of Incorporation to Increase Authorized Common Stock and to Effect the Name Change 138
Dipexium Proposal No. 3: Authorization of Dipexium Board of Directors to Effect a Reverse Stock Split 140
Dipexium Proposal No. 4: Election of Dipexium Directors 145
Dipexium Proposal No. 5: Advisory Vote on Golden Parachute Compensation 146
Dipexium Proposal No. 6: Ratification of Dipexium’s Independent Registered Public Accounting Firm 147
Dipexium Proposal No. 7: Approval of Possible Adjournment of the Dipexium Annual Meeting 149
MATTERS BEING SUBMITTED TO A VOTE OF PLX STOCKHOLDERS 150
PLx Proposal No. 1: Approval and Adoption of the Merger Agreement and Approval of the Merger 150
PLx Proposal No. 2 Amendment to the 2015 Omnibus Incentive Plan to Increase Authorized Common Stock 151
DIPEXIUM BUSINESS 154
Overview 154
Dipexium’s Business Strategy 154
Corporate Conversion 155
Manufacturing and Supply 155
Intellectual Property 156
Competition 157
History of Locilex® 158
Government Regulation and Product Approval 158
Reimbursement 164
Dipexium’s Management 165

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Employees 165
Properties 165
Legal Proceedings 166
Available Information 167
PLx BUSINESS 168
Overview 168
PLxGuard TM Delivery System 168
Product Pipeline 169
The Market 171
PLx’s Key Competitive Strengths 172
PLx’s Strategy 173
Use of Aspirin in Management of Cardiovascular Disease 174
Aspertec 179
How the PLxGuard TM Delivery System Differs from Enteric Coating Technology 184
Single Dose Pharmacokinetic/Pharmacodnamic Study (PK/PD) 188
FDA Approval for Aspertec 325 mg 191
Other Pipeline Opportunities Using PLxGuard TM Delivery System 192
Commercialization Strategy 193
Manufacturing 194
Intellectual Property 194
Risks Associated with PLX’s Business 195
Corporate Information 196
DIPEXIUM MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 197
Overview 197
Recent Developments 197
Plan of Operation 198
Opportunities, Challenges and Risks 198
Results of Operations 199
Liquidity and Capital Resources 199
Subsequent Events 202
PLX MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 204
Overview 204
Financial Overview 204
Results of Operations 207
Liquidity and Capital Resources 207
Contractual Obligations and Commitments 208
Off-Balance Sheet Arrangements 208
JOBS Act Accounting Election 208
Controls and Procedures 209
RELATED PARTY TRANSACTIONS OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMBINED ORGANIZATION 210
Dipexium Transactions 210
PLx Transactions 210
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 211
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 214
COMPARISON OF RIGHTS OF HOLDERS OF DIPEXIUM STOCK AND PLX STOCK 218

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PRINCIPAL STOCKHOLDERS OF DIPEXIUM 221
PRINCIPAL STOCKHOLDERS OF PLX 223
PRINCIPAL STOCKHOLDERS OF COMBINED ORGANIZATION 225
LEGAL MATTERS 227
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 227
EXPERTS 227
PROPOSALS OF STOCKHOLDERS 227
HOUSEHOLDING OF PROXY MATERIALS 228
WHERE YOU CAN FIND MORE INFORMATION 228
Annex A — Agreement and Plan of Merger and Reorganization A-1
Annex B — Opinion Letter of Raymond James & Associates, Inc. B-1
Annex C — Section 262 of the Delaware General Corporation Law C-1
Annex D — Amended and Restated Certificate of Incorporation of Dipexium D-1
Annex E — Proposed Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Dipexium for the Share Increase and Name Change E-1
Annex F — Proposed Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Dipexium for the Reverse Stock Split F-1
Annex G — PLx Pharma’s 2015 Omnibus Incentive Plan G-1
DIPEXIUM PHARMACEUTICALS, INC. CONSOLIDATED FINANCIAL STATEMENTS F-1
PLX PHARMA INC. CONSOLIDATED FINANCIAL STATEMENTS F-18

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INFORMATION ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

Except where specifically noted:

• the term “Dipexium” refers to Dipexium Pharmaceuticals, Inc. and its wholly-owned subsidiaries, the term “PLx” refers to PLx Pharma Inc. and its wholly-owned subsidiaries;
• the information contained in this joint proxy statement/prospectus does not give effect to the reverse stock split contemplated by Dipexium Proposal No. 3;
• all references to the numbers of total outstanding shares of Dipexium common stock and related percentages exclude the impact of any changes in Dipexium or the combined organization’s capitalization unrelated to the issuance of the merger consideration; and
• all references to the numbers of total outstanding options to purchase Dipexium common stock and related percentages exclude the impact of any changes in Dipexium or the combined organization’s capitalization unrelated to the issuance of the merger consideration.

Dipexium Pharmaceuticals, Inc. TM is a registered and unregistered trademark of Dipexium in the United States and other jurisdictions. “PLx,” “Aspertec,” the PLx logo and other trademarks, service marks, and trade names of PLx are registered and unregistered marks of PLx Pharma Inc. Other third-party logos and product/trade names are registered trademarks or trade names of their respective companies.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger and the matters to be addressed at the Dipexium annual stockholders meeting and the PLx special meeting. These questions and answers may not address all questions that may be important to Dipexium stockholders or PLx stockholders. To better understand these matters, and for a description of the legal terms governing the merger, you should carefully read this entire joint proxy statement/prospectus, including the attached appendices, as well as the documents that have been incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” in this joint proxy statement/prospectus. All references in this joint proxy statement/prospectus to Dipexium refer to Dipexium Pharmaceuticals, Inc., a Delaware corporation; all references in this joint proxy statement/prospectus to PLx refer to PLx Pharma Inc., a Delaware corporation; all references in this joint proxy statement/prospectus to AcquireCo refer to Dipexium Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Dipexium; and all references in this joint proxy statement/prospectus to the Merger Agreement refer to the Agreement and Plan of Merger and Reorganization, dated as of December 22, 2016, by and among Dipexium, PLx and AcquireCo, a copy of which is attached as Annex A to this joint proxy statement/prospectus, and as may be amended.

Q: Why am I receiving this joint proxy statement/prospectus?
A: You are receiving this joint proxy statement/prospectus because you have been identified as a stockholder of either Dipexium or PLx as of the applicable record date, and thus you are entitled to vote at Dipexium’s annual stockholders meeting or PLx’s special meeting, as the case may be. This document serves as both a joint proxy statement of Dipexium and PLx, used to solicit proxies for the stockholder meetings, and as a prospectus of Dipexium, used to offer securities of Dipexium in exchange for securities of PLx pursuant to the terms of the Merger Agreement. This document contains important information about the merger and the stockholder meetings of Dipexium and PLx, and you should read it carefully.
Q: Why are Dipexium and PLx proposing this transaction? (see page 108 )
A: The Dipexium and PLx boards of directors have each approved the Merger Agreement and have determined that the Merger Agreement and the transactions contemplated thereunder, including the merger, are advisable and in the best interests of the companies’ respective stockholders. In reaching these decisions, the Dipexium and PLx boards of directors considered the terms and conditions of the Merger Agreement and the ancillary agreements, as well as a number of other factors.
Q: What will happen in the merger? (see page 98 )
A: In the merger, AcquireCo will merge with and into PLx and, as a result, PLx will become a wholly-owned subsidiary of Dipexium and the surviving corporation of the merger.
Q: What will happen to Dipexium if, for any reason, the merger does not close?
A: If, for any reason, the merger does not close, the Dipexium board of directors may elect to, among other things, attempt to complete another strategic transaction like the merger, attempt to sell or otherwise dispose of the various assets of Dipexium or continue to operate the business of Dipexium. If Dipexium decides to dissolve and liquidate its assets, Dipexium would be required to pay all of its debts and contractual obligations and to set aside certain reserves for potential future claims, and there can be no assurances as to the amount or timing of available cash left to distribute to stockholders after paying the debts and other obligations of Dipexium and setting aside funds for reserves in the event of such a liquidation. If Dipexium were to continue its business, it would need to identify, acquire and develop other products or product candidates. Additionally, if Dipexium decides to reestablish its business, it will need to hire managerial and other personnel to lead and staff a variety of necessary functions, including in particular research, development and commercialization.

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Q: What will holders of PLx common stock receive in exchange for their shares in the merger? (see page 98 )
A: Pursuant to the terms of the Merger Agreement, holders of PLx common stock will receive shares of Dipexium common stock. The number of shares of Dipexium common stock to be issued to all holders of PLx securities will be determined pursuant to an exchange ratio that is based upon the number of shares of Dipexium common stock outstanding at the effective time of the merger (the “Merger Effective Time”), the amount of Dipexium’s cash as of a certain determination date and the total number of shares of PLx common stock outstanding, including those shares issued upon the conversion of certain PLx convertible notes, immediately prior to the Merger Effective Time.
Q: How many shares of Dipexium stock will be issued to PLx stockholders in the merger?
A: Subject to the terms of the Merger Agreement, the percentage of the combined organization that Dipexium stockholders will own as of the closing of the merger is subject to adjustment at the closing based on the level of Dipexium’s cash as of a certain determination date. On a pro forma basis, based upon the number of shares of Dipexium common stock to be issued in the merger, (i) current Dipexium stockholders will own approximately 23.25% of the combined organization and current PLx stockholders will own approximately 76.75% of the combined organization if Dipexium’s cash as of a certain determination date is greater than or equal to $12.5 million, and (ii) current Dipexium stockholders will own approximately 22.5% of the combined organization and current PLx stockholders will own approximately 77.5% of the combined organization if Dipexium’s cash as of a certain determination date is greater than or equal to $12 million but less than $12.5 million.

Dipexium and PLx estimate that, assuming no additional issuance of common stock, Dipexium will have 11,129,747 shares of common stock outstanding immediately prior to the merger. Dipexium and PLx also expect that, assuming the conversion of an estimated $2,485,860 of convertible bridge notes outstanding including accrued interest as of March 31, 2017, PLx will have an aggregate of 5,882,897 shares of common stock outstanding immediately prior to the merger. If the share numbers and the underlying assumptions outlined above are accurate, and assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, PLx stockholders as of the Merger Effective Time will be entitled to receive a maximum of 44,056,387 shares of Dipexium common stock on a fully diluted basis, which includes 5,720,592 shares of common stock underlying options, and each outstanding share of PLx common stock will be converted into the right to receive 6.5165 shares of Dipexium common stock as a result of the merger. Assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the total number of shares of Dipexium common stock outstanding after the merger would be 57,319,479 on a fully diluted basis. If the number of shares of outstanding common stock of Dipexium or PLx differs from the amounts set forth above, the exchange ratio will be modified and the number of shares of Dipexium common stock to which holders of PLx’s common stock are entitled may be greater or less.

For illustrative purposes only, assuming Dipexium’s net cash is determined to be greater than or equal to $12.5 million, the exchange ratio for the PLx common stock would be approximately 6.2452 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 624 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares. Assuming Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the exchange ratio for the PLx common stock would be approximately 6.5165 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 651 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares.

Based on Dipexium’s current level of cash and taking into account Dipexium’s projected expenses in connection with the proposed transaction, if Dipexium’s cash were to be determined today, the stockholders of Dipexium would own approximately 23.25% of the combined organization and current PLx stockholders would own approximately 76.75% of the combined organization.

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Q: How will the merger consideration be allocated among the PLx stockholders? (see page 98 )
A: In accordance with the Merger Agreement, upon the Merger Effective Time, each outstanding share of PLx common stock shall be converted solely into the right to receive a number of shares of Dipexium common stock as determined by the exchange ratio calculations described above.
Q: How will the merger affect outstanding stock options to acquire PLx common stock? (see page 99 )
A: In connection with the merger, each PLx stock option outstanding and unexercised immediately prior to the closing, whether or not vested, shall be converted into an option to purchase a number of shares of Dipexium common stock (rounded up to the nearest whole share) equal to the product of (a) the number of shares of PLx common stock that were subject to such option and (b) the exchange ratio set forth in the Merger Agreement, and the per-share exercise price (rounded up to the nearest whole cent) will be equal to the quotient of (i) the per-share exercise price of the PLx stock option and (ii) the exchange ratio, and Dipexium will assume the 2015 Omnibus Incentive Plan of PLx, as amended, and the stock options granted thereunder in accordance with their terms. Any restriction on the exercise of any PLx stock option assumed by Dipexium will continue in full force and the term, exercisability and vesting schedule will remain unchanged as a result of the merger.
Q: Who will the members of the combined organization’s board of directors be after the merger? (see page 129 )
A: Immediately following the Merger Effective Time, the board of directors of the combined organization is expected to be made up of seven (7) members: (i) six (6) of whom will be nominees of PLx, namely Michael J. Valentino, Natasha Giordano, John Hadden II, Kirk Calhoun, Robert Casale and Gary Balkema, with Michael Valentino to serve as the Executive Chairman, and (ii) one (1) of whom will be a designee named by Dipexium, which individual shall initially be David P. Luci, a current director and the current Chief Executive Officer of Dipexium.
Q: Who will the officers of the combined organization be after the merger? (see page 131 )
A: Immediately following the Merger Effective Time, the combined organization will operate under the leadership of the PLx management team, with Natasha Giordano serving as the President and Chief Executive Officer.
Q: Am I entitled to appraisal rights? (see page 97 )
A: Under the Delaware General Corporation Law (the “DGCL”), holders of Dipexium common stock are not entitled to appraisal rights in connection with the merger.

Under the DGCL, holders of PLx common stock who deliver to PLx a written demand for appraisal before the vote on the adoption of the Merger Agreement at the PLx special meeting and who do not vote for the adoption and approval of the Merger Agreement and to approve the merger have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery if the merger is completed, but only if they comply with all requirements of Delaware law. This appraisal amount could be more than, the same as, or less than the amount a PLx stockholder would be entitled to receive under the Merger Agreement. Any holder of PLx common stock intending to exercise appraisal rights must, among other things, submit a written demand for appraisal to PLx prior to the vote on the adoption and approval of the Merger Agreement and the transactions contemplated thereunder, not vote or otherwise submit a proxy in favor of adoption and approval of the Merger Agreement and the transactions contemplated thereunder and not submit a letter of transmittal. Failure to follow exactly the procedures specified under Delaware law will result in the loss of appraisal rights. Because of the complexity of the Delaware law relating to appraisal rights, if you are considering exercising your appraisal rights, you are encouraged to seek the advice of your own legal counsel.

Q: What are the United States federal income tax consequences of the transaction? (see page 93 )
A: Dipexium and PLx intend the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), as described in “The Merger — Material United States Federal Income Tax Consequences of the Merger.” Assuming

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the merger constitutes a reorganization, subject to the limitations and qualifications described in “The Merger — Material United States Federal Income Tax Consequences of the Merger,” PLx stockholders generally should not recognize gain or loss for U.S. federal income tax purposes on the receipt of shares of Dipexium common stock issued in connection with the merger. Each PLx stockholder who receives cash in lieu of a fractional share of Dipexium common stock will be treated for U.S. federal income tax purposes as having received such fractional share pursuant to the merger and then as having exchanged such fractional share for cash in a redemption by Dipexium. A PLx stockholder should generally recognize capital gain or loss on such a deemed exchange of the fractional share. If the merger is not a reorganization under Section 368(a) of the Code, then, subject to the limitations and qualifications described in “The Merger — Material United States Federal Income Tax Consequences of the Merger,” each PLx stockholder will generally recognize gain or loss, for U.S. federal income tax purposes, on the receipt of shares of Dipexium common stock issued to such PLx stockholder in connection with the merger. The tax consequences to each PLx stockholder will depend on that stockholder’s particular circumstances. Each PLx stockholder should consult with his, her or its tax advisor for a full understanding of the tax consequences of the merger to that stockholder.
Q: Do persons involved in the merger have interests that may conflict with mine as a Dipexium stockholder? (see page 86 )
A: Yes. When considering the recommendations of Dipexium’s board of directors, you should be aware that certain Dipexium directors and officers have interests in the merger that are different from, or are in addition to, yours. The Dipexium board of directors was aware of these interests and considered them, among other matters, in its decision to approve the Merger Agreement. Upon completion of the merger, it is expected that the employment of David P. Luci, Dipexium’s president and chief executive officer, Robert J. DeLuccia, Dipexium’s executive chairman, and Robert G. Shawah, Dipexium’s chief accounting officer and treasurer, will be terminated by Dipexium without cause, and each will be entitled to certain severance payments and benefits and each of their outstanding options will automatically vest in full. In addition, Dipexium’s directors and officers will continue to be entitled to indemnification and liability insurance benefits from Dipexium after the merger is consummated. Additionally, David P. Luci will serve as a member of the combined organization’s board of directors after the merger.
Q: Do persons involved in the merger have interests that may conflict with mine as a PLx stockholder? (see page 91 )
A: Michael J. Valentino, Natasha Giordano, Gary Balkema, Robert Casale, Kirk Calhoun and John W. Hadden II, each of whom is a current director of PLx, are expected to be members of the combined organization’s board of directors after the merger. These relationships may have influenced their decision to vote in favor of the merger and to recommend that PLx stockholders vote in favor of the merger and related transactions. In addition, certain of the current executive officers or key employees of PLx are expected to serve as executive officers or key employees of Dipexium at the Merger Effective Time.
Q: What Dipexium proposals will be voted on at the Dipexium annual meeting in connection with the merger? (see page 63 )
A: Pursuant to the terms of the Merger Agreement, the following Dipexium proposals must be approved by the requisite stockholder vote:
• Proposal No. 1 to approve the Merger Agreement and the transactions contemplated thereunder, including the merger, and the issuance of shares of Dipexium common stock as contemplated thereby;
• Proposal No. 2 to authorize an amendment to Dipexium’s amended and restated certificate of incorporation to (a) increase the number of authorized shares of common stock from 30,000,000 to 100,000,000, the approval of which is necessary to enable Dipexium to issue the required number of shares of Dipexium common stock to PLx stockholders in connection with the merger, and (b) change the name of Dipexium to “PLX Pharma Inc.” subject to the consummation of the merger. Dipexium currently expects, based on the assumed number of shares of Dipexium common stock and PLx common stock to be outstanding as of March 31, 2017, and assuming that

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Dipexium’s cash at closing is greater than or equal to $12 million but less than $12.5 million (the maximum PLx equity percentage of 77.5%) and the issuance of an additional 317,074 shares of common stock of PLx for conversion of bridge notes outstanding plus accrued interest, that Dipexium will issue to PLx stockholders a maximum of 44,056,387 shares of Dipexium common stock, on a fully diluted basis, including 5,720,592 shares of common stock underlying options, as a result of the merger; and
• Proposal No. 3 to authorize an amendment to Dipexium’s amended and restated certificate of incorporation to effect a reverse stock split of Dipexium’s issued and outstanding shares of common stock, pursuant to which any whole number of outstanding shares between and including two (2) and eight (8), such amount to be determined by the Dipexium board of directors and mutually agreed to by Dipexium and PLx, would be combined and reclassified into one share of Dipexium common stock, which may be necessary for Dipexium to maintain its eligibility for continued listing on The NASDAQ Capital Market.

Proposals 1 and 2 are collectively referred to as the “Merger Proposals.” Only holders of record of shares of Dipexium common stock at the close of business on the record date are entitled to notice of, and to vote at, the annual meeting. At the close of business on the record date, Dipexium had [•  ] shares of common stock outstanding and entitled to vote.

Q: Are the Merger Proposals each conditioned upon each other?
A: Yes. Each of the Merger Proposals is conditioned upon the approval of all of the other Merger Proposals and the approval of each Merger Proposal is a condition to completion of the merger. Neither the issuance of Dipexium common stock in connection with the merger nor the amendment to Dipexium’s amended and restated certificate of incorporation to increase the number of authorized shares of common stock and effect the name change will take place unless all of the Merger Proposals are approved by the Dipexium stockholders and the merger is completed. Therefore, the completion of the merger cannot proceed without the approval of each of the Merger Proposals.

Additionally, the Merger Agreement and the transactions contemplated thereunder, including the merger, must be approved by PLx stockholders, and the completion of the merger cannot proceed without such approval.

Q: What Dipexium proposals are to be voted on at the Dipexium annual meeting, other than the Merger Proposals required in connection with the merger? (see page 63 )
A: At the Dipexium annual meeting, the holders of Dipexium common stock will also be asked to consider the following proposals, along with any other business that may properly come before the annual meeting or any adjournment or postponement thereof:
• Proposal No. 4 to elect each of Robert J. DeLuccia, David P. Luci, Jack H. Dean, Michael Duffy, Thomas Harrison, William J. McSherry, Jr. and Barry Kagan as a director to serve for a term that expires at the 2017 Annual Meeting of Stockholders, or until his successor is elected and qualified or until his earlier resignation or removal; (provided, however, that, if the merger is completed, the board of directors will be reconstituted as provided in the Merger Agreement);
• Proposal No. 5 to approve, on an advisory basis, the golden parachute compensation that may be paid or become payable to Dipexium’s named executive officers as disclosed in this joint proxy statement/prospectus; and
• Proposal No. 6 to ratify the selection of CohnReznick LLP, an independent registered public accounting firm, as the independent auditor of Dipexium Pharmaceuticals, Inc. for the fiscal year ending December 31, 2017.

