SELLAS Life Sciences Group, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. The unaudited filing was signed August 10, 2023. SELLAS is a clinical-stage biopharmaceutical company developing GPS, a WT1-targeting cancer immunotherapy, and SLS009, a CDK9 inhibitor. It reported no product sales.
Financial highlights
Amounts below are in millions of dollars unless otherwise noted.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Licensing revenue | $0 | $0 | $0 | $1.0 |
| Research and development expense | $5.9 | $5.5 | $13.1 | $10.1 |
| General and administrative expense | $3.1 | $3.1 | $7.2 | $6.1 |
| Operating loss | $(9.1) | $(8.6) | $(20.3) | $(25.4) |
| Net loss | $(8.8) | $(8.4) | $(19.9) | $(25.2) |
| Basic and diluted loss per share | $(0.31) | $(0.41) | $(0.77) | $(1.39) |
| Net cash used in operating activities | — | $(19.7) | $(12.9) |
Balance sheet and liquidity at June 30, 2023: Cash and cash equivalents were $13.8 million, with restricted cash of $0.1 million; total current assets were $15.6 million and current liabilities were $13.4 million. Total liabilities were $13.7 million and stockholders’ equity was $4.8 million. The filing reports no borrowings; liabilities primarily include accounts payable, accrued expenses, the $3.0 million GenFleet license payment due, and lease liabilities. Accumulated deficit was $199.8 million.
Cash flows and financing: Cash, cash equivalents and restricted cash decreased $3.3 million in the first half, to $13.9 million. Investing outflow was $2.5 million, chiefly a GenFleet license payment. Financing provided $18.9 million, including approximately $18.5 million net proceeds from the February 2023 offering and $0.3 million under the at-the-market sales agreement. The offering issued 7.22 million shares and warrants to buy an additional 7.22 million shares at $2.77 per share; warrants expire in February 2028. The company had 28.35 million common shares outstanding at June 30.
Changes versus prior comparable periods
- Q2 net loss increased by $0.4 million year over year, primarily as R&D expense rose $0.4 million; G&A was broadly stable.
- First-half net loss narrowed by $5.2 million, largely because the 2022 period included a $10.0 million acquired in-process R&D charge and $1.0 million of licensing revenue. This improvement was partly offset by higher R&D and G&A expenses and the absence of that prior-year revenue.
- First-half operating cash use increased by $6.8 million year over year. Cash and cash equivalents declined from $17.1 million at December 31, 2022 to $13.8 million at June 30, 2023.
Outlook, risks and notable items
- Going concern and funding: Management states existing cash is not expected to fund planned operations for at least 12 months from issuance of the financial statements, raising substantial doubt about the company’s ability to continue as a going concern. Further financing is required; absent timely funding, the company may need to scale back plans or pause activities. The $13.0 million in expected 3DMed milestones is not included in the going-concern assessment because it is variable and outside the company’s control.
- Potential milestone: SELLAS expects two payments totaling $13.0 million in Q3 2023 following 3DMed’s participation in the REGAL trial in China. The filing describes the payments as expected, not received. A further $191.5 million in potential 3DMed milestones, plus royalties, remains contingent on future events.
- Clinical outlook: Management expected the GPS REGAL Phase 3 interim analysis after 60 deaths by year-end 2023 or early 2024, and final analysis after 80 deaths by year-end 2024; timing is event-driven and may differ. The filing also anticipated Q4 2023 topline data from the SLS009 Phase 2a AML combination study and additional data from the GPS/pembrolizumab and GPS/nivolumab studies. These are forward-looking expectations, not assured outcomes.
- Management expects R&D spending to increase as GPS and SLS009 trials advance. Clinical enrollment, trial results, regulatory outcomes, competition and the ability to raise capital are significant risks.
- SELLAS reported no pending or threatened litigation as of June 30, 2023, no off-balance-sheet financing arrangements, and no material subsequent events identified in the filing.
Important facts for investors to verify
- Whether SELLAS received the expected $13.0 million 3DMed milestone payments and whether the timing or amount changed.
- Current cash runway, operating cash use, financing plans and any updated going-concern disclosure.
- Actual timing and results of the GPS REGAL interim and final analyses, including event counts and regulatory implications.
- Clinical progress and reported results for SLS009 trials and the GPS combination studies, compared with the filing’s expectations.
- Share count, warrant exercises and potential dilution, including the 12.36 million warrants outstanding at June 30, 2023.