SELLAS Life Sciences Group, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; financial statements are unaudited. SELLAS is a clinical-stage biotechnology company developing GPS, a WT1-targeting immunotherapy, and SLS009, a CDK9 inhibitor. It reported no product sales or licensing revenue in the quarter.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior date |
|---|---|---|
| Revenue | None | None in Q1 2023 |
| Research and development expense | $5.1 million | $7.2 million |
| General and administrative expense | $4.5 million | $4.1 million |
| Total operating expenses | $9.6 million | $11.3 million |
| Net loss | $9.6 million | $11.1 million |
| Net loss per share, basic and diluted | $0.21 | $0.47 |
| Cash used in operating activities | $10.8 million | $12.1 million |
| Cash and cash equivalents at period-end | $18.4 million | $2.5 million at Dec. 31, 2023 |
| Total assets | $24.4 million | $6.2 million at Dec. 31, 2023 |
| Total liabilities | $14.8 million | $14.2 million at Dec. 31, 2023 |
Cash, cash equivalents and restricted cash totaled $18.5 million at March 31, 2024. The company had $14.4 million of current liabilities, including accounts payable and accrued expenses; reported debt is not identified in the filing. Operating lease liabilities totaled $0.8 million. With no revenue, profit margins are not meaningful.
Financing activities provided $26.6 million in net cash, primarily from January and March 2024 equity offerings. The company reported an accumulated deficit of $226.8 million and stated that cash on hand would not fund planned operations for at least the next 12 months from the financial statements’ issuance date. Management identified substantial doubt about the company’s ability to continue as a going concern.
Material changes and financing
- Net loss narrowed by $1.5 million year over year, principally as R&D expense fell $2.1 million. Management attributed the decrease mainly to timing of a prior-year clinical drug-supply purchase and lower consultant, personnel and licensing costs.
- G&A expense rose $0.4 million, including a $1.1 million one-time severance charge, partly offset by lower outside services, public-company costs and other personnel expenses.
- January and March offerings generated approximately $8.2 million and $18.5 million in net proceeds, respectively. The March offering included 11.0 million common shares and pre-funded warrants; those pre-funded warrants were subsequently exercised. Both offerings also involved substantial common-warrant issuance.
- Common shares outstanding were 56.3 million at March 31 and 57.8 million as of May 13, 2024. At quarter-end, 41.8 million warrants, 2.2 million options and 0.7 million RSUs were outstanding, creating potential dilution.
Programs, outlook and risks
- GPS / REGAL: Enrollment in the Phase 3 AML maintenance study was completed in March. The event-driven interim analysis after 60 deaths was expected possibly in Q2 2024, with final analysis after 80 deaths potentially by year-end; actual timing is uncertain. The primary endpoint is overall survival, and any BLA submission would depend on results and FDA agreement.
- SLS009: March topline Phase 2a data in relapsed/refractory AML with azacitidine and venetoclax reported response rates of 10% at 45 mg once weekly, 20% at 60 mg once weekly, and 50% at 30 mg twice weekly. At least 50% bone-marrow blast reduction was reported in 67% across dose levels. Median overall survival had not been reached. These are preliminary clinical findings, not evidence of regulatory approval or established efficacy.
- The filing also describes additional preliminary SLS009 biomarker findings announced in May 2024, after quarter-end, and expects further trial updates in Q2 and Q3 2024. These forward-looking timelines and results are uncertain.
- SELLAS expects R&D spending to increase as it advances GPS and SLS009. It has no committed additional financing and may need to raise equity or debt, secure partnerships or licensing proceeds, or reduce or pause activities. Funding success is not assured.
- SELLAS is pursuing binding arbitration against 3D Medicines over development obligations and the trigger and payment of $13.0 million in milestones. The outcome and timing of any recovery are uncertain. A further $191.5 million in potential 3D Medicines milestones is variable and not under SELLAS’s control; no licensing revenue was recorded this quarter.
- Clinical-development, regulatory, financing, competitive and commercialization risks remain significant. The filing reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Current cash runway, expected spending and whether new financing or a strategic transaction is secured; the filing explicitly cites substantial doubt about going concern.
- REGAL interim and final event counts, analysis timing and results, including any FDA discussions affecting a potential BLA.
- Updated SLS009 trial data, including durability, patient numbers, dose-cohort outcomes and validation of the reported biomarker findings.
- Progress and outcome of the 3D Medicines arbitration, including whether the claimed $13.0 million milestones are payable and collectible.
- Actual dilution from warrants and other equity awards, and any additional capital raises or changes to cash and share counts after May 13, 2024.