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The approval of advisory Proposal No. 5 is not binding on the Dipexium board of directors. The approval of Proposal Nos. 4-6 are not conditions to the merger.

Q: How does the Dipexium board of directors recommend that stockholders vote on the proposals to be voted on at the Dipexium annual meeting?
A: After careful consideration, the Dipexium board of directors recommends that stockholders vote “FOR” Proposal Nos. 1 through 6.
Q: What is “golden parachute” compensation and why I am being asked to vote on it?
A: The SEC has adopted rules that require Dipexium to seek an advisory (non-binding) vote on “golden parachute” compensation. “Golden parachute” compensation is compensation that is tied to or based on the merger and that will or may be paid by Dipexium to its named executive officers in connection with the merger.
Q: What PLx proposals will be voted on at the PLx special meeting in connection with the merger? (see page 67 )
A: The following PLx proposals must be approved by the affirmative vote of the holders of a majority of PLx common stock:
• Proposal No. 1 to approve and adopt the Merger Agreement and the transactions proposed thereunder, including the merger.
• Proposal No. 2 to consider and vote upon a proposal to amend PLx’s 2015 Omnibus Incentive Plan to increase the number of authorized shares of common stock under the plan from 1,000,000 shares to 1,450,000 shares.
Q: Why is the PLx board of directors asking the PLx stockholders to approve an increase to the authorized shares issuable under the PLx 2015 Omnibus Incentive Plan?
A: As of the Merger Effective Time, Dipexium will assume the PLx 2015 Omnibus Incentive Plan (the “PLx Plan”), and the stock options granted thereunder (with the PLx shares issued under the PLx Plan becoming Dipexium shares of common stock, as converted pursuant to the Merger Agreement and as described on page 92 ). In order to provide for the issuance of equity compensation going forward, the PLx Plan must be amended to increase the authorized shares issuable under the PLx Plan from 1,000,000 to 1,450,000.
Q: What PLx stockholder approvals are required for the merger? (see page 67 )
A: The affirmative vote of the holders of a majority of PLx common stock is the only vote of the holders of any class or series of PLx capital stock necessary for approval of the Merger Agreement and the transactions proposed thereunder, including the merger.
Q: How does the PLx board of directors recommend stockholders vote on Proposal No. 1 and Proposal No. 2?
A: The PLx board of directors recommends that stockholders vote “FOR” Proposal No. 1 and Proposal No. 2.
Q: Are there any Dipexium stockholders already committed to voting in favor of the proposals to be voted on at the Dipexium annual meeting? (see page 116 )
A: Yes. David P. Luci and Robert J. DeLuccia, who collectively beneficially own or control approximately 33% of Dipexium’s outstanding common stock as of December 31, 2016, have each entered into a voting agreement agreeing to vote in favor of the Dipexium proposals and against any alternative acquisition proposal, agreement or transaction.
Q: Are there any PLx stockholders already committed to voting in favor of the Merger Agreement and the merger? (see page 116 )
A: Yes. Aurus Bios Fondo de Inversion Privado, Integra Ventures III, L.P., Charles E. Sheedy, S. Reed Morian, Michael J. Valentino, Ronald R. Zimmerman, Natasha Giordano, David E. Jorden, Gary

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Mossman, Gary Balkema, Robert Casale, Kirk Calhoun and John W. Hadden II, who collectively beneficially own or control approximately 35% of PLx’s outstanding common stock as of December 31, 2016, have each entered into a voting agreement agreeing to vote in favor of the merger and against any alternative acquisition proposal, agreement or transaction.
Q: Are there risks I should consider in deciding whether to vote for the merger or for the issuance of shares of Dipexium common stock and options in the merger, as applicable?
A: Yes. In evaluating the merger and the issuance of shares of Dipexium common stock and options in the merger, you should carefully consider the factors discussed in the section titled “Risk Factors” beginning on page 26 .
Q: If my PLx shares are certificated, should I send certificates now? (see page 99 )
A: No. You should not send in your PLx stock certificates now. Prior to the Merger Effective Time, Dipexium shall appoint a bank or trust company reasonably acceptable to PLx to act as exchange agent. Promptly after the Merger Effective Time, the exchange agent will provide stock certificate transmittal materials to the holders of PLx common stock (whether certificated or in book entry form). The transmittal materials will contain instructions for surrendering PLx stock certificates to the exchange agent in exchange for the merger consideration.
You bear the risk of delivery and should send your letter of transmittal by courier, by hand or by fax, with stock certificates delivered by courier or by hand, to the appropriate addresses shown on the letter of transmittal.
Q: What do I need to do now?
A: First, carefully read this document in its entirety. Then, vote your shares of Dipexium or PLx common stock, as applicable, by one of the following methods:
• marking, signing, dating and returning your proxy card; or
• attending the Dipexium annual meeting or the PLx special meeting, as applicable, and submitting a properly executed proxy or ballot. If a broker holds your shares of Dipexium common stock in street name (held for your account by a bank, broker or other nominee), you will need to obtain a proxy from your broker to vote your shares in person at the annual meeting.

If you are a stockholder of Dipexium, you may also vote your shares of Dipexium common stock by submitting a proxy over the Internet or by telephone by following the instructions on the enclosed proxy card.

Q: How do I vote shares of Dipexium common stock that are held in street name by my bank, broker or other nominee? (see page 65 )
A: (i) By Internet or telephone. Follow the instructions you receive from the record holder to vote by Internet or telephone. (ii) By mail. You should receive instructions from the record holder explaining how to vote your shares. (iii) In person at the meeting. Contact the bank, broker or other nominee who holds your shares to obtain a broker’s proxy card and bring it with you to the annual meeting. You will not be able to vote at the annual meeting unless you have a proxy card from your broker, bank or other nominee. In any event, to be sure that your vote will be received in time, please cast your vote by your choice of available means at your earliest convenience.
Q: What stockholder votes are required to approve the proposals at the Dipexium annual meeting? (see page 65 )
A: To be approved, Proposal Nos. 1, 5, 6 and 7 must receive the affirmative vote of a majority of the votes properly cast at the Dipexium annual meeting. The affirmative vote of a majority of the shares of Dipexium common stock outstanding as of the record date is required for approval of Proposal Nos. 2 and 3. The affirmative vote of a plurality of the votes properly cast at the Dipexium annual meeting is required for approval of Proposal No. 4.

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Q: What happens if I do not vote? (see page 65 )
A: If you are a Dipexium stockholder, the failure to vote in person or by proxy will have the same effect as voting against Dipexium’s Proposal Nos. 2 and 3. Assuming a quorum is present, a failure to vote will have no effect on the outcome of Dipexium’s Proposal Nos. 1, 4, 5, 6 and 7. If you are a PLx stockholder, the failure to vote in person or by proxy will have the same effect as voting against the Merger Agreement and the transactions contemplated thereunder, including the merger.
Q: What happens if I abstain? (see page 65 )
A: Shares abstaining from voting on a matter will be counted for the purpose of determining whether a quorum exists for the PLx special meeting or the Dipexium annual meeting, as applicable, but are treated as having not voted. If you are a Dipexium stockholder, abstentions will have the same effect as voting against Dipexium’s Proposal Nos. 2 and 3, but will have no effect on the outcome of Dipexium’s Proposal Nos. 1, 4, 5, 6 and 7. If you are a PLx stockholder, abstentions will have the same effect as voting against the Merger Agreement and the transactions contemplated thereunder, including the merger.
Q: Can I change my vote? (see page 65 )
A: Yes. You may revoke your proxy at any time before it is voted by notifying PLx’s or Dipexium’s secretary, as applicable, in writing, by returning a signed proxy with a later date (or by transmitting a subsequent vote over the Internet or by telephone for a Dipexium proxy) or by attending the meeting and voting in person.
• Notices to the secretary of Dipexium should be addressed to: Secretary, Dipexium Pharmaceuticals, Inc., 14 Wall Street, Suite 3D, New York, NY 10005.
• Notices to the secretary of PLx should be addressed to: Secretary, PLx Pharma Inc., 8285 El Rio Street, Suite 130, Houston, TX 77054.

If your stock is held in street name, you must contact your bank, broker or other nominee for instructions as to how to change your vote.

Q: When and where will the vote take place? (see page 63 )
A: The Dipexium annual meeting of stockholders will be held at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., the Chrysler Center, 666 Third Avenue, 32 nd Floor, New York, New York 10017, on [•  ], 2017, starting at 10:00 a.m. local time.
The PLx special meeting of stockholders will be held at PLx’s offices at 8285 El Rio, Suite 130, Houston, TX 77054, on [•  ], 2017, starting at 10:00 a.m. local time.
Q: Are there any conditions that must be satisfied prior to the completion of the merger? (see page 111 )
A: Yes. There are a number of conditions that must be satisfied before the completion of the merger, some of which are outside the parties’ control. See “Merger Agreement — Conditions to Completion of the Merger” beginning on page 111 .
Q: When do you expect the merger to be completed?
A: Dipexium and PLx are working to complete the merger as quickly as practicable and currently expect that the merger could be completed during the second quarter of 2017. However, Dipexium and PLx cannot predict the exact timing of the completion of the merger because it is subject to approvals and other conditions.
Q: Who is paying for this proxy solicitation?
A: Each of Dipexium and PLx will bear its own expenses in printing and filing this joint proxy statement/prospectus and the proxy card. Arrangements will also be made with banks, brokers and/or other nominees who are record holders of Dipexium common stock for the forwarding of solicitation materials to the beneficial owners of such shares. Dipexium will reimburse the banks, brokers and/or other

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nominees for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials to beneficial owners of Dipexium common stock. Dipexium has engaged Advantage Proxy to assist in the solicitation of proxies and provide related advice and informational support, for a $3,500 service fee and the reimbursement of out-of-pocket expenses.
Q: Whom do I call if I have questions about the meetings or the merger?

A: Dipexium stockholders may seek answers to their questions by writing, calling or emailing Dipexium or Advantage Proxy, Dipexium’s proxy solicitor, at:

David P. Luci
President and Chief Executive Officer
Dipexium Pharmaceuticals, Inc.
14 Wall Street, Suite 3D
New York, NY 10005
Email: davidluci@dipexium.com
Tel: (212) 269-2834
Advantage Proxy
P.O. Box 13581
Des Moines, WA 98198
(206) 870-8565

PLx stockholders should direct any questions regarding the annual meeting of stockholders or the merger, including the procedures for voting your shares, to:

Natasha Giordano
President and Chief Executive Officer
PLx Pharma Inc.
8285 El Rio Street, Suite 130
Houston, TX 77054
Email: ngiordano@plxpharma.com
Tel: (713) 842-1249

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Prospectus Summary

This summary highlights selected information contained elsewhere in this joint proxy statement/prospectus. Dipexium and PLx urge you to read carefully the remainder of this joint proxy statement/prospectus, including the documents attached to this joint proxy statement/prospectus, because the information in this section does not provide all the information that might be important to you regarding the merger and the other matters being considered at the Dipexium annual meeting and the PLx special meeting.

The Companies

Dipexium Pharmaceuticals, Inc.

14 Wall Street, Suite 3D
New York, NY 10005
(212) 269-2834

Dipexium Pharmaceuticals, Inc. (“Dipexium”) is a late-stage pharmaceutical company focused on the development and commercialization of Locilex® (pexiganan cream 0.8%), a novel, broad-spectrum, topical antibiotic peptide, which recently announced that Locilex® failed to meet the primary and secondary endpoints in its OneStep-1 and OneStep-2 Phase 3 clinical trials.

PLx Pharma Inc.

8285 El Rio, Suite 130
Houston, TX 77054
(713) 842-1249

PLx Pharma Inc. (“PLx”) is a late-stage specialty pharmaceutical company initially focused on developing its clinically validated and patent-protected PLxGuard TM delivery system to provide safer and more effective aspirin products. PLx’s FDA-approved lead product, Aspertec TM 325 mg, is a novel formulation of aspirin that utilizes the PLxGuard delivery system to reduce acute GI side effects while providing superior antiplatelet effectiveness for cardiovascular disease prevention as compared with the current standard of care, enteric coated aspirin. A companion 81 mg dose of the same novel formulation — Aspertec 81 mg — is in late-stage development and will be the subject of a sNDA leveraging the already approved status of Aspertec 325 mg.

Dipexium Acquisition Corp.

Dipexium Acquisition Corp. (“AcquireCo”) is a wholly-owned subsidiary of Dipexium, and was formed solely for the purposes of carrying out the merger.

The Merger (see page 70 )

If the merger is completed, AcquireCo will merge with and into PLx, with PLx surviving as a wholly-owned subsidiary of Dipexium.

At the effective time of the merger (the “Merger Effective Time”), each outstanding share of common stock of PLx will be converted into the right to receive that number of shares of Dipexium common stock, if any, as determined pursuant to the equity exchange ratio described in the Merger Agreement (the “Equity Exchange Ratio”). At the Merger Effective Time, each outstanding option, whether or not vested, to purchase shares of PLx common stock unexercised immediately prior to the Merger Effective Time will be converted into an option to purchase shares of Dipexium common stock also pursuant to the Equity Exchange Ratio. All rights with respect to each PLx option will be assumed by Dipexium in accordance with its terms. Accordingly, from and after the Merger Effective Time, each option assumed by Dipexium may be exercised solely for shares of Dipexium common stock.

At the Merger Effective Time, the current stockholders of PLx and current stockholders of Dipexium are expected to own (i) 76.75% and 23.25% of the combined organization, respectively, if Dipexium has an amount of cash as of the determination date greater than or equal to $12.5 million or (ii) 77.5% and 22.5% of the combined organization, respectively, if Dipexium has an amount of cash as of the determination date greater than or equal to $12 million but less than $12.5 million. Dipexium will issue to the current stockholders of PLx the aggregate number of shares of Dipexium common stock necessary for the current PLx

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stockholders to own 76.75% or 77.5%, as applicable, of the outstanding capital stock of the combined organization, subject to adjustment based on Dipexium’s cash, as discussed in “Merger Agreement — Merger Consideration and Adjustment” beginning on page 98 .

Dipexium and PLx estimate that, assuming no additional issuance of common stock, Dipexium will have 11,129,747 shares of common stock outstanding immediately prior to the merger. Dipexium and PLx also expect that, assuming the conversion of an estimated $2,485,860 of convertible bridge notes outstanding including accrued interest as of March 31, 2017, PLx will have an aggregate of 5,882,897 shares of common stock outstanding immediately prior to the merger. If the share numbers and the underlying assumptions outlined above are accurate, and assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, PLx stockholders as of the Merger Effective Time will be entitled to receive a maximum of 44,056,387 shares of Dipexium common stock on a fully diluted basis, which includes 5,720,592 shares of common stock underlying options, and each outstanding share of PLx common stock will be converted into the right to receive 6.5165 shares of Dipexium common stock as a result of the merger. Assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the total number of shares of Dipexium common stock outstanding after the merger would be 57,319,479 on a fully diluted basis. If the number of shares of outstanding common stock of Dipexium or PLx differs from the amounts set forth above, the exchange ratio will be modified and the number of shares of Dipexium common stock to which holders of PLx’s common stock are entitled may be greater or less.

Each share of Dipexium common stock issued and outstanding at the time of the merger will remain issued and outstanding and those shares will be unaffected by the merger. Dipexium stock options and other equity awards that are vested and unexercised immediately prior to the Merger Effective Time will also remain outstanding and be unaffected by the merger. Please see “The Merger — Stock Options” beginning on page 92 .

For a more complete description of the Equity Exchange Ratio, please see the section entitled “The Merger Agreement — Merger Consideration and Adjustment” beginning on page 98 .

The merger will be completed as promptly as practicable after all of the conditions to completion of the merger are satisfied or waived, including the approval of the stockholders of Dipexium and PLx. Dipexium and PLx are working to complete the merger as quickly as practicable. However, Dipexium and PLx cannot predict the exact timing of the completion of the merger because it is subject to various conditions. After completion of the merger, assuming that Dipexium receives the required stockholder approval of Dipexium Proposal No. 2, Dipexium will be renamed “PLx Pharma Inc.”

Reasons for the Merger (see pages 72 and 75 )

Following the merger, the combined organization will focus on completion of manufacturing scale-up and label finalization for the previously FDA-approved Aspertec 325 mg aspirin dosage form thereby satisfying the open conditional items, and activities to support the filing of a supplemental new drug application (sNDA) for Aspertec 81 mg maintenance dose form. Aspertec is being developed to provide high-risk cardiovascular and neurology patients with more reliable and predictable antiplatelet efficacy as compared to enteric coated aspirin while also reducing the adverse gastric events common in an acute setting.

Dipexium and PLx believe that the combined organization will have the following potential advantages:

• The combined organization’s resources will be immediately available to allow commencement of manufacturing and marketing activities for Aspertec 325.
• The management of the combined organization will be able to draw on the existing networks of both companies for the development of key commercial relationships.
• The retention of David P. Luci as a member of the board of directors of the combined organization will provide additional industry experience to supplement that of the existing PLx board of directors.

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Each of the boards of directors of Dipexium and PLx also considered other reasons for the merger, as described herein. For example, the board of directors of Dipexium considered, among other things:

• the unsuccessful results of the most recent clinical trials with Locilex® (pexiganan cream 0.8%);
• the strategic alternatives of Dipexium to the merger, including licensing opportunities and discussions that Dipexium management and the Dipexium board of directors previously conducted with other potential merger partners;
• the risks associated with, and uncertain value and costs to stockholders of, liquidating Dipexium;
• the risks of continuing to operate Dipexium on a stand-alone basis, including the need to rebuild infrastructure and management to continue its operations; and
• the opportunity as a result of the merger for Dipexium stockholders to participate in the value of the PLx product candidate portfolio.

In addition, the board of directors of PLx approved the merger based on a number of factors, including the following:

• the potential for increased access to sources of capital and a broader range of investors to support the clinical development of its clinical stage products than it could otherwise obtain if it continued to operate as a privately held company;
• the potential to provide its current stockholders with greater liquidity by owning stock in a public company;
• the board of directors’ belief that no alternatives to the merger were reasonably likely to create greater value for PLx’s stockholders after reviewing the various strategic options to enhance stockholder value that were considered by PLx’s board of directors;
• the cash resources of the combined organization expected to be available at the closing of the merger; and
• the expectation that the merger will be treated as a reorganization for U.S. federal income tax purposes, with the result that the PLx stockholders will generally not recognize taxable gain or loss for U.S. federal income tax purposes.

Opinion of the Dipexium Financial Advisor (see page 77 )

At the December 22, 2016 meeting of the Dipexium board of directors, representatives of Raymond James & Associates, Inc. (“Raymond James”) rendered Raymond James’ oral opinion, which was subsequently confirmed by delivery of a written opinion to Dipexium’s board of directors dated December 22, 2016, as to the fairness, as of such date, from a financial point of view, to the holders of Dipexium’s outstanding common stock of the consideration to be received by such holders in the merger pursuant to the Merger Agreement, based upon and subject to the qualifications, assumptions and other matters considered and described in connection with the preparation of its opinion.

The full text of the written opinion of Raymond James, dated December 22, 2016, which sets forth, among other things, the various qualifications, assumptions and limitations on the scope of the review undertaken, is attached as Annex B to this document. Raymond James provided its opinion for the information and assistance of the Dipexium board of directors (solely in each director’s capacity as such) in connection with, and for purposes of, its consideration of the merger and its opinion only addresses whether the consideration to be received by the holders of Dipexium’s outstanding common stock in the merger pursuant to the Merger Agreement and was fair, from a financial point of view, to such holders. The opinion of Raymond James did not address any other term or aspect of the Merger Agreement or the transactions contemplated thereby. The Raymond James opinion does not constitute a recommendation to Dipexium’s board of directors or any holder of Dipexium common stock as to how the Dipexium board of directors, such stockholder or any other person should vote or otherwise act with respect to the merger or any other matter.

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Overview of the Merger Agreement

Capitalized terms used in this section, but not otherwise defined shall have the meaning ascribed to such term in the Merger Agreement.

