SELLAS Life Sciences Group, Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>SELLAS Life Sciences Group, Inc. filed its Q1 2024 10-Q report, detailing financial data and corporate history.</b>

AI Summary

SELLAS Life Sciences Group, Inc. (SLS) filed a Quarterly Report (10-Q) with the SEC on May 14, 2024. The filing is a 10-Q report for SELLAS Life Sciences Group, Inc. for the period ending March 31, 2024. The company's previous name was Galena Biopharma, Inc., with a name change date of September 26, 2011. SELLAS Life Sciences Group, Inc. is incorporated in Delaware and its fiscal year ends on December 31. The company's business and mailing address is 7 Times Square, Suite 2503, New York, NY 10036. The filing includes data related to common stock, preferred stock, additional paid-in capital, and retained earnings for various periods.

Why It Matters

For investors and stakeholders tracking SELLAS Life Sciences Group, Inc., this filing contains several important signals. This 10-Q filing provides a quarterly update on the company's financial health and operational status, crucial for investors assessing short-term performance. Understanding the company's historical name changes and incorporation details provides context for its corporate evolution and regulatory standing.

Risk Assessment

Risk Level: low — SELLAS Life Sciences Group, Inc. shows low risk based on this filing. The filing is a standard 10-Q report, which typically contains routine financial disclosures and does not indicate significant new risks or positive developments beyond normal business operations.

Analyst Insight

Review the detailed financial statements and any accompanying notes within the 10-Q to understand SELLAS Life Sciences Group's current financial position and operational performance.

Key Numbers

• 2024-03-31 — Period End Date (Conformed period of report)
• 2024-05-14 — Filing Date (Filed as of date)
• 2024-01-01 — Quarter Start Date (Reporting period)
• 2023-12-31 — Previous Fiscal Year End (Fiscal year end)

Key Players & Entities

• SELLAS Life Sciences Group, Inc. (company) — Filer name
• Galena Biopharma, Inc. (company) — Former company name
• RXi Pharmaceuticals Corp (company) — Former company name
• New York (location) — Business address city
• DE (location) — State of incorporation
• 2024-03-31 (date) — Conformed period of report
• 2024-05-14 (date) — Filed as of date
• 7 Times Square (location) — Business address street 1

FAQ

Industry Context

SELLAS Life Sciences Group operates in the pharmaceutical preparations industry, focusing on the development and commercialization of novel therapies.

Regulatory Implications

As a publicly traded company, SELLAS Life Sciences Group is subject to the reporting requirements of the Securities and Exchange Commission (SEC), including the filing of quarterly 10-Q reports.

What Investors Should Do

1. Analyze the balance sheet for changes in assets, liabilities, and equity.
2. Review the statement of operations for revenue, expenses, and net income/loss.
3. Examine the cash flow statement to understand the company's cash generation and usage.

Key Dates

• 2024-03-31: Quarterly Period End — Financial data reported as of this date.
• 2024-05-14: Filing Date — Date the 10-Q was officially filed with the SEC.

Year-Over-Year Comparison

This filing represents the first quarterly report for the fiscal year 2024, providing an update compared to the previous year's Q1 and the most recent annual report (10-K).

Key Financial Figures

• $0.0001 — ange on which registered Common Stock, $0.0001 par value per share SLS The Nasdaq Stoc

Filing Documents

• sls-20240331.htm (10-Q) — 639KB
• sls-20240331ex311.htm (EX-31.1) — 8KB
• sls-20240331ex312.htm (EX-31.2) — 8KB
• sls-20240331ex321.htm (EX-32.1) — 6KB
• sls-20240331ex322.htm (EX-32.2) — 6KB
• sls-20240331_g1.jpg (GRAPHIC) — 30KB
• 0001390478-24-000010.txt (&nbsp;) — 4287KB
• sls-20240331.xsd (EX-101.SCH) — 36KB
• sls-20240331_cal.xml (EX-101.CAL) — 40KB
• sls-20240331_def.xml (EX-101.DEF) — 137KB
• sls-20240331_lab.xml (EX-101.LAB) — 460KB
• sls-20240331_pre.xml (EX-101.PRE) — 317KB
• sls-20240331_htm.xml (XML) — 487KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1 Financial Statements 4 Unaudited Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 4 Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 5 Unaudited Consolidated Statements of Stockholders' Equity (Deficit) for the Three Months Ended March 31, 2024 and 2023 6 Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 7 Unaudited Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Quantitative and Qualitative Disclosures About Market Risk

