SELLAS Life Sciences Group 10-Q Filing

TL;DR

SELLAS Life Sciences Group filed their Q3 2024 10-Q. Check financials.

AI Summary

SELLAS Life Sciences Group, Inc. filed a 10-Q for the period ending September 30, 2024. The company, formerly known as Galena Biopharma, Inc. and RXi Pharmaceuticals Corp, is involved in pharmaceutical preparations. Their principal executive offices are located at 7 Times Square, Suite 2503, New York, NY 10036.

Why It Matters

This filing provides investors and stakeholders with an update on the company's financial performance and operational status for the third quarter of 2024.

Risk Assessment

Risk Level: medium — As a life sciences company, SELLAS is subject to inherent risks related to drug development, regulatory approvals, and market competition.

Key Numbers

• 2024-09-30 — Period End Date (The 10-Q covers financial information up to this date.)
• 2024-11-13 — Filing Date (The date the 10-Q was officially filed with the SEC.)

Key Players & Entities

• SELLAS Life Sciences Group, Inc. (company) — Filer of the 10-Q
• Galena Biopharma, Inc. (company) — Former name of the company
• RXi Pharmaceuticals Corp (company) — Former name of the company
• 7 Times Square, Suite 2503, New York, NY 10036 (location) — Company's business and mailing address
• 20240930 (date) — Period of report for the 10-Q

FAQ

Key Financial Figures

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

Filing Documents

• sls-20240930.htm (10-Q) — 741KB
• sls-20240930ex311.htm (EX-31.1) — 8KB
• sls-20240930ex312.htm (EX-31.2) — 8KB
• sls-20240930ex321.htm (EX-32.1) — 6KB
• sls-20240930ex322.htm (EX-32.2) — 6KB
• sls-20240930_g1.jpg (GRAPHIC) — 30KB
• 0001390478-24-000021.txt ( ) — 4613KB
• sls-20240930.xsd (EX-101.SCH) — 36KB
• sls-20240930_cal.xml (EX-101.CAL) — 42KB
• sls-20240930_def.xml (EX-101.DEF) — 144KB
• sls-20240930_lab.xml (EX-101.LAB) — 483KB
• sls-20240930_pre.xml (EX-101.PRE) — 329KB
• sls-20240930_htm.xml (XML) — 547KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1 Financial Statements 4 Unaudited Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 4 Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 5 Unaudited Consolidated Statements of Stockholders' Equity (Deficit) for the Three and Nine Months Ended September 30, 2024 and 2023 6 Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 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 28

Controls and Procedures

Item 4 Controls and Procedures 28

- 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) September 30, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 21,031 $ 2,530 Restricted cash and cash equivalents 100 100 Prepaid expenses and other current assets 2,904 542 Total current assets 24,035 3,172 Operating lease right-of-use assets 513 858 Goodwill 1,914 1,914 Deposits and other assets 43 275 Total assets $ 26,505 $ 6,219 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 4,547 $ 5,639 Accrued expenses and other current liabilities 5,490 7,650 Operating lease liabilities 576 446 Total current liabilities 10,613 13,735 Operating lease liabilities, non-current — 460 Total liabilities 10,613 14,195 Commitments and contingencies (Note 6) Stockholders' equity (deficit): 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 September 30, 2024 and December 31, 2023 — — Common stock, $ 0.0001 par value; 350,000,000 shares authorized, 64,381,979 and 32,132,890 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 6 3 Additional paid-in capital 257,274 209,265 Accumulated deficit ( 241,388 ) ( 217,244 ) Total stockholders' equity (deficit) 15,892 ( 7,976 ) Total liabilities and stockholders' equity (deficit) $ 26,505 $ 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Operating expenses: Research and development $ 4,362 $ 5,813 $ 14,659 $ 18,910 General and administrative 2,967 3,5

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 September 30, 2024, has an accumulated deficit of $ 241.4 million. During the nine months ended September 30, 2024, the Company incurred a net loss of $ 24.1 million, and used $ 28.2 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 August 1, 2024, the Company consummated a registered direct offering with an institutional investor priced at a premium to market (the "August 2024 Registered Direct

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into an Exclusive License Agreement (the "3D Medicines Agreement") with 3D Medicines Inc. ("3D Medicines"), pursuant to which the Company granted 3D Medicines a sublicensable, royalty-bearing license, under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS product candidates for all therapeutic and other diagnostic uses in mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). As of September 30, 2024, the Company has received an aggregate of $ 10.5 million in upfront payments and certain technology transfer and regulatory milestones. There is a total of $ 191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, that remains under the 3D Medicines Agreement, which milestones are all variable in nature and not under the Company's control. In December 2023, the Company commenced a binding arbitration proceeding against 3D Medicines, which involves, among other things, the trigger and payment of certain milestone payments due to the Company. See Part II, Item 1 . Legal Proceedings. As of September 30, 2024, the Company had cash and cash equivalents of approximately $ 21.0 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 twe

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) Unaudited Interim Results These consolidated financial statements and accompanying notes should be read in conjunction with the Company's annual consolidated financial statements and the notes thereto included in the 2023 Annual Report. The accompanying consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023, are unaudited, but include all adjustments, consisting of normal recurring entries, that management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2023 have been derived from the audited financial statements as of that date. Net Loss Per Share 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): Nine Months Ended September 30, 2024 2023 Common stock warrants 65,434 12,221 Stock options 1,953 1,643 Restricted stock units ("RSUs") 644 433 68,031 14,297 Recent Accounting Standards Adopted In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Top

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited) 4. Fair Value Measurements The following tables present information about the Company's assets measured at fair value on a recurring basis in the consolidated balance sheets (in thousands): Description September 30, 2024 Quoted Prices In Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Assets: Cash equivalen

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