Merger Consideration and Adjustment (see page 98 )

At the Merger Effective Time:

• each share of PLx common stock outstanding immediately prior to the Merger Effective Time will automatically be converted into the right to receive a number of shares of Dipexium common stock at a rate per share equal to the Equity Exchange Ratio; and
• each option to purchase shares of PLx common stock outstanding and unexercised immediately prior to the Merger Effective Time will be assumed by Dipexium and will become an option to purchase shares of Dipexium common stock, with the number of shares and exercise price being adjusted by the Equity Exchange Ratio.

Based on shares of Dipexium and PLx capital stock anticipated to be outstanding as of the closing of the merger, assuming no future issuances of Dipexium capital stock prior to the closing of the merger and assuming that Dipexium’s cash at closing reaches the applicable target, subject to adjustment to account for the reverse stock split and for the payment of cash in lieu of fractional shares, the exchange ratio in the merger would be within the range of approximately 6.25 – 6.52. As a result, following the completion of the merger, PLx’s stockholders would own in the aggregate approximately 76.1% of the combined organization’s outstanding common stock (assuming full exercise of outstanding options, whether vested or unvested) and Dipexium’s stockholders would own in the aggregate approximately 23.9% of the combined organization’s outstanding common stock (assuming full exercise of outstanding options, whether vested or unvested).

For illustrative purposes only, assuming Dipexium’s net cash is determined to be greater than or equal to $12.5 million, the Equity Exchange Ratio for the PLx common stock would be approximately 6.2452 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 624 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares. Assuming Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the Equity Exchange Ratio for the PLx common stock would be approximately 6.5165 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 651 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares.

The Merger Agreement does not include a price-based termination right, and there will be no adjustment to the Equity Exchange Ratio (or, as a result, the number of shares of Dipexium common stock that PLx stockholders will be entitled to receive) due to changes in the market price of Dipexium common stock. Accordingly, the market value of the shares of Dipexium common stock issued pursuant to the merger will depend on the market value of the shares of Dipexium common stock at the time the merger closes, and could vary significantly from the market value on the date of this joint proxy statement/prospectus.

Treatment of PLx Stock Options (see page 92 )

At the Merger Effective Time, each outstanding option, whether or not vested, to purchase shares of PLx common stock unexercised immediately prior to the Merger Effective Time will be converted into an option to purchase shares of Dipexium common stock. All rights with respect to each PLx option or warrant will be assumed by Dipexium in accordance with its terms. Accordingly, from and after the Merger Effective Time each option assumed by Dipexium may be exercised solely for shares of Dipexium common stock.

The number of shares of Dipexium common stock subject to each outstanding PLx option assumed by Dipexium will be determined by multiplying the number of shares of PLx common stock that were subject to such option by the Equity Exchange Ratio and rounding the resulting number up to the nearest whole number of shares of Dipexium common stock. The per share exercise price for the shares of Dipexium common stock issuable upon exercise of each PLx option assumed by Dipexium will be determined by dividing the per share

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exercise price of PLx common stock subject to such option by the Equity Exchange Ratio and rounding the resulting exercise price up to the nearest whole cent. Any restriction on the exercise of any option will continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such option will, subject to certain exceptions set forth in the Merger Agreement, otherwise remain unchanged.

Conditions to Completion of the Merger (see page 111 )

To complete the merger, Dipexium stockholders must approve the issuance of shares of Dipexium common stock to PLx stockholders by virtue of the merger, and, if deemed necessary, the amended and restated certificate of incorporation of Dipexium effecting the proposed reverse stock split, and an amendment to the amended and restated certificate of incorporation effecting a change of the Dipexium name to “PLx Pharma Inc.” and increasing the number of authorized shares of Dipexium. Additionally, the PLx stockholders must approve the merger and adopt the Merger Agreement. In addition to such stockholder approvals and appropriate regulatory approvals, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived.

No Solicitation

The Merger Agreement contains provisions prohibiting Dipexium and PLx from seeking a competing transaction, subject to specified exceptions described in the Merger Agreement. Under these “no solicitation” provisions, each of Dipexium and PLx has agreed that neither it nor its subsidiaries, nor any of its officers, directors, employees, consultants, advisors, agents or other representatives will directly or indirectly:

• initiate, solicit, facilitate or knowingly encourage (including by way of furnishing or affording access to information) or take any other action that promotes, directly or indirectly, or may reasonably cause, any inquiries or the making of any proposal or offer with respect to, proposals or offers that constitute or may reasonably be expected to lead to any competing proposal;
• participate or engage in any discussions or negotiations regarding, or otherwise cooperate in any way with, or assist or participate in, knowingly encourage or otherwise facilitate, any effort or attempt by any other person (other than PLx, or Dipexium, as applicable and their affiliates) to make or complete a competing proposal;
• enter into any letter of intent, agreement in principle or other similar type of agreement relating to a competing proposal, or enter into any agreement or agreement in principle requiring either Dipexium or PLx, as the case may be, to abandon, terminate or fail to complete the merger; or
• resolve, propose or agree to do any of the foregoing.

Termination of the Merger Agreement (see page 113 )

Either Dipexium or PLx can terminate the Merger Agreement under certain circumstances, which would prevent the merger from being completed.

Termination Fee (see page 114 )

The Merger Agreement provides that, upon termination of the Merger Agreement under specified circumstances, Dipexium may be required to pay PLx a termination fee of $700,000, or PLx may be required to pay Dipexium a termination fee of $500,000.

Voting Agreements (see page 116 )

In connection with the execution of the Merger Agreement, certain stockholders of PLx entered into voting agreements with Dipexium and PLx under which such stockholders have agreed to vote in favor of the merger and against any alternative acquisition proposal, agreement or transaction. As of December 31, 2016, these entities collectively beneficially own or control approximately 35% of the voting power of PLx. These voting agreements grant Dipexium irrevocable proxies to vote or give consent with respect to any shares of PLx stock over which such stockholder has voting power in favor of each of the PLx proposals described elsewhere in this joint proxy statement/prospectus and against any alternative acquisition proposal, agreement or transaction.

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In connection with the execution of the Merger Agreement, certain stockholders of Dipexium, who collectively beneficially own or control approximately 33% of Dipexium’s outstanding common stock as of December 31, 2016, also entered into voting agreements with Dipexium and PLx under which such stockholder has agreed to vote in favor of the Dipexium proposals that relate to the merger described elsewhere in this joint proxy statement/prospectus and against any alternative acquisition proposal, agreement or transaction. Each of these voting agreements grant PLx irrevocable proxies to vote any shares of Dipexium stock over which such stockholder has voting power in favor of each of the Dipexium proposals described elsewhere in this joint proxy statement/prospectus and against any alternative acquisition proposal, agreement or transaction.

Each stockholder executing a voting agreement has made representations and warranties to Dipexium and PLx regarding ownership and unencumbered title to the shares thereto, such stockholder’s power and authority to execute the voting agreement, and due execution and enforceability of the voting agreement. Unless otherwise waived, all of these voting agreements prohibit the sale, assignment, transfer or other disposition by the stockholder of their respective shares of Dipexium or PLx stock, or the entrance into an agreement or commitment to do any of the foregoing, except for transfers by will or by operation of law, in which case the voting agreement will bind the transferee. Each stockholder executing a voting agreement has also waived its statutory appraisal rights in connection with the merger.

The voting agreements will terminate at the earlier of the Merger Effective Time, termination of the Merger Agreement in accordance with its terms or upon mutual written consent of such stockholder, Dipexium and PLx.

Lock-up Agreements (see page 117 )

As a condition to the closing of the merger, certain PLx stockholders representing approximately 62% of the voting power of PLx on an as-converted to common stock basis have entered lock-up agreements, pursuant to which the stockholders have agreed not to, except in limited circumstances, sell, assign, transfer, tender, or otherwise dispose of, any PLx securities and shares of Dipexium common stock, including, as applicable, shares received in the merger and issuable upon exercise of certain options, from the Merger Effective Time until 120 days after the closing date of the merger.

In addition, as a condition to the closing of the merger, certain Dipexium stockholders representing approximately 36% of the voting power of Dipexium have entered lock-up agreements, pursuant to which the stockholders have agreed not to, except in limited circumstances, sell, assign, transfer, tender, or otherwise dispose of, any shares of Dipexium common stock, including, as applicable, shares issuable upon exercise of certain options, from the Merger Effective Time until 120 days after the closing date of the merger.

Bridge Loan (see page 116 )

In connection with the execution of the Merger Agreement, on January 6, 2017, Dipexium made a secured loan in the amount of $2.0 million to PLx to be used for certain pre-defined Aspertec development activities and other actions or items as may be determined in advance by mutual written agreement of Dipexium and PLx. The interest rate on the loan is 8.0% per annum.

Management Following the Merger (see page 129 )

Effective as of the closing of the merger, Dipexium’s executive officers are expected to be:

Name Title
Michael J. Valentino Executive Chairman
Natasha Giordano President and Chief Executive Officer
David E. Jorden Acting Chief Financial Officer
Gary Mossman Chief Operating Officer

Interests of Certain Directors, Officers and Affiliates of Dipexium and PLx (see pages 87 and 91 )

In considering the recommendation of the Dipexium board of directors with respect to issuing shares of Dipexium common stock pursuant to the Merger Agreement and the other matters to be acted upon by Dipexium stockholders at the Dipexium annual meeting, Dipexium stockholders should be aware that certain

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members of the Dipexium board of directors and executive officers of Dipexium have interests in the merger that may be different from, or in addition to, interests they have as Dipexium stockholders. For example, Dipexium has entered into certain employment agreements with its executive officers that may result in the receipt by such executive officers of cash severance payments and other benefits with a total value of approximately $2.37 million (collectively, not individually, and excluding the value of any accelerated vesting of stock options). In addition, the closing of the merger will result in the acceleration of vesting of stock options to purchase approximately 120,260 shares of Dipexium common stock held by the Dipexium executive officers and directors, before giving effect to the proposed reverse stock split, and assuming no continuation of employment with the combined organization by the current executive officers of Dipexium. In addition, David P. Luci, a current director of Dipexium has been designated to serve on the board of directors of the combined organization following the completion of the merger.

Certain Dipexium officers and directors, and their affiliates, also entered into voting agreements in connection with the merger. The voting agreements are discussed in greater detail in the section entitled “Agreements Related to the Merger — Voting Agreements” beginning on page 116 .

In considering the recommendation of the PLx board of directors with respect to consenting to the adoption of the Merger Agreement and the approval of the merger and related transactions, PLx stockholders should be aware that certain members of the board of directors and executive officers of PLx have interests in the merger that may be different from, or in addition to, interests they have as PLx stockholders. For example, PLx’s executive officers have options to purchase shares of PLx common stock that will be converted into options to purchase shares of Dipexium common stock, and certain of PLx’s directors and executive officers are expected to become directors and executive officers of the combined organization upon the closing of the merger. Specifically, Michael J. Valentino, Natasha Giordano, David E. Jorden and Gary Mossman, all currently executive officers of PLx, are expected to become executive officers of the combined organization upon the closing of the merger, with Mr. Valentino serving as the Executive Chairman, Ms. Giordano serving as the President and Chief Executive Officer, Mr. Jorden serving as the Chief Financial Officer and Mr. Mossman serving as the Chief Operating Officer. Together with Mr. Valentino and Ms. Giordano, Gary Balkema, Robert Casale, Kirk Calhoun and John W. Hadden II, all currently directors of PLx, have been designated to serve on the board of directors of the combined organization following the completion of the merger. Certain PLx officers, directors and significant shareholders also entered into voting agreements in connection with the merger. The voting agreements are discussed in greater detail in the section entitled “Agreements Related to the Merger — Voting Agreements” beginning on page 116 .

Material U.S. Federal Income Tax Consequences of the Merger (see page 94 )

Each of Dipexium and PLx intends the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. Assuming the merger qualifies as a reorganization under the Code, then, in general, the material tax consequences to U.S. Holders (as defined herein) of PLx common stock will be as follows:

• a PLx stockholder will not recognize gain or loss upon the exchange of PLx common stock for Dipexium common stock pursuant to the merger, except to the extent of cash received in lieu of a fractional share of Dipexium common stock as described below;
• a PLx stockholder who receives cash in lieu of a fractional share of Dipexium common stock in the merger will generally recognize capital gain or loss in an amount equal to the difference between the amount of cash received instead of a fractional share and the stockholder’s tax basis allocable to such fractional share;
• a PLx’s stockholder’s aggregate tax basis for the shares of Dipexium common stock received in the merger (including any fractional share interest for which cash is received) will equal the stockholder’s aggregate tax basis in the shares of PLx common stock surrendered upon completion of the merger; and
• the holding period of the shares of Dipexium common stock received by a PLx stockholder in the merger will include the holding period of the shares of PLx common stock surrendered in exchange therefor.

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Since Dipexium stockholders will continue to own and hold their existing shares of Dipexium common stock following the merger, the merger generally will not result in U.S. federal income tax consequences to Dipexium stockholders.

Tax matters are very complicated, and the tax consequences of the merger to a particular PLx stockholder will depend on such stockholder’s circumstances. Accordingly, you should consult your tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability and effect of federal, state, local and foreign income and other tax laws. For more information, please see the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger to Holders of PLx Common Stock” beginning on page 94 .

Risk Factors (see page 26 )

Both Dipexium and PLx are subject to various risks associated with their businesses and their industries. In addition, the merger, including the possibility that the merger may not be completed, poses a number of risks to each company and its respective stockholders, including the following risks:

• The market price of Dipexium common stock following the completion of the merger may decline as a result of the transaction;
• Dipexium and PLx stockholders may not realize a benefit from the proposed merger commensurate with the ownership dilution they will experience in connection with the merger;
• Failure to complete the proposed merger may adversely affect the common stock price of Dipexium and future business and operations of Dipexium and PLx;
• The anticipated benefits of the merger may not be realized;
• During the pendency of the merger, Dipexium and PLx 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;
• Provisions of the Merger Agreement may discourage third parties from submitting alternative acquisition proposals, including proposals that may be superior to the proposed merger;
• The lack of a public market for PLx shares makes it difficult to determine the fair value of PLx, and the merger consideration to be issued to PLx stockholders may exceed the actual value of PLx;
• Dipexium and PLx will incur substantial transaction-related costs in connection with the proposed merger;
• A failure by Dipexium to comply with the initial listing standards of The NASDAQ Capital Market may subject its stock to delisting from The NASDAQ Capital Market, which listing is a condition to the completion of the merger;
• Dipexium and PLx may become involved in securities class action litigation that could divert management’s attention and harm the combined organization’s business and insurance coverage may not be sufficient to cover all costs and damages;
• Dipexium may not be able to complete the proposed merger and may elect to pursue another strategic transaction similar to the proposed merger, which may not occur on commercially reasonably terms or at all;
• If the proposed merger is not completed, Dipexium may elect to liquidate its remaining assets, and there can be no assurances as to the amount of cash available to distribute to stockholders after paying its debts and other obligations; and
• If the proposed merger is not completed, and Dipexium fails to acquire or develop other products or product candidates on commercially reasonable terms, or at all, Dipexium may be unable to reestablish a viable operating business.

These risks and other risks are discussed in greater detail under the section entitled “Risk Factors” beginning on page 26 . Dipexium and PLx both encourage you to read and consider all of these risks carefully.

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Regulatory Approvals (see page 93 )

Dipexium must comply with applicable federal and state securities laws and the rules and regulations of The NASDAQ Capital Market in connection with the issuance of shares of Dipexium common stock and the filing of this joint proxy statement/prospectus with the SEC. As of the date hereof, the registration statement of which this joint proxy statement/prospectus is a part has not become effective.

NASDAQ Stock Market Listing (see page 96 )

Dipexium has submitted an initial listing application with The NASDAQ Capital Market pursuant to NASDAQ Stock Market LLC “reverse merger” rules. If such application is accepted, Dipexium anticipates that Dipexium’s common stock will be listed on The NASDAQ Capital Market following the closing of the merger under the trading symbol “PLXP.”

Anticipated Accounting Treatment (see page 97 )

The merger will be treated by Dipexium as reverse acquisition business combination, using the acquisition method of accounting in accordance with accounting principles generally accepted in the United States. For accounting purposes, PLx is considered to be acquiring Dipexium in the merger.

Appraisal Rights and Dissenters’ Rights (see page 97 )

Under the DGCL, holders of Dipexium common stock are not entitled to appraisal rights in connection with the merger.

Under the DGCL, holders of PLx capital stock who do not vote for the adoption and approval of the Merger Agreement and to approve the merger have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery if the merger is completed, but only if they comply with all requirements of Delaware law, which are summarized in this joint proxy statement/prospectus. This appraisal amount could be more than, the same as, or less than the amount a PLx stockholder would be entitled to receive under the Merger Agreement. Any holder of PLx capital stock intending to exercise appraisal rights must, among other things, submit a written demand for appraisal to PLx prior to the vote on the adoption and approval of the Merger Agreement and to approve the merger, not vote or otherwise submit a proxy in favor of adoption and approval of the Merger Agreement and to approve the merger and not submit a letter of transmittal. Failure to follow exactly the procedures specified under Delaware law will result in the loss of appraisal rights. Because of the complexity of the Delaware law relating to appraisal rights, if you are considering exercising your appraisal rights, you are encouraged to seek the advice of your own legal counsel. A copy of Section 262 of the DGCL is also included as Annex C to this joint proxy statement/prospectus.

Comparison of Stockholder Rights (see page 218 )

Both Dipexium and PLx are incorporated under the laws of the State of Delaware and, accordingly, the rights of the stockholders of each are currently, and will continue to be, governed by the DGCL. If the merger is completed, PLx stockholders will become stockholders of Dipexium, and their rights will be governed by the DGCL, the bylaws of Dipexium and, assuming Dipexium Proposal No. 2 is approved by Dipexium stockholders at the Dipexium annual stockholders meeting, the amended and restated certificate of incorporation of Dipexium attached to this joint proxy statement/prospectus as Annex D. The rights of Dipexium stockholders contained in the amended and restated certificate of incorporation and bylaws of Dipexium differ from the rights of PLx stockholders under the amended and restated certificate of incorporation and bylaws of PLx, as more fully described under the section entitled “Comparison of Rights of Holders of Dipexium Stock and PLx Stock” beginning on page 218 .

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SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL DATA

The following tables present summary historical financial data for Dipexium and PLx, summary unaudited pro forma condensed combined financial data for Dipexium and PLx, and comparative historical and unaudited pro forma per share data for Dipexium and PLx.

Selected Historical Financial Data of Dipexium

The selected financial data as of December 31, 2016 and 2015 and for the years ended December 31, 2016 and 2015 are derived from the Dipexium audited financial statements prepared using accounting principles generally accepted in the United States, which are included in this joint proxy statement/prospectus. The financial data should be read in conjunction with “Dipexium’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Dipexium financial statements and related notes appearing elsewhere in this joint proxy statement/prospectus. The historical results are not necessarily indicative of results to be expected in any future period.

Year ended December 31,
2016 2015
Statement of Operations Data:
Revenues $ — $ —
Operating Expenses
Research and Development Expenses 12,753,917 11,286,236
Selling, General and Administrative Expenses 8,613,981 7,478,527
Total Operating Expenses 21,367,898 18,764,763
Loss from Operations (21,367,898 ) (18,764,763 )
Interest Income 46,769 22,057
Net Loss $ (21,321,129 ) $ (18,742,706 )
Loss Per Share
Basic and diluted net loss per common share $ (2.06 ) $ (1.99 )
Weighted average common shares/units outstanding basic and diluted 10,365,840 9,432,705

As of December 31,
2016 2015
Balance Sheet Data:
Cash $ 16,675,228 $ 5,234,953
Short-term Investments $ — $ 26,977,362
Prepaid Expenses $ 359,015 $ 146,145
Total Current Assets $ 17,034,243 $ 32,358,460
Total Assets $ 17,090,873 $ 32,407,845
Accumulated Deficit $ (62,382,584 ) $ (41,061,455 )
Total Shareholders’ Equity $ 14,968,980 $ 30,801,538

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Selected Historical Financial Data of PLx

The selected financial data as of December 31, 2016 and 2015 and for the years ended December 31, 2016 and 2015 are derived from the PLx audited financial statements prepared using accounting principles generally accepted in the United States, which are included in this joint proxy statement/prospectus. The financial data should be read in conjunction with “PLx’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the PLx financial statements and related notes appearing elsewhere in this joint proxy statement/prospectus. The historical results are not necessarily indicative of results to be expected in any future period.