Item 3 Quantitative and Qualitative Disclosures About Market Risk 27

Controls and Procedures

Item 4 Controls and Procedures 27

- OTHER INFORMATION

PART II - OTHER INFORMATION

Legal Proceedings 29

Item 1 Legal Proceedings 29

Risk Factors 29

Item 1A Risk Factors 29

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 29

Defaults Upon Senior Securities

Item 3 Defaults Upon Senior Securities 29

Mine Safety Disclosures

Item 4 Mine Safety Disclosures 29

Other Information

Item 5 Other Information 29

Signatures

Signatures The names "SELLAS Life Sciences Group, Inc.," "SELLAS," the SELLAS logo, and other trademarks or service marks of SELLAS Life Sciences Group, Inc. appearing in this Quarterly Report on Form 10-Q are the property of SELLAS Life Sciences Group, Inc. Other trademarks, service marks or trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend the use or display of other companies' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of or by either of, these other companies. Unless the context otherwise indicates, references in these notes to the "Company," "we," "us" or "our" refer to SELLAS Life Sciences Group, Inc. and its wholly owned subsidiaries. 1 SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS This Quarterly Report on Form 10-Q includes forward-looking statements that reflect our current views with respect to our development programs, business strategy, business plan, financial performance and other future events. These statements include forward-looking statements both with respect to us, specifically, and our industry, in general. Such forward-looking statements include the words "expect," "intend," "plan," "believe," "project," "estimate," "may," "should," "anticipate," "will" and similar statements of a future or forward-looking nature identify forward-looking statements and include, without limitation, statements regarding: our future financial and business performance; strategic plans for our business and product candidates; our ability to develop or commercialize products; the expected results and timing of clinical trials and nonclinical studies; our ability to comply with the terms of our license agreements; developments and projections relating to our competitors and industry; our expectations regarding our ability to obtain, develop and maintain intellectual property protection and not infringe on the righ

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS SELLAS LIFE SCIENCES GROUP, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) (Unaudited) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 18,415 $ 2,530 Restricted cash and cash equivalents 100 100 Prepaid expenses and other current assets 2,986 542 Total current assets 21,501 3,172 Operating lease right-of-use assets 747 858 Goodwill 1,914 1,914 Deposits and other assets 272 275 Total assets $ 24,434 $ 6,219 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 7,407 $ 5,639 Accrued expenses and other current liabilities 6,542 7,650 Operating lease liabilities 488 446 Total current liabilities 14,437 13,735 Operating lease liabilities, non-current 313 460 Total liabilities 14,750 14,195 Commitments and contingencies (Note 7) Stockholders' (deficit) equity: Preferred stock, $ 0.0001 par value; 5,000,000 shares authorized; Series A convertible preferred stock, 17,500 shares designated; no shares issued and outstanding at March 31, 2024 and December 31, 2023 — — Common stock, $ 0.0001 par value; 350,000,000 shares authorized, 56,267,670 and 32,132,890 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 5 3 Additional paid-in capital 236,489 209,265 Accumulated deficit ( 226,810 ) ( 217,244 ) Total stockholders' equity (deficit) 9,684 ( 7,976 ) Total liabilities and stockholders' equity (deficit) $ 24,434 $ 6,219 See accompanying notes to these unaudited consolidated financial statements. 4 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Operating expenses: Research and development $ 5,111 $ 7,174 General and administrative 4,534 4,107 Total operating expenses 9,645 11,281 Loss from operations ( 9,645 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Description of Business Overview SELLAS Life Sciences Group, Inc. is a late-stage clinical biopharmaceutical company focused on novel therapeutics for a broad range of cancer indications. SELLAS' lead product candidate, galinpepimut-S ("GPS"), is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center ("MSK") and targets the Wilms Tumor 1 ("WT1") protein, which is present in an array of tumor types. GPS has potential as a monotherapy or in combination with other immunotherapeutic agents to address a broad spectrum of hematologic, or blood, cancers and solid tumor indications. SELLAS' second product candidate is SLS009 (formerly GFH009), a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which the Company licensed from GenFleet Therapeutics (Shanghai), Inc. ("GenFleet"), for all therapeutic and diagnostic uses in the world outside of mainland China, Hong Kong, Macau and Taiwan ("SLS009 Territory"). 2. Liquidity Since inception, the Company has incurred recurring losses and negative cash flows from operations and, as of March 31, 2024, has an accumulated deficit of $ 226.8 million. During the three months ended March 31, 2024, the Company incurred a net loss of $ 9.6 million, and used $ 10.8 million of cash in operations. The Company expects to continue to generate operating losses and negative cash flows from operations for the next few years and will need additional funding to support its planned operating activities through profitability. The transition to profitability is dependent upon the successful development, approval, and commercialization of the Company's product candidates and the achievement of a level of revenues adequate to support its cost structure. On March 19, 2024, the Company consummated the March 2024 Registered Direct Offering priced at-the-market under Nasdaq rules, in which it entered into a Securities Purchase Agr