Year ended December 31,
2016 2015
Statement of Operations Data:
Revenues $ 20,000 $ 171,592
Operating Expenses
Research and Development Expenses 78,656 166,726
Selling, General and Administrative Expenses 4,752,068 1,626,001
Total Operating Expenses 4,830,724 1,792,727
Loss from Operations (4,810,724 ) (1,621,135 )
Other Income (Expense) (94,554 ) (2,028,999 )
Net Loss $ (4,905,278 ) $ (3,650,134 )
Loss Per Share
Basic and diluted net loss per common share $ (0.88 ) $ (0.67 )
Weighted average common shares outstanding – basic and diluted 5,565,823 5,428,595

As of December 31,
2016 2015
Balance Sheet Data:
Cash and Cash Equivalents $ 59,335 $ 91,657
Other Current Assets 130,519 22,510
Total Current Assets 189,854 114,167
Total Assets 616,488 544,126
Total Current Liabilities 2,735,820 229,969
Total Liabilities 2,935,820 429,969
Accumulated Deficit (51,985,517 ) (47,080,239 )
Total Shareholders’ Equity (Deficit) (2,319,332 ) 114,157

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Selected Unaudited Pro Forma Condensed Combined Financial Data of Dipexium and PLx
(In thousands, except share and per share amounts)

The following information does not give effect to the proposed reverse stock split of Dipexium common stock described in Dipexium Proposal No. 3.

The following selected unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting. For accounting purposes, PLx is considered to be acquiring Dipexium in the merger. Dipexium and PLx unaudited pro forma condensed combined balance sheet data and statement of operations data assume that the merger took place on December 31, 2016 and combines the Dipexium and PLx historical balance sheet at and for the year ended December 31, 2016.

The selected unaudited pro forma condensed combined financial data are presented for illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. The selected unaudited pro forma condensed combined financial data as of and for the year ended December 31, 2016 are derived from the unaudited pro forma condensed combined financial information and should be read in conjunction with that information. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” in this joint proxy statement/prospectus.

The unaudited pro forma condensed combined financial statements assume that, at the Merger Effective Time, each share of PLx common stock will convert into the right to receive 6.32 shares of Dipexium common stock, subject to adjustment to account for the effect of the proposed reverse stock split of Dipexium common stock to be implemented prior to the consummation of the merger.

Year ended
December 31,
2016
Unaudited Pro Forma Combined Statement of Operations Data:
Revenue $ 20,000
Expenses:
Research and development expenses 12,832,573
Selling, general and administrative expenses 12,199,022
Operating loss (25,011,595 )
Other income (expense):
Interest income (expense) 47,340
Total other income (expense), net 47,340
Net loss $ (24,964,255 )
Basic and diluted loss per common share $ (0.54 )
Basic and diluted weighted-average shares outstanding 46,505,820

As of
December 31,
2016
Unaudited Pro Forma Combined Balance Sheet Data:
Cash and equivalents $ 16,734,563
Total current assets 17,224,097
Total assets 23,173,728
Total liabilities 5,910,827
Accumulated deficit (51,505,517 )
Total shareholders’ equity 17,262,901

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Comparative Historical and Unaudited Pro Forma Per Share Data

The information below reflects the historical net income (loss) and book value per share of Dipexium common stock and the historical net loss and book value per share of PLx common stock in comparison with the unaudited pro forma net loss and book value per share after giving effect to the proposed merger of Dipexium with PLx on a purchase basis. The unaudited pro forma net loss and book value per share does not give effect to the proposed reverse stock split of Dipexium common stock described in Dipexium Proposal No. 3.

You should read the tables below in conjunction with the audited and unaudited consolidated financial statements of Dipexium included in this joint proxy statement/prospectus and the audited and unaudited financial statements of PLx included in this joint proxy statement/prospectus and the related notes and the unaudited pro forma condensed financial information and notes related to such financial statements included elsewhere in this joint proxy statement/prospectus.

DIPEXIUM

Year Ended
December 31,
2016
Historical Per Common Share Data:
Basic and diluted net loss per share $ (2.06 )
Book value per share 1.35

PLX

Year Ended
December 31,
2016
Historical Per Common Share Data:
Basic and diluted net loss per share $ (0.88 )
Book value per share $ (0.42 )

DIPEXIUM AND PLX

Year Ended
December 31,
2016
Combined organization Pro Forma Data:
Basic and diluted net loss per share $ (0.54 )
Book value per share $ 0.36

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MARKET PRICE INFORMATION

Dipexium common stock is listed on The NASDAQ Capital Market under the symbol “DPRX”. The following table presents, for the periods indicated, the range of high and low per share sales prices for Dipexium common stock as reported on The NASDAQ Capital Market for each of the periods set forth below. PLx is a private company and its common stock is not publicly traded.

Dipexium Common Stock

High Low
Year Ended December 31, 2015
First Quarter $ 15.14 $ 10.70
Second Quarter $ 15.00 $ 11.25
Third Quarter $ 17.10 $ 10.80
Fourth Quarter $ 14.66 $ 10.12
Year Ended December 31, 2016
First Quarter $ 12.23 $ 6.04
Second Quarter $ 13.20 $ 8.54
Third Quarter $ 17.75 $ 9.50
Fourth Quarter $ 15.84 $ 1.15
Year Ended December 31, 2017
First Quarter (through February 24, 2017) $ 1.75 $ 1.05

The closing price of Dipexium common stock on December 21, 2016, the last trading day prior to the public announcement of the merger, was $1.60 per share and the closing price of Dipexium common stock on February 24, 2017 was $1.20 per share, in each case as reported on The NASDAQ Capital Market.

Because the market price of Dipexium common stock is subject to fluctuation, the market value of the shares of Dipexium common stock that PLx stockholders will be entitled to receive in the merger may increase or decrease.

Assuming approval of Dipexium Proposal No. 2 and successful application for initial listing with The NASDAQ Capital Select Market, following the completion of the merger, Dipexium common stock will be listed on The NASDAQ Capital Market and will trade under Dipexium’s new name, “PLx Pharma Inc.” and new trading symbol, “PLXP.”

As of [•], 2017, the record date for the Dipexium annual stockholders meeting, Dipexium had approximately [•] holders of record of its common stock. As of [•], 2017, the record date for PLx’s annual stockholders meeting, PLx had approximately [•] holders of record of its common stock.

Dividends

Dipexium has never paid or declared any cash dividends on its common stock. Dipexium does not anticipate paying periodic cash dividends on its common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay dividends subsequent to the merger will be at the discretion of Dipexium’s then-current board of directors and will depend upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors Dipexium’s then-current board of directors deems relevant.

PLx has never paid or declared any cash dividends on its common stock. If the merger does not occur, PLx does not anticipate paying any cash dividends on its common stock in the foreseeable future, and PLx intends to retain all available funds and any future earnings to fund the development and expansion of its business. Any future determination to pay dividends will be at the discretion of PLx’s board of directors and will depended upon a number of factors, including its results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors PLx’s then-current board of directors deems relevant.

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Securities Authorized for Issuance under Equity Compensation Plans

The following table indicates shares of common stock authorized for issuance under Dipexium’s 2013 Equity Incentive Plan as of December 31, 2016:

Plan category Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
unvested
common shares
Weighted-average
exercise price of
outstanding
options,
warrants and
unvested
Number of
securities
remaining
available for
future issuance
Equity compensation plans approved by security holders 1,445,013 $ 12.64 696,156
Equity compensation plans not approved by security holders — — —
Total 1,445,013 $ 12.64 696,156

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RISK FACTORS

The combined organization 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 joint proxy statement/prospectus, stockholders of Dipexium and PLx should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with the business of Dipexium because these risks may also affect the combined organization — these risks can be found in Dipexium’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 joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” in this joint proxy statement/prospectus.

Risks Related to the Merger

The Equity Exchange Ratio in the Merger Agreement is subject to adjustment based on Dipexium’s cash as of a determination date prior to completion of the merger, which could dilute further the ownership of Dipexium’s stockholders in the combined organization.

Subject to the terms and conditions of the Merger Agreement, at the Merger Effective Time and as a result of the merger, each share of PLx capital stock issued and outstanding immediately prior to the Merger Effective Time will be converted into the right to receive that number of shares of Dipexium’s common stock, if any, as determined pursuant to the Equity Exchange Ratio described in the Merger Agreement. The Equity Exchange Ratio is subject to potential adjustment as described in the Merger Agreement depending upon the amount of Dipexium’s “cash,” as defined in the Merger Agreement and generally consisting of Dipexium’s cash and cash equivalents including certain credits for deal-related expenses and security deposits, as of a determination date prior to the closing date of the merger. If Dipexium has $12.5 million or more of cash as of the determination date, then the percentage ownership of Dipexium’s current stockholders will be 23.25% in the combined organization. If Dipexium has less than $12.5 million of cash as of the determination date but more than $12.0 million, then the percentage ownership of Dipexium’s current stockholders will be 22.5% of the combined organization, which would constitute further dilution for Dipexium’s stockholders in the combined organization. In addition, one of the conditions to PLx’s obligations to complete the merger is Dipexium’s cash as of the closing date being no less than $12.0 million as calculated and as adjusted pursuant to the provisions of the Merger Agreement. The items that will constitute Dipexium’s cash at the determination date set forth in the Merger Agreement are subject to a number of factors, some of which are outside Dipexium’s control and many of which are outside the control of PLx.

Dipexium and PLx estimate that, assuming no additional issuance of common stock, Dipexium will have 11,129,747 shares of common stock outstanding immediately prior to the merger. Dipexium and PLx also expect that, assuming the conversion of an estimated $2,485,860 of convertible bridge notes outstanding including accrued interest as of March 31, 2017, PLx will have an aggregate of 5,882,897 shares of common stock outstanding immediately prior to the merger. If the share numbers and the underlying assumptions outlined above are accurate, and assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, PLx stockholders as of the Merger Effective Time will be entitled to receive a maximum of 44,056,387 shares of Dipexium common stock on a fully diluted basis, which includes 5,720,592 shares of common stock underlying options, and each outstanding share of PLx common stock will be converted into the right to receive 6.5165 shares of Dipexium common stock as a result of the merger. Assuming that Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the total number of shares of Dipexium common stock outstanding after the merger would be 57,319,479 on a fully diluted basis. If the number of shares of outstanding common stock of Dipexium or PLx differs from the amounts set forth above, the exchange ratio will be modified and the number of shares of Dipexium common stock to which holders of PLx’s common stock are entitled may be greater or less.

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Failure to complete the merger could negatively impact Dipexium’s business, financial condition or results of operations or the trading price of Dipexium common stock.

The completion of the merger is subject to a number of conditions and there can be no assurance that the conditions to the completion of the merger will be satisfied. If the merger is not completed, Dipexium will be subject to several risks, including:

• the current trading price of Dipexium common stock may reflect a market assumption that the merger will occur, meaning that a failure to complete the merger could result in a decline in the trading price of Dipexium common stock;
• certain executive officers and/or directors of Dipexium may seek other employment opportunities, and the departure of any of Dipexium’s executive officers and the possibility that the company would be unable to recruit and hire an executive could impact negatively Dipexium’s business and operating results;
• the Dipexium board of directors will need to reevaluate Dipexium’s strategic alternatives, which alternatives may include a sale of the company, liquidation of the company or other strategic transaction;
• Dipexium may be required to pay a termination fee of $700,000 to PLx if the merger agreement is terminated by PLx or Dipexium under certain circumstances;
• Dipexium has incurred and is expected to continue to incur substantial transaction costs in connection with the merger whether or not the merger is completed;
• Dipexium would not realize any of the anticipated benefits of having completed the merger; and
• Pursuant to the merger agreement, Dipexium is subject to certain restrictions on the conduct of its business prior to completion of the merger, which restrictions could adversely affect its ability to realize certain of its business strategies or take advantage of certain business opportunities.

If the merger is not completed, these risks may materialize and affect materially and adversely Dipexium’s business, financial condition, results of operations, or the trading price of Dipexium common stock.

Because PLx stockholders will receive a fixed number of shares of Dipexium common stock in the merger, rather than a fixed value, if the market price of Dipexium common stock declines, PLx stockholders will receive consideration in the merger of lesser value, and if the market price of Dipexium common stock increases, Dipexium will pay consideration in the merger of greater value.

The aggregate number of shares of Dipexium common stock to be issued to PLx stockholders will be fixed based on the Equity Exchange Ratio calculations set forth in the Merger Agreement. For illustrative purposes only, assuming Dipexium’s net cash is determined to be greater than or equal to $12.5 million, the Equity Exchange Ratio for the PLx common stock would be approximately 6.2452 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 624 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares. Assuming Dipexium’s net cash is determined to be greater than or equal to $12 million but less than $12.5 million, the Equity Exchange Ratio for the PLx common stock would be approximately 6.5165 shares of Dipexium common stock for each share of PLx common stock. Therefore, if the merger is consummated based on such calculation and you owned 100 shares of PLx common stock at the Merger Effective Time, you would have the right to receive 651 shares of Dipexium common stock in exchange for your PLx common stock plus cash in lieu of fractional shares. Accordingly, the aggregate number of shares that PLx stockholders will receive in the merger will not change after Dipexium’s cash is determined, even if the market price of Dipexium common stock changes. In recent years, the stock market in general, and the securities of biotechnology companies in particular, have experienced extreme price and volume fluctuations. These market fluctuations may adversely affect the market price of Dipexium’s common stock.

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Dipexium’s stockholders and the stockholders of PLx may not approve the merger of the two companies.

Dipexium has signed a Merger Agreement with PLx, pursuant to which Dipexium has agreed to merge with PLx subject to among other closing conditions, the approval of the stockholders of both companies. Although Dipexium believes the merger is in the best interests of Dipexium and its stockholders, one or both companies may not be able to obtain the stockholder vote required to approve the merger. If Dipexium’s stockholders or the stockholders of PLx do not approve the merger, Dipexium will pursue other strategic alternatives or potentially pursue a dissolution of Dipexium.

Dipexium stockholders must approve all of the Merger Proposals to consummate the merger.

Each of the Merger Proposals is conditioned upon the approval of all of the other Merger Proposals and the approval of each Merger Proposal is a condition to completion of the merger. Neither the issuance of Dipexium common stock in connection with the merger nor the amendment to Dipexium’s amended and restated certificate of incorporation to increase the number of authorized shares of common stock and effect the name change will take place unless all of the Merger Proposals are approved by the Dipexium stockholders and the merger is completed. Therefore, the completion of the merger cannot proceed without the approval of each of the Merger Proposals.

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 Dipexium or PLx can refuse to complete the merger in the event that certain circumstances occur between December 22, 2016, 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 Dipexium or PLx, including:

• changes, developments or conditions in or relating to general international, political, economic or financial or capital market conditions, or political, economic or financial or capital market conditions in any jurisdiction in which such Party or any of its Subsidiaries operates or carries on business;
• changes, developments or conditions resulting from any act of sabotage or terrorism or any outbreak of hostilities or declared or undeclared war, or any escalation or worsening of such acts of sabotage, terrorism, hostilities or war;
• any natural disaster;
• changes or developments in or relating to currency exchange or interest rates;
• changes or developments affecting the pharmaceutical industry in general;
• any change in applicable laws (other than orders against a party or a subsidiary thereof) or U.S. GAAP;
• except for purposes of Sections 3.1(c), 3.1(d), 3.2(c) and 3.2(d) of the Merger Agreement, the announcement of the execution of the Merger Agreement or the transactions contemplated thereby;
• any actions taken (or omitted to be taken) by Dipexium or PLx upon the express written request of the other;
• any of the matters described in Section 1.1 of the Dipexium and PLx disclosure letters; or
• (A) any changes in the share price or trading volume of Dipexium shares of common stock or the credit rating or in any analyst’s recommendation with respect to Dipexium, or (B) any failure of Dipexium to meet projections, guidance, milestones, forecasts or published financial or operating predictions or measures.

If adverse changes occur and Dipexium and PLx still complete the merger, the combined organization stock price may suffer. This in turn may reduce the value of the merger to the stockholders of Dipexium, PLx or both.

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Some Dipexium and PLx officers and directors 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.

When considering the recommendations by the Dipexium board of directors and the PLx board of directors that the Dipexium stockholders vote “for” each of the proposals being submitted to the Dipexium stockholders at the annual meeting of Dipexium stockholders and the PLx stockholders vote “for” each of he proposals being submitted to the PLx stockholders at the special meeting of PLx stockholders, respectively, the Dipexium stockholders and PLx stockholders should be aware that certain of the directors and executive officers of Dipexium and PLx have arrangements that provide them with interests in the merger that are different from, or in addition to, those of the stockholders of Dipexium and PLx, respectively. For instance, in connection with the merger, David Luci, Dipexium’s President and CEO and a current member of the Dipexium board of directors, will continue to serve as a director of the combined organization following completion of the merger and will receive cash and equity compensation in consideration for such service. The employment of Dipexium’s three executive officers will terminate immediately following completion of the merger and they will be entitled to receive severance cash payments ranging from $213,000 to $1,238,000, and other severance benefits such as continuing health insurance, in connection with such termination. The directors and executive officers of Dipexium also have certain rights to indemnification and to directors’ and officers’ liability insurance that will be provided by the combined organization following completion of the merger. The board of directors of Dipexium was aware of these potential interests and considered them in making its recommendations to approve the proposals being submitted to the Dipexium stockholders at the annual meeting of Dipexium stockholders.

In considering the recommendation of the PLx board of directors with respect to consenting to the adoption of the Merger Agreement and the approval of the merger and related transactions, PLx stockholders should be aware that certain members of the board of directors and executive officers of PLx have interests in the merger that may be different from, or in addition to, interests they have as PLx stockholders. For example, PLx’s executive officers have options to purchase shares of PLx common stock that will be converted into options to purchase shares of Dipexium common stock, and certain of PLx’s directors and executive officers are expected to become directors and executive officers of the combined organization upon the closing of the merger. Specifically, Michael J. Valentino, Natasha Giordano, David E. Jorden and Gary Mossman, all currently executive officers of PLx, are expected to become executive officers of the combined organization upon the closing of the merger, with Mr. Valentino serving as the Executive Chairman, Ms. Giordano serving as the President and Chief Executive Officer, Mr. Jorden serving as the Chief Financial Officer and Mr. Mossman serving as the Chief Operating Officer. Together with Mr. Valentino and Ms. Giordano, Mssrs. Balkema, Casale, Calhoun and Hadden, all currently directors of PLx, have been designated to serve on the board of directors of the combined organization following the completion of the merger. Certain PLx officers, directors and significant shareholders also entered into voting agreements in connection with the merger. The voting agreements are discussed in greater detail in the section entitled “Agreements Related to the Merger — Voting Agreements” beginning on page 116 .

The market price of Dipexium common stock following the merger may decline as a result of the merger.

The market price of Dipexium common stock may decline as a result of the merger for a number of reasons, including if:

• investors react negatively to the prospects of the combined organization’s business and prospects from the merger;
• third parties may seek to terminate and/or renegotiate their relationships with Dipexium as a result of the merger, whether pursuant to the terms of their existing agreements with Dipexium or otherwise;
• the effect of the merger on the combined organization’s business and prospects is not consistent with the expectations of financial or industry analysts; or
• the combined organization does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts.

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The issuance of shares of Dipexium common stock to PLx stockholders in connection with the merger will dilute substantially the voting power of current Dipexium stockholders.

Pursuant to the terms of the Merger Agreement, it is anticipated that Dipexium will issue shares of its common stock to PLx stockholders representing 76.75% of the outstanding shares of common stock of the combined organization as of immediately following completion of the merger, assuming Dipexium’s cash is $12.5 million as of the determination date. After such issuance, the shares of Dipexium common stock outstanding immediately prior to completion of the merger will represent 23.25% of the outstanding shares of common stock of the combined organization as of immediately following completion of the merger. These ownership percentages may change depending upon the amount of Dipexium’s cash as of a determination date prior to completion of the merger. Accordingly, the issuance of shares of Dipexium common stock to PLx stockholders in connection with the merger will reduce significantly the relative voting power of each share of Dipxium’s common stock held by its current stockholders. Consequently, Dipexium’s stockholders as a group will have significantly less influence over the management and policies of the combined organization after the merger than prior to the merger.

The success of the merger will depend, in large part, on the ability of the combined organization following completion of the merger to realize the anticipated benefits from combining the businesses of Dipexium and PLx.

The merger involves the integration of two companies that previously have operated independently with principal offices in two distinct locations. Significant management attention and resources will be required to integrate the two companies after completion of the merger. The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in the combined organization’s failure to achieve some or all of the anticipated benefits of the merger.

Potential difficulties that may be encountered in the integration process include the following:

• using the combined organization’s cash and other assets efficiently to develop the business of the combined organization;
• appropriately managing the liabilities of the combined organization;
• potential unknown or currently unquantifiable liabilities associated with the merger and the operations of the combined organization;
• potential unknown and unforeseen expenses, delays or regulatory conditions associated with the merger; and
• performance shortfalls at one or both of the companies as a result of the diversion of management’s attention caused by completing the merger and integrating the companies’ operations.

Delays in the integration process could adversely affect the combined organization’s business, financial results, financial condition and stock price following the merger. Even if the combined organization were able to integrate the business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, innovation and operational efficiencies that may be possible from this integration and that these benefits will be achieved within a reasonable period of time.

During the pendency of the merger, Dipexium and PLx 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 Dipexium and PLx to make acquisitions, subject to certain exceptions relating to fiduciaries duties, as set forth below, 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. Any such transactions could be favorable to such party’s stockholders.

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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 Dipexium and PLx from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when Dipexium’s board of directors determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to lead to a superior takeover proposal and is reasonably capable of being consummated and that failure to cooperate with the proponent of the proposal could reasonably be considered a breach of the Dipexium board of directors’ fiduciary duties. The PLx board of directors is not permitted under any circumstances to solicit alternative takeover proposals or cooperate with any person making unsolicited takeover proposals. In addition, if Dipexium or PLx terminate the Merger Agreement under certain circumstances, Dipexium or PLx would be required to pay a termination fee of $700,000 or $500,000, respectively, to the other party. This termination fee may discourage third parties from submitting alternative takeover proposals to Dipexium or PLx or their stockholders, 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 shares of PLx capital stock makes it difficult to evaluate the fairness of the merger, PLx stockholders may receive consideration in the merger that is greater than the fair value of the shares of capital stock of PLx.

PLx is privately held and its outstanding capital stock is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair value of PLx or its shares of capital stock. Since the percentage of PLx’s equity to be issued to the PLx stockholders was determined based on negotiations between the parties, it is possible that the value of the Dipexium common stock to be issued in connection with the merger will be greater than the fair value of PLx.

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

Even if the merger is approved by the stockholders of Dipexium and PLX, 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 joint proxy statement/prospectus. Dipexium and PLx cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the merger will not occur or will be delayed, and Dipexium and PLx each may lose some or all of the intended benefits of the merger.

The Equity Exchange Ratio is not adjustable based on issuances by Dipexium of additional shares of Dipexium common stock either upon the exercise of options or warrants or otherwise, which issuances would result in additional dilution to the Dipexium stockholders.

As of December 31, 2016, Dipexium had outstanding options to purchase an aggregate of approximately 1,445,013 million shares of Dipexium common stock and warrants to purchase an aggregate of approximately 10,500 shares of Dipexium common stock. Dipexium is not prohibited under the terms of the merger agreement from issuing additional equity securities under certain circumstances, including securities issued pursuant to the exercise of outstanding options or warrants or to certain vendors or suppliers. It is possible that prior to completion of the merger, Dipexium may issue additional equity securities, which would result in additional dilution to Dipexium stockholders.

Because the merger will be completed after the date of Dipexium’s annual meeting of stockholders, it is possible under certain limited circumstances described below that at the time of the annual meeting, Dipexium stockholders will not know the exact number of shares of Dipexium common stock that the PLx stockholders will receive upon completion of the merger.

Subject to the terms of the Merger Agreement, at the effective time of the merger, each share of PLx common stock issued and outstanding immediately prior to the merger will be canceled, extinguished and automatically converted into the right to receive that number of shares of Dipexium common stock as determined pursuant to the Equity Exchange Ratio described in the Merger Agreement. The Equity Exchange Ratio depends on the

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cash of Dipexium as of a determination date prior to completion of the merger. The determination date is defined as the date that is 3 days prior to the closing date. Under the Merger Agreement, Dipexium’s “cash” is defined as generally consisting of Dipexium’s cash and cash equivalents plus certain credits for deal-related costs and security deposits, as of a determination date prior to the closing date of the merger.

Dipexium may waive one or more of the conditions to the merger without resoliciting stockholder approval for the merger.

Certain conditions to Dipexium’s obligations to complete the merger may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement of Dipexium and PLx. In the event of a waiver of a condition, the board of directors of Dipexium will evaluate the materiality of any such waiver to determine whether amendment of this proxy statement/prospectus and resolicitation of proxies is necessary. In the event that the board of directors of Dipexium determines any such waiver is not significant enough to require resolicitation of stockholders, it will have the discretion to complete the merger without seeking further stockholder approval. The conditions requiring the approval of each company’s stockholders cannot, however, be waived.

The merger will result in changes to the Dipexium board of directors and the combined organization may pursue different strategies than Dipexium may have pursued independently.

If Dipexium and PLx complete the merger, the composition of the Dipexium board of directors will change in accordance with the Merger Agreement. Following completion of the merger, the combined organization’s board of directors will consist of seven members, including David P. Luci, Dipexium’s current President and CEO, from the current board of directors of Dipexium. Currently, it is anticipated that the combined organization will continue to advance the product development efforts and business strategies of PLx, which necessarily differ from those that Dipexium would have pursued independently.

Ownership of the combined organization’s common stock may be highly concentrated, and it may prevent the Dipexium stockholders from influencing significant corporate decisions and may result in conflicts of interest that could cause the combined organization’s stock price to decline.

Upon completion of the merger, PLx directors and executive officers continuing with the combined organization, together with their respective affiliates, are expected to beneficially own or control approximately 13.9% of the combined organization. Accordingly, these directors, executive officers and their affiliates, acting individually or as a group, will have substantial influence over the outcome of a corporate action of the combined organization requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of the combined organization’s assets or any other significant corporate transaction. These stockholders also may exert influence in delaying or preventing a change in control of the combined organization, even if such change in control would benefit the other stockholders of the combined organization. In addition, the significant concentration of stock ownership may affect adversely the market value of the combined organization’s common stock due to investors’ perception that conflicts of interest may exist or arise.

Third party lawsuits may be filed against Dipexium in connection with the merger transaction which may be frivolous but costly to defend.

Third parties may assert claims against Dipexium alleging that the terms of the merger are somehow unfair or inappropriate. Although Dipexium’s board of directors and management team may disagree, any claims against Dipexium, with or without merit, as well as claims initiated by Dipexium against third parties, can be time-consuming and expensive to defend or prosecute and resolve. Dipexium cannot assure you that litigation asserting claims against the company will not be initiated or that Dipexium would prevail in any litigation. Dipexium cannot assure you that the merger with PLx would close if and to the extent a claim or claims were filed against Dipxium in this regard.

The merger may fail to qualify as a reorganization for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by PLx stockholders in respect of their PLx common stock.

Dipexium and PLx intend the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, as described in “The Merger — Material United States Federal Income Tax Consequences of the

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Merger.” However, if the merger fails to qualify as a reorganization, each PLx stockholder generally will be treated as exchanging his, her or its PLx common stock in a fully taxable transaction for the merger consideration.

Risks Related to Dipexium

Dipexium has never generated revenues and does not expect to in the near future. Dipexium has a history of operating losses, expects continuing losses and may never become profitable.

In order to generate revenue, Dipexium must develop and commercialize successfully its own product or enter into strategic partnering agreements with others who can develop and commercialize them successfully, or acquire additional new products that generate or have the potential to generate revenues. Because of the numerous risks and uncertainties associated with Dipexium’s product development program and Dipexium’s ability to acquire new products, Dipexium is unable to predict when it will be able to generate significant revenue or become profitable, if at all. Dipexium incurred a net loss of $21.3 million for the year ended December 31, 2016. As of December 31, 2016, Dipexium’s accumulated deficit was $62.4 million. Dipexium expects to continue to incur substantial and continuing losses for the foreseeable future. These losses will increase if Dipexium decides to pursue clinical trials of Locilex® in yet to be identified, new clinical indications or if Dipexium were to in-license new products that require further development. Even if Dipexium’s Locilex® or any new products it may acquire or in-license are introduced commercially, Dipexium may never achieve market acceptance and may never generate sufficient revenues to achieve or sustain future profitability.

Dipexium may not be able to complete the merger and may elect to pursue another strategic transaction similar to such merger, which may not occur on commercially reasonably terms or at all.

Dipexium cannot assure you that it will complete the merger in a timely manner or at all. The Merger Agreement is subject to many closing conditions and termination rights, as set forth herein. In addition to Dipexium’s product candidates, for which it has stopped all development, Dipexium’s assets currently consist primarily of cash, cash equivalents and marketable securities, its listing on The NASDAQ Capital Market and the Merger Agreement with PLx. If Dipexium does not close the merger, its board of directors may elect to attempt to complete another strategic transaction similar to the merger. Attempting to complete another strategic transaction similar to the merger will prove to be costly and time consuming, and Dipexium cannot make any assurances that a future strategic transaction will occur on commercially reasonable terms or at all. Even if Dipexium does complete the merger, the merger ultimately may not deliver the anticipated benefits or enhance stockholder value.

If the merger is not completed, in light of the challenges of rebuilding an operating business, Dipexium may elect to liquidate its remaining assets, and there can be no assurances as to the amount of cash available to distribute to stockholders after paying its debts and other obligations.

If Dipexium does not close the merger, in light of the risks of reestablishing an operating business, as set forth herein, the board of directors may elect to take the steps necessary to liquidate all remaining assets of Dipexium. The process of liquidation may be lengthy and Dipexium cannot make any assurances regarding timing of completion. In addition, Dipexium would be required to pay all of its debts and contractual obligations, and to set aside certain reserves for potential future claims. There can be no assurance as to the amount or timing of available cash remaining to distribute to stockholders after paying Dipexium’s debts and other obligations and setting aside funds for reserves.

Because Dipexium has no source of revenue, Dipexium must depend on financing or partnering to sustain its operations. Dipexium likely will need to raise substantial additional capital or enter into strategic partnering agreements to fund its current operations and Dipexium is very likely unable to raise such funds or enter into strategic partnering agreements when needed and on acceptable terms because its lead and only product candidate recently failed in Phase 3 clinical trials.

Developing products requires substantial amounts of capital. Dipexium has not yet identified a potential new clinical and regulatory pathway forward for Locilex® and therefore cannot estimate the cost of any such pathway to market. If Dipexium is able to identify a promising clinical and regulatory pathway forward, it is

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likely that Dipexium (or the combined organization, after completion of the merger) will need to raise substantial additional capital or enter into strategic partnering agreements to fund its operations and it may be unable to raise such funds or enter into strategic partnering agreements when needed and on acceptable terms, particularly given that Locilex® has recently failed in two Phase 3 clinical trials.

Dipexium’s future capital requirements in connection with its current operations will depend upon numerous factors, including:

• the ability to identify a clinical and regulatory pathway forward for Locilex® given the recent failure in Phase 3 clinical trials in infected diabetic foot ulcers;
• the progress, timing, cost and results of its yet-to-be identified clinical development program if Dipexium decides to pursue them;
• the cost, timing and outcome of regulatory actions with respect to Dipexium’s product;
• the success, progress, timing and costs of Dipexium’s business development efforts to implement business collaborations, licenses and other business combinations or transactions, and its efforts to evaluate various strategic alternatives available with respect to its product;
• Dipexium’s ability to acquire or in-license additional new products and technologies and the costs and expenses of such acquisitions or licenses;
• the timing and amount of any royalties, milestone or other payments Dipexium may receive from or be obligated to pay to potential licensors, licensees and other third parties;
• the costs of preparing, filing, prosecuting, maintaining and enforcing patent claims and other intellectual property rights;
• the emergence of competing products and technologies, and other adverse market developments;
• the perceived, potential and actual commercial success of Dipexium’s product;
• Dipexium’s operating expenses; and
• the resolution of Dipexium’s pending litigation and any amount it may be required to pay in excess of its directors’ and officers’ liability insurance.

Dipexium’s future capital requirements and projected expenditures in connection with its current operations are based upon numerous assumptions and subject to many uncertainties, and actual requirements and expenditures may differ significantly from its projections. To date, Dipexium has relied entirely upon proceeds from sales of its equity securities to finance its business and operations. Dipexium likely will need to raise additional capital to fund its operations. As of December 31, 2016, Dipexium had $16.7 million of cash and cash equivalents. Dipexium does not have any existing credit facilities under which it may borrow funds. Absent the receipt of any licensing income or financing, Dipexium expects its cash and cash equivalents balance to decrease as it continues to use cash to fund its operations. Assuming the merger is completed during the first half of 2017, Dipexium expects its cash equivalents as of December 31, 2016 to meet its liquidity requirements through at least its anticipated close of the merger, including the closing condition under the Merger Agreement to have at least $12.0 million of “cash,” as defined in the Merger Agreement, available upon the closing of the merger. If the merger is not completed, Dipexium will need to reevaluate its strategic alternatives, which may include continuing to operate its business as an independent, stand-alone company, a sale of the company, liquidation of the company or other strategic transaction. Dipexium’s liquidity position will be dependent upon the strategic alternative selected; however, assuming Dipexium does not enter into another strategic transaction, Dipexium expects its cash and cash equivalents as of December 31, 2016 will be sufficient to meet its liquidity requirements for at least the next 12 months. Additional financing would be required should Dipexium decide to commence a new clinical program for Locilex® in a new, yet-to-be-identified clinical indication. Cash needs to pursue a new clinical indication cannot reasonably be estimated until a promising new indication for Locilex® to target is identified, if ever.

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The October 2016 announcement of the results of Dipexium’s prior completed OneStep Phase 3 clinical trials has significantly depressed the trading price of Dipexium common stock and harmed Dipexium’s ability to raise additional capital. Dipexium can provide no assurance that additional financing will be available on terms favorable to Dipexium, or at all.

Dipexium and its management are parties to a lawsuit which, if adversely decided against Dipexium, could impact its rights to Locilex®.

In April 2010, Dipexium acquired the worldwide rights to develop pexiganan, the active pharmaceutical ingredient in Locilex®, from Genaera Liquidating Trust, which was put in place to liquidate the assets of Genaera Corporation. In June 2012, Dipexium, along with its two senior executives and several other unrelated defendants, were sued in the Federal District Court for the Eastern District of Pennsylvania by a former shareholder of Genaera Corporation and purported to be on behalf of other Genaera Corporation shareholders, alleging, in pertinent part, that Dipexium’s acquisition of the rights to pexiganan (the active ingredient in Locilex®, and which rights included the rights to the prior formulation of Locilex®) was for what was alleged to be inadequate consideration, and as a result, it was alleged that Dipexium and its senior executives aided and abetted a breach of fiduciary duty by Genaera Corporation and the Genaera Liquidating Trust to the former shareholders of Genaera Corporation. It was also alleged that Dipexium and its senior executives aided and abetted a breach of the duty of the trustee at common law and under a certain trust agreement which was alleged to exist and which was executed by Argyce LLC (or Argyce), as trustee. The agreement called for Argyce to create the Genaera Liquidating Trust pursuant to which Argyce apparently was appointed to liquidate the assets formerly held by Genaera Corporation. One of these assets was pexiganan, which Dipexium acquired via public auction conducted by Argyce on behalf of the Genaera Liquidating Trust.

The case against Dipexium and its senior executives was dismissed with prejudice by the Federal District Court, without leave to refile, on August 12, 2013 based on the argument that Plaintiff’s claims were time barred, and a subsequent motion to reconsider such dismissal was denied by the Federal District Court. Prior to the dismissal there was no request or action to seek class certification by the plaintiff though it was purportedly filed on behalf of other former Genaera Corporation shareholders. Plaintiff appealed the dismissal of the suit as well as the denial of the motion to reconsider to the Third Circuit Appellate Court, which granted Plaintiff’s appeal.

On October 17, 2014, the Third Circuit Appellate Court, in a 2-1 decision with a strong dissenting opinion, reversed the trial court’s dismissal of Plaintiff’s claims based on the expiration of the applicable statutes of limitation and remanded the case to the Federal District Court. In a 2-1 decision, the Third Circuit held that more information was necessary to determine when Plaintiff should have been on notice of his claims to determine the applicability of the discovery rule, which could serve to extend the time frame in which Plaintiff could bring his claims. Due to the strong dissent, all defendants filed the necessary documents requesting a petition for rehearing en banc, by the majority of the Third Circuit justices who are in active service. The Third Circuit denied the request for en banc hearing and remanded this case to District Court.

Upon remand to the Federal District Court, all defendants moved to dismiss the complaint for reasons other than being time barred. Dipexium and its executives moved for dismissal based on Plaintiff’s inability to make a case for aiding and abetting a breach of fiduciary duty because there was no underlying breach and such an aiding and abetting claim requires an element of knowing participation in the fiduciary breach which cannot be established by Plaintiff.

The District Court held a hearing on this in September 2015 and the District Court delivered an Order on November 10, 2015 pursuant to which the District Court granted the Motion to Dismiss filed by each and every defendant including the Company and its executives. In December 2015, Plaintiff appealed the Federal District Court’s decision to the Third Circuit Appellate Court and Dipexium anticipates a decision on whether to grant Plaintiff’s appeal by the Third Circuit Appellate Court in the first quarter of 2017. Dipexium will continue to vigorously defend Plaintiff’s claims on the factual record, which it believes will prove that Dipexium is not liable to the Plaintiff in any regard.

If Dipexium were to lose such case, its rights to the prior formulation of Locilex® could be lost, which may impair the commercial viability of its product or the timeline to potential regulatory approval. If Dipexium

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were required to settle the case, it may lose certain rights to Locilex® or be required to pay damages, which could have a material adverse effect on the company, its business plans and results of operations.

Dipexium’s two pivotal OneStep-1 and OneStep-2 clinical trials did not meet the primary or secondary endpoints, which could continue to harm Dipexium’s business and further disappoint Dipexium stockholders and cause the trading price of Dipexium common stock to continue to decrease.

Dipexium’s lead and only product in development is Locilex® for the treatment of mildly infected diabetic foot ulcers, for which there is currently no FDA-approved product. In October 2016, Dipexium announced top-line data from its OneStep pivotal Phase 3 clinical trials and both trials failed to meet any of the primary or secondary endpoints. Currently, management, in conjunction with its clinical and regulatory advisors, has not been able to identify a new clinical and regulatory pathway forward although this is subject to ongoing review and evaluation. No assurance can be given that a promising clinical and regulatory pathway will be identified or that, if identified, any such pathway could be achieved, if at all, without significantly more capital invested in the Company. No assurance can be given that additional capital would be available or that such capital would be available at acceptable terms.

Dipexium has not yet identified a clinical or regulatory pathway forward for Locilex®, its only product, and the likelihood is that Locilex® will not be approved by regulatory authorities or introduced commercially for at least several years, if at all.

In October 2016, Dipexium released top-line data on its only ongoing clinical trials, OneStep-1 and OneStep-2, which were two identical Phase 3 clinical trials testing Locilex® in patients with mildly infected diabetic foot ulcers. Both trials failed to meet all primary and secondary endpoints. Dipexium currently is evaluating whether or not there is any clinical and regulatory pathway forward based on the data from the OneStep trials. Going forward, Locilex® will require further development, preclinical and clinical testing and investment prior to obtaining required regulatory approvals and commercialization in the United States and abroad, even if a viable regulatory pathway forward is identified. Dipexium has no other product candidates. Dipexium cannot ensure that a new clinical and regulatory pathway will be identified or that Locilex® will be developed successfully. Even if a viable clinical and regulatory pathway forward is identified, Dipexium cannot assure that Locilex® will:

• prove to be safe and effective in clinical studies;
• meet applicable regulatory standards or obtain required regulatory approvals;
• demonstrate substantial protective or therapeutic benefits in the prevention or treatment of any disease;
• be capable of being produced in commercial quantities at reasonable costs;
• obtain coverage and favorable reimbursement rates from insurers and other third-party payors; or
• be marketed successfully or achieve market acceptance by physicians and patients.

If Dipexium reallocates its resources to acquire one or more new product candidates, Dipexium may not be successful in developing such newly acquired product candidates and Dipexium will once again be subject to all the risks and uncertainties associated with research and development of products and technologies.

Dipexium has explored the possibility of reallocating its resources toward acquiring, by acquisition or in-license, new product candidates. If Dipexium decides to acquire one or more new product candidates, Dipexium cannot guarantee that any such acquisition would result in the identification and successful development of one or more approved and commercially viable products. The development of products and technologies is subject to a number of risks and uncertainties, including:

• the time, costs and uncertainty associated with the clinical testing required to demonstrate the safety and effectiveness of a product candidate to obtain regulatory approvals;
• the ability to raise sufficient funds to fund the research and development of any one or more new product candidates;

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• the ability to find third party strategic partners to assist or share in the costs of product development, and potential dependence on such strategic partners, to the extent Dipexium may rely on strategic partners for future sales, marketing or distribution;
• the ability to protect the intellectual property rights associated with any one or more new product candidates;
• litigation;
• competition;
• ability to comply with ongoing regulatory requirements;
• government restrictions on the pricing and profitability of products in the United States and elsewhere; and
• the extent to which third-party payers, including government agencies, private health care insurers and other health care payers, such as health maintenance organizations, and self-insured employee plans, will cover and pay for newly approved therapies.