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) As of March 31, 2024, the Company had cash and cash equivalents of approximately $ 18.4 million and restricted cash and cash equivalents of $ 0.1 million. In accordance with Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern , the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the consolidated financial statements are issued. The Company expects its cash and cash equivalents will not be sufficient to fund its current planned operations for at least the next twelve months from the date of issuance of these consolidated financial statements. The Company will require substantial additional financing to commercially develop any current or future product candidates. If the Company is unable to obtain additional funding on a timely basis, it will be required to scale back its plans and place certain activities on hold. The Company currently does not have any commitments to obtain additional funds. The Company's management continues to evaluate different strategies to obtain the required funding for future operations. These strategies may include public and private placements of equity and/or debt securities, as well as payments from potential strategic research and development collaborations or licensing and/or marketing arrangements with pharmaceutical companies. Additionally, the Company continues to pursue discussions with global and regional pharmaceutical companies for licensing and/or co-development rights to the Company's product candidates. There can be no assurance that these future funding efforts will be successful. 3. Basis of Presentation and Significant Accounting Policies The Company's complete summary of significant accounting policies can be found in "Item 8. Financial Statements and Supplem

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) Net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share, the weighted average number of shares remains the same for both calculations due to the fact that, when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive (in thousands): Three Months Ended March 31, 2024 2023 Common stock warrants 41,802 12,361 Stock options 2,155 1,661 Restricted stock units ("RSUs") 738 444 44,695 14,466 Recent Accounting Standards Adopted In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose significant segment expenses regularly provided to the chief operating decision-maker. Public entities with a single reporting segment have to provide all disclosures required by ASC 280, including the significant segment expense disclosures. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. This ASU became effective for the Company on January 1, 2024 and did not have a material impact on the consolidated financial statements. Recent Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures , which

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) Description December 31, 2023 Quoted Prices In Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Assets: Cash equivalents $ 2,314 $ 2,314 $ — $ — Restricted cash equivalents 100 100 — — Total assets measured and recorded at fair value $ 2,414 $ 2,414 $ — $ — The Company did not transfer any financial instruments into or out of Level 3 classification during the three months ended March 31, 2024 or during the year ended December 31, 2023. 5. Acquired In-Process Research and Development Exclusive License Agreement with GenFleet Therapeutics (Shanghai) Inc. On March 31, 2022, the Company entered into an exclusive license agreement with GenFleet pursuant to which GenFleet granted to the Company a sublicensable royalty-bearing license under certain of its intellectual property, to develop, manufacture, and commercialize SLS009 for the treatment, diagnosis or prevention of disease in humans and animals in the SLS009 Territory. In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $ 10.0 million, all of which has been paid, (ii) development and regulatory milestone payments for up to three indications totaling up to $ 48.0 million in the aggregate upon the achievement of such milestones, and (iii) sales milestone payments totaling up to $ 92.0 million in the aggregate upon the achievement of certain net sales thresholds in a given calendar year. The Company also agreed to pay GenFleet single-digit tiered royalties based upon a percentage of annual net sales, with the royalty rate escalating based on the level of annual net sales of SLS009 in the SLS009 Territory ranging from the low to high single digits. 6. Balance Sheet Accounts Prepaid expenses and other current assets consist of the following (in thousands): March 31, 2024 December 31, 2023 Insurance $ 1,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) Leases The Company has

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