Dipexium has very limited staffing and is dependent upon key employees and the limited use of independent contractors, the loss of some of which could affect adversely its operations.

Dipexium’s success is dependent upon the efforts of a relatively small management team and staff. Dipexium also has engaged independent contractors from time-to-time on an as needed, project by project, basis. During November 2016, in order to reduce Dipexium’s operating expenses, Dipexium terminated all of its major independent contractor arrangements and reduced its total employee headcount. Such reductions in force, combined with Dipexium’s future business prospects and financial condition, put Dipexium at risk of losing key personnel who Dipexium will need going forward to implement its business strategies. Dipexium has no redundancy of personnel in key development areas, including clinical, regulatory, strategic planning and finance. Dipexium has employment arrangements in place with its executive and other officers, but none of these executive and other officers is bound legally to remain employed with Dipexium for any specific term. Dipexium does not have key man life insurance policies covering its executive and other officers or any of its other employees. If key individuals leave Dipexium, its business could be affected adversely if suitable replacement personnel are not recruited quickly. There is competition for qualified personnel in the biotechnology and biopharmaceutical industry in the New York, New York area in all functional areas, which makes it difficult to retain and attract the qualified personnel necessary for any potential turn around or restart of Dipexium’s business. Dipexium’s financial condition and recent reductions in force and expense reductions may make it difficult for Dipexium to retain current personnel and attract qualified employees and independent contractors in the future.

Dipexium’s business is subject to increasingly complex corporate governance, public disclosure and accounting requirements that could affect adversely its business and financial results.

Dipexium is subject to changing rules and regulations of federal and state governments as well as the stock exchange on which Dipexium common stock is listed. These entities, including the SEC and The NASDAQ Stock Market, continue to issue new requirements and regulations in response to laws enacted by Congress. In July 2010, the Dodd-Frank Wall Street Reform and Protection Act (the Dodd-Frank Act) was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that require the SEC and The NASDAQ Stock Market to adopt additional rules and regulations in these areas. Dipexium’s efforts to comply with these requirements have resulted in, and are likely to continue to result in, an increase in expenses and a diversion of management’s time from its other business activities.

The trading price of Dipexium common stock has been volatile, and your investment in Dipexium common stock could decline in value.

The price of Dipexium common stock has dropped dramatically since the announced failure of Dipexium’s pivotal Phase 3 clinical trials, in October 2016 and it is likely that the price of Dipexium common stock will continue to fluctuate in the future. From January 1, 2015 through December 31, 2016, the sale price of

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Dipexium common stock ranged from $12.38 per share to $1.60 per share. The market price of Dipexium common stock, and the market price of the combined organization’s common stock, may fluctuate significantly in the future due to a variety of factors, including:

• general stock market and general economic conditions in the United States and abroad, not directly related to Dipexium or its business;
• actual or anticipated governmental agency actions, including in particular decisions or actions by the FDA or FDA advisory committee panels with respect to other antibiotic candidates in development;
• termination of the proposed merger with PLx;
• entering into new strategic partnering arrangements;
• developments concerning Dipexium’s efforts to identify and implement strategic opportunities and the terms and timing of any resulting transactions;
• public concern as to the safety or efficacy of or market acceptance of products developed by Dipexium or its competitors;
• Dipexium’s cash and cash equivalents and its need and ability to obtain additional financing;
• equity sales by Dipexium to fund its operations;
• the resolution of Dipexium’s pending litigation matter;
• developments or disputes concerning patents or other proprietary rights;
• period-to-period fluctuations in Dipexium’s financial results, including its cash and cash equivalents, operating expenses, cash burn rate or revenues;
• loss of key management;
• common stock sales and purchases in the public market by one or more of Dipexium’s larger stockholders, officers or directors;
• reports issued by securities analysts regarding Dipexium common stock and articles published regarding its business and/or products;
• changes in the market valuations of other life science or biotechnology companies; and
• other financial announcements, including delisting of Dipexium common stock from The NASDAQ Capital Market, review of any of its filings by the SEC, changes in accounting treatment or restatement of previously reported financial results, delays in its filings with the SEC or its failure to maintain effective internal control over financial reporting.

In addition, the occurrence of any of the risks described in this joint proxy statement/prospectus or in subsequent reports Dipexium files with or submits to the SEC from time to time could have a material and adverse impact on the market price of Dipexium common stock. Securities class action litigation is sometimes brought against a company following periods of volatility in the market price of its securities or for other reasons. Securities litigation, whether with or without merit, could result in substantial costs and divert management’s attention and resources, which could harm Dipexium’s business and financial condition, as well as the market price of Dipexium common stock.

Dipexium has incurred and will continue to incur significant transaction costs in connection with the merger, some of which will be required to be paid even if the merger is not completed.

Dipexium has incurred and will continue to incur significant transaction costs in connection with the merger. These costs are primarily associated with the fees of Dipexium’s attorneys, accountants and financial advisors. Most of these costs will be paid by Dipexium even if the merger is not completed. In addition, if the Merger Agreement is terminated due to certain triggering events specified in the Merger Agreement, Dipexium may be required to pay PLx a termination fee of $700,000. The Merger Agreement also provides that under

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specified circumstances, if the merger is completed, the combined organization will bear the transaction costs of both Dipexium and PLx in connection with the merger, including financial advisor, legal and accounting fees and expenses.

Dipexium’s ability to achieve commercial success depends to a material extent on its ability to maintain adequate intellectual property protection for its products and technology. If Dipexium is unable to obtain and maintain adequate intellectual property rights for Locilex®, it may materially and adversely affect its ability to market and generate sales of the product.

Due to the exclusivity that intellectual property protection can afford, Dipexium’s commercial success depends to a material extent on its ability to obtain and maintain adequate intellectual property protection for Locilex® (and any other products Dipexium may develop in the future) in the U.S. and other countries.

As of December 31, 2016, Dipexium’s patent estate included a U.S. patent (U.S. Patent No. 8,530,409), corresponding granted patents in Australia, New Zealand, Japan, Europe, Hong Kong, Israel and Korea, and corresponding applications pending in Brazil, Canada, China, Eurasia, Indonesia, Mexico, Singapore and South Africa. Dipexium also has an exclusive sublicense from Scripps Research Institute (or Scripps), the inventor of the pexiganan technology, to a U.S. patent (U.S. Patent No. 5,912,231), directed to pexiganan, the API used in Locilex®. Dipexium considers its U.S. Patent No. 8,530,409, which relates to its new, proprietary formulation of Locilex® and methods of using it to treat skin or wound infection, to be particularly important to Dipexium primarily due to its substantially longer patent term coverage, its novel attributes as a topical formulation, its potentially broader scope of coverage and its opportunity for foreign patent protection. While Dipexium currently has pending applications in foreign jurisdictions corresponding to U.S. Patent No. 8,530,409, no assurance can be given that any foreign patents will issue, or that even if any such patents were to issue, such patents would provide meaningful protection for Locilex®.

Dipexium’s patent estate related to Locilex® is critical to its commercial viability. There is a risk that Dipexium’s pending patent applications may not result in issued patents, and that any of Dipexium’s issued patents will not include claims that are sufficiently broad to provide adequate protection for Locilex®, including meaningful protection from Dipexium’s competitors. Additionally, the success of an application for the patent term extension of Dipexium’s licensed patent will require the cooperation of the licensor, which cooperation cannot be guaranteed. Dipexium will be able to protect its proprietary rights from unauthorized use by third parties only to the extent that Locilex® (and any other products Dipexium may develop in the future) is covered by valid and enforceable patents that are of sufficient scope to effectively prevent competitive products or are effectively maintained as trade secrets within Dipexium. If third parties disclose or misappropriate or design around Dipexium’s proprietary rights, it may materially and adversely impact Dipexium’s position in the market.

Dipexium applies for patents covering both its technologies and product candidates, as it deems appropriate. However, Dipexium may fail to apply for patents on important technologies or improvements in its technologies in a timely fashion, or at all. Dipexium’s existing patents and any future patents it obtains may not be sufficiently broad to prevent others from using Dipexium’s technologies or from developing competing products and technologies. Moreover, the patent positions of numerous biotechnology and pharmaceutical companies are highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. As a result, the validity and enforceability of Dipexium’s patents cannot be predicted with certainty. In addition, no assurances can be given that:

• Dipexium was the first to make the inventions covered by each of Dipexium’s issued patents and pending patent applications;
• Dipexium was the first to file patent applications for these inventions;
• others will not independently develop similar or alternative technologies or duplicate any of Dipexium’s technologies by inventing around its claims;
• a third party will not challenge Dipexium’s proprietary rights, and if challenged that a court will hold that Dipexium’s patents are valid and enforceable;

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• any patents issued to Dipexium or its collaboration partners will cover Dipexium’s product as ultimately developed, or provide Dipexium with any competitive advantages, or will not be challenged by third parties;
• Dipexium will develop additional proprietary technologies that are patentable; or
• the patents of others will not have an adverse effect on Dipexium’s business.

In addition, there are numerous recent changes to the patent laws and proposed changes to the rules of the USPTO which may have a significant impact on Dipexium’s ability to protect its technology and enforce its intellectual property rights. For example, on September 16, 2011, President Obama signed the Leahy-Smith America Invents Act which codifies several significant changes to the U.S. patent laws, including, among other things, changing from a “first to invent’ to a “first inventor to file” system, limiting where a patentee may file a patent suit, eventually eliminating interference proceedings while maintaining derivation actions, and creating a set of procedures to challenge patents in the USPTO after they have issued. The effects of these changes are currently uncertain as the USPTO has just implemented regulations related to these changes and the courts have yet to address many of these provisions in the context of a dispute. Furthermore, Dipexium has not assessed the applicability of the act and new regulations on the specific patents discussed herein. The U.S. Supreme Court has also issued decisions, the full impact of which is not yet known. For example, on March 20, 2012 in Mayo Collaborative Services, DBA Mayo Medical Laboratories, et al. v. Prometheus Laboratories, Inc. , the Court held that several claims drawn to measuring drug metabolite levels from patient samples and correlating them to drug doses were not patentable subject matter. The decision appears to impact diagnostics patents that merely apply a law of nature via a series of routine steps and it has created uncertainty around the ability to patent certain biomarker-related method claims. Additionally, on June 13, 2013 in Association for Molecular Pathology v. Myriad Genetics, Inc. , the Court held that claims to isolated genomic DNA are not patentable, but claims to complementary DNA (or cDNA) molecules were held to be valid. The effect of the decision on patents for other isolated natural products is uncertain.

Dipexium is dependent on a third party to maintain the patent exclusivity for the API in Locilex®

Dipexium holds an exclusive, worldwide sublicense to the composition-of-matter patent, U.S. Patent No. 5,912,231, which expires in June 2016, excluding any patent term restoration that it may seek under the Hatch-Waxman Act. Dipexium’s rights to practice the pexiganan technology are derived through a license agreement between Scripps and Multiple Peptide Systems Inc. (or MPS). MPS subsequently sublicensed the pexiganan technology to the prior sponsor of the pexiganan clinical and regulatory program. On October 1, 1996, both the license agreement and sublicense agreement were amended by the parties to confirm that the license and sublicense were fully-paid and royalty-free with no further economic obligations for the practice of the pexiganan technology.

In June 2016, Dipexium received the cooperation of Scripps and filed an interim patent extension of U.S Patent No. 5,912,231 under the Hatch Waxman Act which was approved by the USPTO in June 2016. In the future, should Dipexium decide to file for a formal five-year patent term extension of U.S. Patent No. 5,912,231 under the Hatch Waxman Act, Dipexium would need further cooperation from Scripps to complete the submission and such cooperation is not guaranteed. Although U.S. Patent 5,912,231 supplements Dipexium’s existing intellectual property portfolio, Dipexium is chiefly reliant on its U.S. Patent 8,530,409, which covers the novel formulation and method of use for Locilex® and provides for substantially longer patent coverage (until June 2032) than U.S. Patent 5,912,231. Because a patent term extension is filed only after regulatory approval, Dipexium would need to consider the possibility for a patent term extension at a later date even if Dipexium is able to identify a promising new clinical indication to target for further clinical development. An inability to extend the patent past June 2017 may impair Dipexium’s competitive position if other companies use pexiganan as an API to develop a product that, once approved by the FDA, competes with Locilex®.

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Dipexium may become subject to third parties’ claims alleging infringement of its patents and proprietary rights or seeking to invalidate Dipexium’s patents or proprietary rights, or Dipexium may need to become involved in lawsuits to protect or enforce its patents, which could be costly, time consuming, delay or prevent the development and commercialization of its product candidates, or put Dipexium’s patents and other proprietary rights at risk.

Litigation relating to infringement or misappropriation of patent and other intellectual property rights in the pharmaceutical and biotechnology industries is common. Dipexium may become subject to third-party claims in the future relating to Dipexium’s technologies, processes, formulations, methods, or products that would cause Dipexium to incur substantial expenses and which, if successful, could cause Dipexium to pay substantial damages and attorney’s fees, if Dipexium is found to be infringing a third party’s patent rights. Dipexium may also become subject to claims that Dipexium has misappropriated the trade secrets of others. These risk are exacerbated by the fact that the validity and breadth of claims covered in pharmaceutical patents is, in most instances, uncertain and highly complex. Dipexium would be particularly at risk if any such claims relate to Dipxium’s key U.S. Patent No. 8,530,409 covering its particular formulation of and method of use for Locilex®.

Furthermore, if a patent infringement suit is brought against Dipexium relating to Locilex® (or any other products Dipexium may develop or acquire in the future), Dipexium’s research, development, manufacturing or sales activities relating to Locilex® or the product candidate that is the subject of the suit may be delayed or terminated. As a result of patent infringement claims, or in order to avoid potential infringement claims, Dipexium or its collaborators may choose to seek, or be required to seek, a license from the third party, which would be likely to include a requirement to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if a license can be obtained on acceptable terms, the rights may be nonexclusive, which would give Dipexium’s competitors access to the same intellectual property rights. If Dipexium is unable to enter into a license on acceptable terms, Dipexium or its collaborators could be prevented from commercializing Locilex® (or any other products Dipexium may develop or acquire in the future), or forced to modify such product candidates, or to cease some aspect of Dipexium’s business operations, which could harm its business significantly.

In addition, competitors may infringe Dipexium’s patents, or misappropriate or violate its other intellectual property rights. To counter infringement or unauthorized use, Dipexium may find it necessary to file infringement or other claims to protect its intellectual property rights. In addition, in any infringement proceeding brought by Dipexium against a third party to enforce its rights, a court may decide that a patent of Dipexium is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the basis that Dipexium’s patents do not cover the technology in question. An adverse result in any such litigation proceeding could put one or more of Dipexium’s patents at risk of being invalidated or interpreted narrowly, which could open Dipexium up to additional competition and have a material adverse effect on Dipexium’s business.

The cost to Dipexium of any patent litigation or other proceedings, even if resolved in its favor, could be substantial. Such litigation or proceedings could substantially increase Dipexium’s operating losses and reduce its resources available for development activities. Dipexium may not have sufficient financial or other resources to adequately conduct such litigation or proceedings, and such litigation could impair Dipexium’s ability to raise funding for the company. Some of Dipexium’s competitors may be able to sustain the costs of such litigation or proceedings more effectively than Dipexium can because of their substantially greater financial resources. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be negative, there could be a substantial adverse effect on the price of Dipexium’s common stock. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on Dipexium’s ability to compete in the marketplace. Patent litigation and other proceedings may also require significant time and attention of management and technical staff, which may materially and adversely impact Dipexium’s financial position and results of operations. Furthermore, because of the substantial amount of discovery required in connection with any intellectual property litigation, there is a risk that some of Dipexium’s confidential information could be compromised by disclosure during this type of litigation.

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As a result of any such litigation, Dipexium may also be required to: (i) cease selling, making, importing, incorporating or using one or more or all of Dipexium’s products that incorporate intellectual property of others, which would adversely affect Dipexium’s revenue; or (ii) redesign Dipexium’s products, which would be costly and time-consuming.

Restrictions on Dipexium’s patent rights relating to Locilex® may limit its ability to prevent third parties from competing against Dipexium.

Assuming FDA approval, Dipexium’s ability to market and sell Locilex® will depend, in part, on Dipexium’s ability to obtain and maintain patent protection for Locilex® (or any products Dipexium may develop in the future), preserve Dipexium’s trade secrets, prevent third parties from infringing upon Dipexium’s proprietary rights and operate without infringing upon the proprietary rights of others. The U.S. patent that Dipexium sublicenses from Scripps (U.S. Patent No. 5,912,231), which is directed to the composition of matter of pexiganan, expires on June 15, 2016 without any term extension. The foreign patents corresponding to U.S. Patent No. 5,912,231 expired in 2009. As a result, Dipexium has no foreign patent protection for the pexiganan API. Dipexium has recently been issued a U.S. patent, U.S. Patent No. 8,530,409, covering its new formulation of Locilex® as well as a method of using this new formulation to treat skin or wound infections. The U.S. Patent No. 8,530,409 claims are directed to very specific formulations of the pexiganan API, and their methods of use to treat skin or wound infections. As a result, U.S. Patent No. 8,530,409 would not prevent third party competitors from creating, making and marketing alternative formulations of pexiganan, including topical formulations that fall outside the scope of the U.S. Patent No. 8,530,409 claims. There can be no assurance that any such alternative formulations will not be equally effective as Locilex®. Introduction of any such competitive product could have a material adverse effect on sales of Locilex®. Moreover, even if these competitors do not actively promote their product for Dipexium’s targeted indication, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.

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

Filing, prosecuting and defending patents on Locilex® or any product candidates Dipexium may develop or acquire in the future throughout the world would be prohibitively expensive. Competitors may use Dipexium’s technologies in jurisdictions where Dipexium has not obtained patent protection to develop Dipexium’s own products and furthermore, may export otherwise infringing products to territories where Dipexium has patent protection, but where enforcement is not as strong as that in the U.S. These products may compete with Dipexium’s future products in jurisdictions where Dipexium does not have any issued patents and Dipexium’s patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for Dipexium to stop the infringement of Dipexium’s patents or marketing of competing products in violation of Dipexium’s proprietary rights generally. Proceedings to enforce Dipexium’s patent rights in foreign jurisdictions could result in substantial cost and divert Dipexium’s efforts and attention from other aspects of Dipexium’s business.

Obtaining and maintaining Dipexium’s patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Dipexium’s patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.

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If Dipexium’s Locilex® trademark is not adequately protected, then Dipexium may not be able to build name recognition in its markets of interest and Dipexium’s business may be adversely affected.

Dipexium’s registered trademark, Locilex®, may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. Dipexium may not be able to protect its rights to this trademark, which Dipexium needs to build name recognition by potential partners or customers in its markets of interest. Over the long term, if Dipexium is unable to establish name recognition based on Dipexium’s trademark, then Dipexium may not be able to compete effectively and its business may be adversely affected.

If Dipexium is unable to protect the confidentiality of its trade secrets, its business and competitive position would be harmed.

In addition to seeking patent protection for Locilex®, Dipexium also relies on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain its competitive position. Dipexium seeks to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as Dipexium’s employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. Dipexium also enters into confidentiality and invention or patent assignment agreements with its employees and consultants that obligate them to assign their inventions to Dipexium. Despite these efforts, any of these parties may breach the agreements and disclose Dipexium’s proprietary information, including its trade secrets, and Dipexium may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the U.S., including in foreign jurisdictions, are less willing or unwilling to protect trade secrets. If any of Dipexium’s trade secrets were to be lawfully obtained or independently developed by a competitor, Dipexium would have no right to prevent them from using that technology or information to compete with Dipexium. If any of Dipexium’s trade secrets were to be disclosed to or independently developed by competitor, Dipexium’s competitive position would be harmed.

Risks Related to PLx

PLx has not yet generated significant revenues, has a limited operating history, has incurred net losses in each year since inception and anticipates that it will continue to incur significant losses for the foreseeable future, and if it is unable to achieve and sustain profitability following the merger, the market value of the combined organization’s common stock will likely decline.

Though it has been in existence since 2003, until recently, PLx’s efforts had been focused on research and development. It has not generated any revenue from the sale of products, has generated minimal revenue from licensing activities, and has incurred losses in each year since it commenced operations in 2003. PLx’s net losses for the years ended December 31, 2015 and 2016 were $3.7 million and $4.9 million, respectively. As of December 31, 2016, it had an accumulated deficit of approximately $52.0 million.

It is expected that PLx will continue to incur significant expenses and increased operating losses for the foreseeable future as it continues the development and commercialization of Aspertec and its other product candidates. Expenses will also increase substantially if and when it:

• discovers and develops additional product candidates;
• establishes a sales, marketing and distribution infrastructure to commercialize Aspertec and any other product candidates for which it may obtain marketing approval;
• establishes a manufacturing and supply chain sufficient for commercial quantities of Aspertec and any other product candidates for which it may obtain marketing approval;
• maintains, expands and protects its intellectual property portfolio;
• hires additional clinical, scientific and commercial personnel;
• adds operational, financial and management information systems and personnel, including personnel to support its product development and planned future commercialization efforts, as well as to support its transition to a public reporting company in connection with the merger; and
• acquires or in-licenses other product candidates and technologies.

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Even if it is able to generate revenues, PLx and the combined organization many never achieve profitability, and even it does achieve profitability in the future, it may not be able to sustain profitability in subsequent periods. PLx’s prior losses, combined with expected future losses, have had and will continue to have an adverse effect on stockholders’ equity and working capital. If it is unable to achieve and sustain profitability, the market value of its common stock will likely decline. Because of the numerous risks and uncertainties associated with developing biopharmaceutical products, PLx is unable to predict the extent of any future losses or when, if ever, it will become profitable.

There is significant doubt about PLx’s ability to continue as a going concern if it is unable to secure additional funding.

PLx’s independent registered public accounting firm has noted, in their report on its accompanying consolidated financial statements and in Note 2 to such financial statements, that PLx has suffered recurring losses from operations, that it has insufficient working capital as of December 31, 2016, and that these factors raise substantial doubt regarding its ability to continue as a going concern. Its continuation as a going concern is dependent upon, among other things, its ability to obtain necessary equity or debt financing to continue operations (through this transaction or otherwise), and ultimately its ability to commercialize Aspertec.

PLx is substantially dependent on the success of its lead product candidate, Aspertec. If it is unable to successfully commercialize Aspertec or experiences significant delays in doing so, its business could be materially harmed.

Since 2003, PLx has invested its efforts and financial resources almost exclusively in the development of product candidates, including Aspertec. Its future success, and that of the combined organization, is substantially dependent on its ability to successfully commercialize Aspertec, which will depend on several factors, including the following:

• establishing commercial manufacturing and supply arrangements;
• establishing a commercial infrastructure;
• identifying and successfully establishing one or more collaborations to commercialize Aspertec;
• acceptance of the product by patients, the medical community and third-party payors;
• obtaining market share while competing with more established companies;
• a continued acceptable safety and adverse event profile of the product; and
• qualifying for, identifying, registering, maintaining, enforcing and defending intellectual property rights and claims covering the product.

Serious adverse events, undesirable side effects or other unexpected properties of Aspertec or any other product candidate may be identified after approval that could delay, prevent or cause the withdrawal of regulatory approval, limit the commercial potential, or result in significant negative consequences following marketing approval.

Serious adverse events or undesirable side effects caused by, or other unexpected properties of, Aspertec or PLx’s product candidates could cause PLx, an institutional review board, or regulatory authorities to interrupt, delay or halt its manufacturing and distribution operations and could result in a more restrictive label, the imposition of distribution or use restrictions or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities. If Aspertec or any of PLx’s other product candidates are associated with serious adverse events or undesirable side effects or have properties that are unexpected, PLx may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in clinical or earlier stage testing have later been found to cause undesirable or unexpected side effects that prevented further development of the compound.

Undesirable side effects or other unexpected adverse events or properties of Aspertec or any of PLx’s other product candidates could arise or become known either during clinical development or, if approved, after the

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approved product has been marketed. If such an event occurs during development, PLx’s trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order it to cease further development of, or deny approval of its other product candidates. If such an event occurs with respect to Aspertec, a number of potentially significant negative consequences may result, including:

• regulatory authorities may withdraw the approval of such product;
• regulatory authorities may require additional warnings on the label or impose distribution or use restrictions;
• regulatory authorities may require one or more post-market studies;
• PLx may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
• PLx or the combined organization could be sued and held liable for harm caused to patients; and
• PLx’s reputation, and that of the combined organization, may suffer.

Any of these events could prevent PLx from achieving or maintaining market acceptance of the affected product candidate, or could substantially increase commercialization costs and expenses, which could delay or prevent it from generating revenue from the sale of its products and harm its business and results of operations.

PLx will need substantial additional funding. If PLx is unable to raise capital when needed, it could be forced to delay, reduce or terminate its operations or commercialization efforts.

Since inception through December 31, 2016, PLx has financed its operations primarily through the private placements of its equity securities and short-term financing totaling approximately $44.0 million. As of December 31, 2016, PLx had a working capital deficit of approximately $2.5 million and cash and cash equivalents of approximately $59,000. It is anticipated that PLx will need to raise substantial additional financing in the future to fully fund its business plan and operations after the merger.

PLx may obtain additional financing through public or private equity offerings, debt financings (including related-party financings), a credit facility or strategic collaborations. Additional financing may not be available when needed or may not be available on favorable terms, if at all. PLx’s failure to raise capital as and when needed could have a negative impact on its financial condition and its ability to pursue its business strategies. PLx’s future financing requirements will depend on many factors, some of which are beyond its control, including:

• the ability to enter into additional collaboration, licensing or other arrangements and the terms and timing of such arrangements;
• the type, number, costs and results of the product candidate development programs which PLx is pursuing or may choose to pursue in the future;
• the rate of progress and cost of its clinical trials, preclinical studies and other discovery and research and development activities;
• the timing of, and costs involved in, seeking and obtaining FDA and other regulatory approvals;
• the costs of preparing, filing, prosecuting, maintaining and enforcing any patent claims and other intellectual property rights, including litigation costs and the results of such litigation;
• the emergence of competing technologies and other adverse market developments;
• the resources PLx devotes to marketing, and, if approved, commercializing its product candidates;
• the scope, progress, expansion, and costs of manufacturing its product candidates;
• the ability to enter into collaborative agreements, to support the development of product candidates and development efforts; and
• the costs associated with being a public company.

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Future capital requirements will also depend on the extent to which PLx acquires or invests in additional complementary businesses, products and technologies. PLx currently has no understandings, commitments or agreements relating to any of these types of transactions.

If PLx is unable to raise additional funds when needed, it may be required to sell or license to others technologies or clinical product candidates or programs that it would prefer to develop and commercialize itself. Without additional funding — or, alternatively, a partner willing to collaborate and fund development — PLx will be unable to continue development of PL1200 Ibuprofen or any other development-stage products in its pipeline.

Even though Aspertec 325 mg has already obtained regulatory approval, it may never achieve market acceptance by physicians, patients, and others in the medical community necessary for commercial success and the market opportunity may be smaller than is currently estimated.

Even if PLx is able to launch Aspertec commercially, it may not achieve market acceptance among physicians, patients, hospitals (including pharmacy directors) and third-party payors and, ultimately, may not be commercially successful. Market acceptance of any product candidate for which PLx receives approval depends on a number of factors, including:

• the efficacy and safety of the product candidate as demonstrated in clinical trials;
• relative convenience and ease of administration;
• the clinical indications for which the product candidate is approved;
• the potential and perceived advantages and disadvantages of the product candidates, including cost and clinical benefit relative to alternative treatments;
• strength of competitive products;
• the effectiveness of sales and marketing efforts;
• the strength of marketing and distribution support;
• the willingness of physicians to recommend or prescribe the product;
• the willingness of hospital pharmacy directors to purchase its products for their formularies;
• the ability to maintain regulatory approvals for Aspertec;
• acceptance by physicians, operators of hospitals and treatment facilities and parties responsible for reimbursement of the product;
• the availability of adequate coverage and reimbursement by third-party payors and government authorities;
• limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling or an approved risk evaluation and mitigation strategy;
• the approval of other new products for the same indications;
• the timing of market introduction of the approved product as well as competitive products; and
• adverse publicity about the product or favorable publicity about competitive products.

Any failure by Aspertec or any other product candidate that obtains regulatory approval to achieve market acceptance or commercial success would adversely affect PLx’s business prospects.

PLx’s ability to market Aspertec for long-term use may be hampered by lack of trial results demonstrating long-term GI-safety benefits.

While demonstrating a statistically significant reduction in mucosal damage at 42 days when evaluated using the same clinical endpoints used for early studies involving enteric coated aspirin, Aspertec 325 mg did not

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demonstrate a reduction in ulcer risk over the course of a 42-day trial when more contemporary clinical endpoints were used. This lack of demonstrated long-term GI benefits could hamper the ability to market Aspertec 325 mg for long-term use.

For many new product candidates, PLx will rely on third parties to conduct preclinical studies and all of PLx’s clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, PLx may be unable to obtain regulatory approval for or commercialize any of its product candidates.

If PLx elects to pursue new products, it will rely on medical institutions, clinical investigators, contract laboratories and other third parties, such as contract research organizations, to conduct its preclinical studies and clinical trials on its product candidates in compliance with applicable regulatory requirements. These third parties are not PLx’s employees and, except for restrictions imposed by contracts with such third parties, PLx has limited ability to control the amount or timing of resources that they devote to its programs. Although PLx relies on these third parties to conduct its preclinical studies and clinical trials, it remains responsible for ensuring that each of its preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol and the applicable legal, regulatory, and scientific standards, and PLx’s reliance on these third parties does not relieve it of its regulatory responsibilities. The FDA and regulatory authorities in other jurisdictions requires PLx to comply with regulations and standards, commonly referred to as current good clinical practices, or cGCPs, for conducting, monitoring, recording and reporting the results of clinical trials, in order to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials. If PLx or any of its third-party contractors fail to comply with applicable cGCPs, the clinical data generated in PLx’s clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require it to perform additional clinical trials before approving its marketing applications. In addition, PLx is required to report certain financial interests of its third party investigators if those relationships exceed certain financial thresholds and meet other criteria. PLx’s clinical trials must also generally be conducted with products produced under current good manufacturing practice, or cGMP, regulations. Failure to comply with these regulations may require PLx to repeat clinical trials, which would delay the regulatory approval process.

Many of the third parties with whom PLx contracts may also have relationships with other commercial entities, some of which may compete with PLx. If the third parties conducting preclinical studies or clinical trials do not perform their contractual duties or obligations or comply with regulatory requirements, PLx may need to enter into new arrangements with alternative third parties. This could be costly, and the preclinical studies or clinical trials may need to be extended, delayed, terminated or repeated, and PLx may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable product candidate, or to commercialize such product candidate being tested in such studies or trials. If any of PLx’s relationships with these third parties terminate, it may not be able to enter into arrangements with alternative third party contractors or to do so on commercially reasonable terms. Though PLx carefully manages its relationships with CROs, there can be no assurance that it will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on its business, financial condition and prospects.

Clinical trials for future products may be delayed or prevented.

Clinical trials may be delayed or prevented for a broad range of reasons, including:

• Difficulties obtaining regulatory approval to begin trials;
• Delays in reaching agreements on acceptable terms with contract manufacturers and contract research organizations;
• Insufficient or inadequate supply or quality of a product candidate or other materials necessary to conduct clinical trials;
• Challenges recruiting and enrolling subjects to participate in clinical trials for a variety of reasons, including size and nature of subject population, proximity of subjects to clinical sites, eligibility criteria for the trial, nature of trial protocol, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications;

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• Difficulties maintaining contact with subjects after treatment, which results in incomplete data;
• Receipt by a competitor of marketing approval for a product targeting an indication that its product targets, such that PLx is not “first to market” with its product candidate;
• Governmental or regulatory delays and changes in regulatory requirements, policy and guidelines;
• Inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities;
• Unforeseen safety issues, including serious adverse events associated with a product candidate, or lack of effectiveness; and
• Lack of adequate funding to continue the clinical trial.

One or more of these difficulties could result in delayed or cancelled trials and have a significant negative impact on earnings.

PLx will rely on third-party contract manufacturing organizations to manufacture and supply Aspertec and other product candidates, as well as certain raw materials used in the production thereof. If one of PLx’s suppliers or manufacturers fails to perform adequately, it may be required to incur significant delays and costs to find new suppliers or manufacturers.

PLx currently has limited experience in, and does not own facilities for, manufacturing product candidates, including Aspertec. It relies upon third-party manufacturing organizations to manufacture and supply product candidates and certain raw materials used in the production thereof. Some of PLx’s key components for the production of Aspertec have a limited number of suppliers.

PLx will not control the manufacturing process of, and will be completely dependent on, its contract manufacturing partners for compliance with cGMP regulations for manufacture of drug products. If contract manufacturers cannot successfully manufacture material that conforms to PLx’s specifications and the strict regulatory requirements of the FDA or others, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, PLx will have no control over the ability of its contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of product candidates or if it withdraws any such approval in the future, PLx may need to find alternative manufacturing facilities, which would significantly impact its ability to develop, obtain regulatory approval for or market its product candidates, if approved.

PLx does not have commercial supply agreements with its suppliers. In the event that PLx and its suppliers cannot agree to the terms and conditions for them to provide clinical and commercial supply needs, PLx would not be able to manufacture its product or candidates until a qualified alternative supplier is identified, which could also delay the development of, and impair the ability to commercialize, its product candidates.

Third-party suppliers may not be able to meet PLx’s supply needs or timelines and this may negatively affect its business. The failure of third-party manufacturers or suppliers to perform adequately or the termination of PLx’s arrangements with any of them may adversely affect its business.

A key ingredient for PLx’s products is currently available from only a single provider.

One key ingredient is currently limited to a single provider, Lipoid GmbH (Lipoid), who supplies cGMP lecithin and is a leader in supplying high quality lipids to the global pharmaceutical industry. Lipoid developed this particular cGMP lecithin with PLx over a several year period, and has informed PLx that they are currently the only buyer of the product. PLx does not have a long-term contract with Lipoid for the supply of commercial quantities of this product, and there can be no assurances that Lipoid will be able to supply sufficient commercial quantities in compliance with regulatory requirements at an acceptable cost.

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PLx may be subject to costly product liability claims related to its products and product candidates and, if PLx 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.

PLx faces the risk that the use of its product candidates may result in adverse side effects. Although it has product liability insurance, PLx’s insurance may be insufficient to reimburse it for any expenses or losses it may suffer, and it may be required to increase its product liability insurance coverage as the size of its operations increase. PLx does not know whether it will be able to continue to obtain product liability coverage and obtain expanded coverage if required, on acceptable terms, if at all. PLx may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limits of, its insurance coverage. To the extent that PLx is required to provide indemnities in favor of third parties, 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 PLx alleging that a product candidate or product has caused an injury or is found to be unsuitable for consumer use. Any product liability claim brought against PLx, with or without merit, could result in:

• the inability to commercialize Aspertec or future product candidates;
• decreased demand for Aspertec or future candidates;
• regulatory investigations that could require costly recalls or product modifications;
• loss of revenue;
• substantial costs of litigation;
• liabilities that substantially exceed product liability insurance, which PLx would then be required to pay;
• an increase in product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all;
• the diversion of management’s attention from PLx’s business; and
• damage to PLx’s reputation and the reputation of its products.

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

PLx currently has no sales and marketing staff or distribution organization. If it is unable to develop a sales and marketing and distribution capability on its own or through third parties, it will not be successful in commercializing future products.

PLx currently has no sales, marketing or distribution organization or history. To achieve commercial success for any approved product candidate, PLx must either develop a sales, marketing and distribution organization or outsource these functions to third parties. If it relies on third parties for marketing and distributing approved products, any revenue received will depend upon the efforts of third parties, which may not be successful and are only partially within PLx’s control, and product revenue may be lower than if PLx directly marketed or sold its products. PLx has no historical operations in this area, and if such efforts become necessary, it may not be able to successfully commercialize its future products. If PLx is not successful in commercializing future products, either on its own or through third parties, any future product revenue will be materially and adversely affected.

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

The development and commercialization of new drug products is highly competitive. PLx faces competition from major pharmaceutical companies and biotechnology companies worldwide with respect to Aspertec and other product candidates that PLx may seek to develop or commercialize in the future. There are a number of pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the

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development of product candidates that compete directly or indirectly with Aspertec. Potential competitors also include academic institutions, government agencies and other public and private research organizations. Competitors may succeed in developing, acquiring or licensing technologies and drug products that are more effective, safer or less costly than Aspertec or any other product candidates that PLx is currently developing or that it may develop, which could render its product candidates obsolete and noncompetitive.

Many of PLx’s competitors have materially greater name recognition and financial, manufacturing, marketing, research and drug development resources. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated. Large pharmaceutical companies in particular have extensive expertise in commercial sales, preclinical 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 PLx’s competitors.

Finally, the success of any product that is successfully commercialized will depend in large part on PLx’s ability to prevent competitors from launching a generic version that would compete with such product. If such competitors are able to establish that PLx’s patents are invalid or that the generic version would not infringe upon PLx’s product, they may be able to launch a generic product prior to the expected expiration of PLx’s relevant patents, and any generic competition could have a material adverse effect on PLx’s business, results of operations, financial condition and prospects.

PLx may fail to innovate and be competitive.

PLx cannot state with certainty when or whether any of its products under development will be launched, whether they will be able to develop, license, or otherwise acquire compounds or products, or whether any products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause PLx’s products to become obsolete, causing revenues and operating results to suffer.

PLx expects to compete with a large number of multinational pharmaceutical companies, biotechnology companies, and generic pharmaceutical companies. To successfully expand its product offerings, PLx must continue to deliver to the market innovative, cost-effective products that meet important medical needs. PLx’s product revenues can be adversely affected by the introduction by competitors of branded products that are perceived as superior by the marketplace, by generic or biosimilar versions of its branded products, and by generic or biosimilar versions of other products in the same therapeutic class as PLx’s branded products. PLx’s revenues can also be adversely affected by treatment innovations that eliminate or minimize the need for treatment with drugs.

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

PLx may form strategic alliances, create joint ventures or collaborations or enter into licensing arrangements with third parties with respect to its programs that it believes will complement or augment its existing business. For example, it entered into a licensing arrangement with Lee’s Pharmaceutical Holdings Limited for the commercialization of Aspertec in China and with an option for additional countries in Southeast Asia. PLx may attempt to find other strategic partners for other geographic jurisdictions and it may also attempt to find one or more strategic partners for the development or commercialization of one or more of its other product candidates. PLx faces significant competition in seeking appropriate strategic partners, and the negotiation process to secure appropriate terms is time-consuming and complex. PLx may not be successful in its efforts to establish such a strategic partnership for any product candidates and programs on terms that are acceptable.

Any delays in identifying suitable collaborators and entering into agreements to develop or commercialize product candidates could negatively impact the development or commercialization of PLx’s product candidates in geographic regions where it does not have development and commercialization infrastructure. Absent a collaboration partner, PLx would need to undertake development or commercialization activities at its own expense. If it elects to fund and undertake development or commercialization activities on its own, PLx may need to obtain additional expertise and additional capital, which may not be available on acceptable terms or

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at all. If PLx is unable to do so, it may not be able to develop product candidates or bring them to market and its business may be materially and adversely affected.

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

Even if it is successful in entering into a collaboration with respect to the development 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:

• collaborators may not perform their obligations as expected;
• disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the course of development, might cause delays or termination of the development or commercialization of product candidates, and might result in legal proceedings, which would be time-consuming, distracting and expensive;
• collaborators may be impacted by changes in their strategic focus or available funding, or business combinations involving them, which could cause them to divert resources away from the collaboration;
• collaborators may infringe the intellectual property rights of third parties, which may expose PLx to litigation and potential liability;
• the collaborations may not result in PLx achieving revenue to justify such transactions; and
• collaborations may be terminated and, if terminated, may result in a need for PLx to raise additional capital to pursue further development or commercialization of the applicable product candidate.

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

PLx will need to grow its organization, and may experience difficulties in managing growth.

As of December 31, 2016, PLx had seven employees. PLx will need to expand its managerial, operational, financial and other resources in order to manage operations, continue development activities, commercialize Aspertec or other product candidates, and transition to becoming a public reporting company. PLx’s management and personnel, systems and facilities currently in place may not be adequate to support this future growth. PLx’s need to effectively execute its business strategy requires that it:

• manages its internal discovery and development efforts effectively while carrying out its contractual obligations to licensors, contractors, government agencies, any future collaborators and other third parties;
• continues to improve operational, financial and management controls, reporting systems and procedures; and
• identifies, recruits, maintains, motivates and integrates additional employees.

If it is unable to expand managerial, operational, financial, and other resources to the extent required to manage development and commercialization activities, PLx’s business will be materially adversely affected.

PLx is highly dependent on the services of Michael J. Valentino and Natasha Giordano, and on its ability to attract and retain qualified personnel.

PLx may not be able to attract or retain qualified management and scientific and clinical personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses. PLx is highly dependent on the principal members of its management and scientific staff, particularly its Executive Chairman of the Board, Michael J. Valentino, and its President and Chief Executive Officer, Natasha Giordano. If it is not able to retain Mr. Valentino or Ms. Giordano, or is not able to attract, on acceptable terms, additional qualified personnel necessary for the continued development of its business, PLx may not be able to sustain its operations or grow. Although PLx has executed employment agreements with each member of its current executive management team, including Mr. Valentino and Ms. Giordano, it may not be able to retain their services as expected.

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In addition, PLx has scientific and clinical advisors who assist it in formulating product development and clinical strategies. These advisors are not employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability, or may have arrangements with other companies to assist in the development of products that may compete with PLx’s.

If PLx is not able to attract, retain and motivate necessary personnel to accomplish its business objectives, it may experience constraints that will significantly impede the achievement of its development objectives, its ability to raise additional capital and its ability to implement its business strategy.

PLx’s business involves the use of hazardous materials and it and third-party manufacturers must comply with environmental laws and regulations, which may be expensive and restrict how it does business.

PLx third-party manufacturers’ activities and its own activities may involve the controlled storage, use and disposal of hazardous materials, including the components of pharmaceutical product candidates, test samples and reagents, biological materials and other hazardous compounds. PLx and its manufacturers are subject to federal, state, local and foreign laws and regulations governing the use, generation, manufacture, storage, handling and disposal of these hazardous materials. PLx currently carries no insurance specifically covering environmental claims relating to the use of hazardous materials. Although PLx believes that its safety procedures for handling and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations, it cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials. In the event of an accident, state or federal or other applicable authorities may curtail the use of these materials and/or interrupt PLx’s business operations. In addition, if an accident or environmental discharge occurs, or if PLx discovers contamination caused by prior operations, including by prior owners and operators of properties it acquires, it could be liable for cleanup obligations, damages and fines. If such unexpected costs are substantial, this could significantly harm PLx’s financial condition and results of operations.

PLx or the third parties upon whom it depends may be adversely affected by natural disasters.

Changes to global climate, extreme weather and natural disasters that could affect demand for PLx’s products and services, cause disruptions in manufacturing and distribution networks, alter the availability of goods and services within the supply chain, and affect the overall design and integrity of its operations.

PLx’s corporate headquarters are currently located in Houston, Texas, which in the past has experienced hurricanes. Hurricanes or other natural disasters could severely disrupt operations, and have a material adverse effect on PLx’s business, operations, financial condition and prospects.

If a natural disaster, power outage or other event occurred that prevented PLx from using all or a significant portion of its headquarters, that damaged critical infrastructure, such as information technology systems, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for PLx to continue its business for a substantial period of time.

If such an event were to affect PLx’s supply chain, it could have a material adverse effect on its business.

PLx’s employees, independent contractors, principal investigators, consultants and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

PLx is exposed to the risk that its employees, independent contractors, principal investigators, consultants and vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities that violates: (1) FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA; (2) manufacturing standards; (3) federal and state healthcare fraud and abuse laws and regulations; or (4) laws that require the true, complete and accurate reporting of financial information or data. Specifically, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws

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also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to PLx’s reputation.

It is not always possible to identify and deter misconduct by PLx’s employees and other third parties, and the precautions PLx takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against PLx, and it are not successful in defending itself or asserting its rights, those actions could have a significant impact on PLx’s business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of its operations, any of which could adversely affect PLx’s ability to operate its business and its results of operations.

Requirements associated with being a public company will increase costs significantly, as well as divert significant company resources and management attention.

Prior to the merger, PLx has not been subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), or the other rules and regulations of the SEC or any securities exchange relating to public companies. PLx is working with its legal, independent accounting and financial advisors to identify those areas in which changes should be made to its financial and management control systems to manage its growth and obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. PLx has made, and will continue to make, changes in these and other areas. However, the expenses that will be required in order to operate as a public company could be material, particularly after PLx ceases to be an “emerging growth company.” Compliance with the various reporting and other requirements applicable to public companies will also require considerable time and attention of management. In addition, the changes PLx makes may not be sufficient to allow it to satisfy its obligations as a public company on a timely basis.

Being a public company could also make it more difficult or more costly for PLx to obtain certain types of insurance, including directors’ and officers’ liability insurance, and PLx may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for PLx or the combined organization to attract and retain qualified persons to serve on its board of directors, its board committees or as executive officers.

Following the merger, if PLx is not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, it may be subject to sanctions by regulatory authorities.

Section 404 of the Sarbanes-Oxley Act of 2002 will require that PLx evaluate and determine the effectiveness of its internal controls over financial reporting and, beginning with its annual report for the year ending December 31, 2017, provide a management report on the internal control over financial reporting. If PLx has a material weakness in its internal controls over financial reporting, it may not detect errors on a timely basis and its financial statements may be materially misstated. PLx will be evaluating its internal controls systems to allow management to report on, and eventually its independent auditors will attest to, the effectiveness of the operation of its internal controls. PLx will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and eventual auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002. The aforementioned auditor attestation requirements will not apply to PLx until it is no longer an “emerging growth company.”

To date, PLx has not conducted a review of its internal controls for the purpose of providing the reports required by these rules. It cannot be certain as to the timing of completion of its evaluation, testing and remediation actions or the impact of the same on its operations. If PLx is not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, it may be subject to sanctions or investigation by regulatory authorities, such as the SEC or NASDAQ. Any such action could adversely affect its financial results or investors’ confidence and could cause its stock price to fall. Moreover, if PLx is not able to comply with the requirements of Section 404 in a timely manner, or if it or its independent

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registered public accounting firm identifies deficiencies in PLx’s internal controls that are deemed to be material weaknesses, it could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities, which would entail expenditure of additional financial and management resources and could materially adversely affect its stock price. Deficient internal controls could also cause PLx to fail to meet its reporting obligations or cause investors to lose confidence in its reported financial information, which could have a negative effect on PLx’s stock price.

PLx’s understanding of the safety and efficacy of Aspertec could change as larger portions of the population begin using Aspertec.

Aspertec, like all NSAIDs, poses specific risks, including stomach bleeding and, for aspirin, Reyes syndrome. As the product is used by additional patients, PLx may discover new risks associated with Aspertec which may result in changes to the distribution program and additional restrictions on the use of Aspertec which may decrease demand for the product. Regulatory authorities have been moving towards more active and transparent pharmacovigilance and are making greater amounts of stand-alone safety information and clinical trial data directly available to the public through websites and other means, e.g. periodic safety update report summaries, risk management plan summaries and various adverse event data. Safety information, without the appropriate context and expertise, may be misinterpreted and lead to misperception or legal action which may potentially cause PLx’s product sales or stock price to decline. Further, if serious safety, resistance or drug interaction issues arise with its marketed products, sales of these products could be limited or halted by PLx or by regulatory authorities and PLx’s results of operations would be adversely affected.

Adverse safety events involving PLx’s marketed products may have a negative impact on its business.

Discovery of safety issues with PLx’s products could create product liability and could cause additional regulatory scrutiny and requirements for additional labeling, withdrawal of products from the market, and the imposition of fines or criminal penalties. Adverse safety events may also damage physician and patient confidence in PLx’s products and reputation. Any of these could result in liabilities, loss of revenue, material write-offs of inventory, material impairments of intangible assets, goodwill and fixed assets, material restructuring charges and other adverse impacts on PLx’s results of operations. The reporting of adverse safety events involving PLx’s products or products similar to PLx’s and public rumors about such events may increase claims against it and may also cause its product sales or stock price to decline or experience periods of volatility. Restrictions on use or significant safety warnings that may be required to be included in the label of PLx’s products — such as the risk of developing an allergic reaction to soy, stomach bleeding or Reyes syndrome, in the label for Aspertec — may significantly reduce expected revenues for this product and require significant expense and management time.

Unexpected safety or efficacy concerns can arise with respect to marketed products, whether or not scientifically justified, leading to product recalls, withdrawals, or declining sales, as well as product liability, consumer fraud and/or other claims, including potential civil or criminal governmental actions.

PLx’s business will be highly dependent on professional and public reputation and perception, which may change, leading to volatile sales.

Market perceptions of PLx are very important to its business, especially market perceptions of the company and brands, and the safety and quality of its products. If PLx, its partners and suppliers, or its brands suffer from negative publicity, or if any of its products or similar products which other companies distribute are subject to market withdrawal or recall or are proven to be, or are claimed to be, ineffective or harmful to consumers, then this could have a material adverse effect on PLx’s business, financial condition, results of operations, cash flows, and/or share price. Also, because PLx is dependent on market perceptions, negative publicity associated with product quality, patient illness, or other adverse effects resulting from, or perceived to be resulting from, PLx’s products, or its partners’ and suppliers’ manufacturing facilities, could have a material adverse effect on PLx’s business, financial condition, results of operations, cash flows, or share price.

PLx must be able to adapt to changed circumstances and quickly update product labels, which could be costly or harm its reputation.

PLx may be required by regulatory authorities to change the labeling for any pharmaceutical product, including after a product has been marketed for several years. These changes are often the result of additional

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data from post-marketing studies, head-to-head trials, adverse events reports, studies that identify biomarkers (objective characteristics that can indicate a particular response to a product or therapy) or other studies or post-marketing experience that produce important additional information about a product. New information added to a product’s label can affect its risk-benefit profile, leading to potential recalls, withdrawals, or declining revenue, as well as product liability claims. Sometimes additional information from these studies identifies a portion of the patient population that may be non-responsive to a medicine or would be at higher risk of adverse reactions and labeling changes based on such studies may limit the patient population. The studies providing such additional information may be sponsored by PLx, but they could also be sponsored by competitors, insurance companies, government institutions, managed care organizations, scientists, investigators, or other interested parties. While additional safety and efficacy information from such studies can assist PLx and healthcare providers in identifying the best patient population for each product, it can also negatively impact PLx’s revenues due to inventory returns and a more limited patient population going forward. Additionally, certain study results, especially from head-to-head trials, could affect a product’s reimbursement status or priority with certain payors, which could also adversely affect revenues.

If PLx is unable to obtain and maintain sufficient intellectual property protection for Aspertec or its future product candidates, or if the scope of the intellectual property protection is not sufficiently broad, PLx’s competitors could develop and commercialize products similar or identical to PLx’s, and PLx’s ability to successfully commercialize its product candidates may be adversely affected.

PLx relies upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to its technologies. If PLx does not adequately protect its intellectual property, competitors may be able to use its technologies and erode or negate any competitive advantage it may have, which could harm its business and ability to achieve profitability. In particular, PLx’s success depends in large part on its ability to obtain and maintain patent protection in the United States and other countries with respect to its product candidates. However, PLx may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. PLx may also fail to identify patentable aspects of its research and development before it is too late to obtain patent protection.

Further, the patentability of inventions, and the validity, enforceability and scope of patents in the pharmaceutical field involve complex legal and scientific questions and can be uncertain. As a result, patent applications that PLx owns or licenses may fail to result in issued patents in the United States or in other foreign countries for many reasons. For example, since patent applications in the United States and most other countries are confidential for a period of time after filing, PLx cannot be certain that it was the first to file any patent application related to its product candidates. Even if patents have issued, or do successfully issue, from patent applications, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable. Furthermore, even if they are unchallenged, PLx’s patents and patent applications may not adequately protect its intellectual property or prevent others from designing around its claims. If the breadth or strength of protection provided by the patents and patent applications PLx holds, licenses or pursues with respect to its product candidates is threatened, it could threaten PLx’s ability to commercialize its product candidates. Further, if PLx encounters delays in its clinical trials, the period of time during which it could market any of its product candidates under patent protection, if approved, would be reduced. Changes to the patent laws in the United States and other jurisdictions could also diminish the value of its patents and patent applications or narrow the scope of PLx’s patent protection.

If it is unable to protect the confidentiality of its trade secrets, the value of PLx’s technology could be materially adversely affected and PLx’s business would be harmed.

In addition to the protection afforded by patents, PLx relies on confidential proprietary information — including trade secrets and know-how — to develop and maintain its competitive position. Any disclosure to or misappropriation by third parties of PLx’s confidential proprietary information could enable competitors to quickly duplicate or surpass its technological achievements, thus eroding PLx’s competitive position in its market. PLx seeks to protect its confidential proprietary information, in part, by confidentiality agreements and invention assignment agreements with its employees and confidentiality agreements with consultants, scientific advisors, contractors and collaborators. These agreements are designed to protect PLx’s proprietary information. However, PLx cannot be certain that such agreements have been entered into with all

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relevant parties, and it cannot be certain 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. For example, any of these parties may breach the agreements and disclose PLx’s proprietary information, including its trade secrets, and PLx may not be able to obtain adequate remedies for such breaches. PLx also seeks to preserve the integrity and confidentiality of its confidential proprietary information by maintaining physical security of its premises and physical and electronic security of its information technology systems, but it is possible that these security measures could be breached. If any of its confidential proprietary information were to be lawfully obtained or independently developed by a competitor, PLx would have no right to prevent such competitor from using that technology or information to compete, which could harm PLx’s competitive position. If PLx is unable to prevent material disclosure of the intellectual property related to its technologies to third parties, it will not be able to establish or maintain a competitive advantage in its market, which could materially adversely affect its business, results of operations and financial condition.

If PLx is sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay it from developing or commercializing its product candidates.

There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and PLx may become party to, or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to its technology or product candidates, including post-grant or inter-partes proceedings, interference or derivation proceedings before the U.S. Patent and Trademark Office, or USPTO. Third parties may assert infringement claims against PLx based on existing or future intellectual property rights. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance. The pharmaceutical and biotechnology industries have produced a significant number of patents, and it may not always be clear to industry participants, including PLx, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If PLx is sued for patent infringement, it would need to demonstrate that its product candidates, products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid, and PLx may not be able to do this. Proving that a patent is invalid is difficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if PLx is successful in such proceedings, it may incur substantial costs and the time and attention of its management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on it. Even if PLx is successful in defending these claims, it may incur substantial costs and the time and attention of its management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on PLx.

If PLx is found to infringe a third party’s intellectual property rights, it could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product. Alternatively, PLx may be required to obtain a license from such third party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing product candidate. However, PLx may not be able to obtain any required license on commercially reasonable terms or at all. Even if it were able to obtain a license, it could be non-exclusive, thereby giving PLx’s competitors access to the same technologies licensed to PLx. In addition, PLx could be found liable for monetary damages, including treble damages and attorneys’ fees if it is found to have willfully infringed a patent. A finding of infringement could prevent PLx from commercializing its product candidates or force it to cease some of its business operations, which could materially harm PLx’s business. PLx may also elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes prior to litigation, and any such license agreements may require PLx to pay royalties and other fees that could be significant. Claims that PLx has misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on PLx’s business.

PLx may be involved in lawsuits to protect or enforce its intellectual property rights, which could be expensive, time consuming and unsuccessful.

Competitors may infringe or otherwise violate PLx’s patents, the patents of its licensors, or other intellectual property rights. To counter infringement or unauthorized use, PLx may be required to file infringement claims,

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which can be expensive and time-consuming. Any claims that it asserts against perceived infringers could also provoke these parties to assert counterclaims against PLx alleging that it infringes their intellectual property rights. In addition, in an infringement proceeding, a court may decide that a patent of PLx’s is not valid or is unenforceable, in whole or in part, or may refuse to stop the other party in such infringement proceeding from using the technology at issue on the grounds that PLx’s patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of PLx’s patents at risk of being invalidated, held unenforceable or interpreted narrowly, and could put any of its patent applications at risk of not yielding an issued patent.

Post-grant or inter-parte proceedings, interference or derivation proceedings provoked by third parties or brought by the USPTO or any foreign patent authority may be necessary to determine the priority of inventions or other matters of inventorship with respect to PLx’s patents or patent applications. PLx may also become involved in other proceedings, such as re-examination or opposition proceedings, before the USPTO or its foreign counterparts relating to its intellectual property or the intellectual property rights of others. An unfavorable outcome in any such proceedings could require PLx to cease using the related technology or to attempt to license rights to it from the prevailing party, or could cause PLx to lose valuable intellectual property rights. PLx’s business could be harmed if the prevailing party does not offer it a license on commercially reasonable terms, if any license is offered at all. Litigation or other proceedings may fail and, even if successful, may result in substantial costs and distract PLx’s management and other employees. PLx may also become involved in disputes with others regarding the ownership of intellectual property rights. For example, PLx jointly develops intellectual property with certain parties, and disagreements may therefore arise as to the ownership of the intellectual property developed pursuant to these relationships. If PLx is unable to resolve these disputes, it could lose valuable intellectual property rights.

PLx may not be able to prevent misappropriation of trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of PLx’s confidential information could be compromised by disclosure during this type of litigation. In addition, there could 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 substantial adverse effect on the price of PLx’s common stock. Even if resolved in its favor, litigation or other legal proceedings relating to intellectual property claims may cause PLx to incur significant expenses, and could distract technical and/or management personnel from their normal responsibilities. Such litigation or proceedings could substantially increase operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. Uncertainties resulting from the initiation and continuation of intellectual property litigation or other proceedings could have negatively affect PLx’s ability to compete in the marketplace.

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

Filing, prosecuting and defending patents on all of its product candidates throughout the world would be prohibitively expensive. Competitors may use PLx’s technologies in jurisdictions where it has not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where PLx has patent protection but where enforcement is not as strong, or where standards are different than they are in the United States. These products may compete with PLx’s products in jurisdictions where it does not have any issued patents and PLx’s patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions, including China, where PLx currently has granted a license for Aspertec 325 mg. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for PLx to stop the infringement of its patents or marketing of competing products in violation of its proprietary rights generally. Proceedings to enforce PLx’s patent rights in foreign jurisdictions could result in substantial cost and divert efforts and attention from other aspects of its business.

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If PLx breaches any of the agreements under which it licenses the use, development and commercialization rights to its product candidates from third parties, it could lose license rights that are important to its business.

In addition to its own patents, an important patent family covering Aspertec is owned by The Board of Regents of the University of Texas System. PLx’s development and commercialization of Aspertec is subject to its license agreement with The University of Texas as is its license agreement with Lee’s Pharmaceutical Holdings Limited. Under its existing license agreements, PLx is subject to various obligations, including diligence obligations with respect to development and commercialization activities, payment obligations for achievement of certain milestones and royalties on product sales, as well as other material obligations. If it fails to comply with any of these obligations or otherwise breaches its license agreements, The University of Texas may have the right to terminate the applicable license in whole or in part. Specifically, Section 4.6 of PLx’s license agreement with the University of Texas System (as amended) provides that “Reasonable commercial diligence shall require that PLx . . . . [o]n or before September 8, 2013, Sell or offer for Sale a Licensed Product.” While PLx believes that it has exercised reasonable commercial diligence to actively attempt such commercialization, it has not yet successfully commercialized a licensed product. As such, The Board of Regents of the University of Texas System may have the option to terminate the license agreement, or to limit the exclusivity of the license in certain territories.

The loss of PLx’s license agreement with The University of Texas could materially adversely affect its ability to proceed with the development or potential commercialization of Aspertec as currently planned, and could materially adversely affect its ability to proceed with any development or potential commercialization of PL1200 Ibuprofen and other NSAID programs.

The risks described elsewhere pertaining to PLx’s patents and other intellectual property rights also apply to the intellectual property rights that it licenses, and any failure by PLx or its licensors to obtain, maintain and enforce these rights could have a material adverse effect on PLx’s business. In some cases PLx does not have control over the prosecution, maintenance or enforcement of the patents that it licenses, and may not have sufficient ability to consult and input into the patent prosecution and maintenance process with respect to such patents, and its licensors may fail to take the steps necessary or desirable in order to obtain, maintain and enforce the licensed patents.

Limitations on intellectual property rights may result in other threats to PLx’s competitive advantage.

The degree of future protection afforded by PLx’s intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect its business or permit it to maintain its competitive advantage. The following examples are illustrative:

• others may be able to make compounds that are similar to Aspertec or future product candidates but that are not covered by the claims of the patents that PLx owns or licenses;
• PLx or its licensors or collaborators might not have been the first to make the inventions covered by an issued patent or pending patent application that it owns or licenses;
• PLx or its licensors or collaborators might not have been the first to file patent applications covering an invention;
• others may independently develop similar or alternative technologies or duplicate any of PLx’s technologies without infringing PLx’s intellectual property rights;
• pending patent applications that PLx owns or licenses may not lead to issued patents;
• issued patents that PLx owns or licenses may not provide it with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by its competitors;
• PLx’s competitors might conduct research and development activities in countries where PLx does not have patent rights and then use the information learned from such activities to develop competitive products for sale in PLx’s major commercial markets; and
• PLx may not develop or in-license additional proprietary technologies that are patentable.

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PLx may be subject to claims that its employees or consultants have wrongfully used or disclosed alleged trade secrets of former or other employers.