SELLAS Life Sciences Group, Inc. (NASDAQ:SLS) is a late-stage clinical biopharmaceutical company focused on the development of novel therapeutics for a broad range of cancer indications. The company's lead product candidates include galinpepimut-S (GPS), a cancer immunotherapeutic agent targeting the Wilms Tumor 1 (WT1) antigen, and SLS009, a highly selective small molecule cyclin-dependent kinase 9 (CDK9) inhibitor.
Business Overview
SELLAS' lead product candidate, GPS, is licensed from Memorial Sloan Kettering Cancer Center and has the potential as a monotherapy or in combination with other immunotherapeutic agents to address a broad spectrum of hematologic cancers and solid tumor indications. The company is currently conducting a Phase 3 clinical trial, the REGAL study, evaluating GPS monotherapy in patients with acute myeloid leukemia (AML) in the maintenance setting after achievement of second complete remission.
In addition, SELLAS is developing SLS009, a highly selective CDK9 inhibitor licensed from GenFleet Therapeutics. SLS009 has demonstrated promising results in Phase 1 and Phase 2a clinical trials for the treatment of AML and relapsed/refractory lymphomas. The company recently announced that SLS009 received Rare Pediatric Disease Designation from the FDA for the treatment of pediatric AML, as well as Orphan Drug Designation from the European Medicines Agency for the treatment of AML.
Financial Performance
For the full year 2023, SELLAS reported an annual net loss of $37.3 million, with no revenue generated. The company's annual operating cash flow was -$31.4 million, and its annual free cash flow was -$36.9 million. These financial results reflect the company's continued investment in the development of its pipeline candidates.
In the third quarter of 2024, SELLAS reported a net loss of $9.3 million, with no revenue generated. The company's operating cash flow for the quarter was -$8.5 million, and its free cash flow was -$9.4 million. These quarterly results are in line with the company's annual financial performance, as it continues to focus on advancing its clinical programs.
Liquidity and Capital Resources
As of September 30, 2024, SELLAS had $4.0 million in cash and cash equivalents, along with $0.1 million in restricted cash and cash equivalents. The company's current liabilities stood at $11.7 million, resulting in a current ratio of 1.49.
In October 2024, SELLAS announced the completion of a $4.0 million registered direct offering, which provided additional funding to support the company's operations. However, the company's management has expressed concerns about its ability to continue as a going concern, as its current cash resources may not be sufficient to fund its planned operations for the next 12 months.
To address its liquidity needs, SELLAS is actively exploring various financing options, including public and private placements of equity and/or debt securities, as well as potential strategic collaborations or licensing agreements. The company's ability to continue as a going concern is dependent on its success in obtaining additional funding and/or generating revenue from its product candidates.
Pipeline and Clinical Development
Galinpepimut-S (GPS)
GPS is SELLAS' lead product candidate, a cancer immunotherapeutic agent targeting the WT1 antigen. The company is currently conducting the REGAL study, a Phase 3 clinical trial evaluating GPS monotherapy in AML patients in the maintenance setting after achievement of second complete remission.
In December 2020, SELLAS entered into an exclusive license agreement with 3D Medicines Inc. for the development and commercialization of GPS and its next-generation heptavalent immunotherapeutic GPS+ in Greater China. Under the agreement, SELLAS has received $10.5 million in upfront and milestone payments to date, with the potential for an additional $191.5 million in future development, regulatory, and sales milestones.
SLS009
SLS009 is a highly selective small molecule CDK9 inhibitor licensed from GenFleet Therapeutics. The company is currently evaluating SLS009 in a Phase 2a clinical trial for the treatment of AML patients who have relapsed after or are refractory to venetoclax-based therapies. In the 60 mg dose cohort, the target response rate at the optimal dose level is 20% with a target median survival over 3 months.
In July 2024, the FDA granted Rare Pediatric Disease Designation to SLS009 for the treatment of pediatric AML, and in July 2024, the European Commission granted Orphan Drug Designation to SLS009 for the treatment of AML. These designations provide regulatory and financial incentives to support the development of SLS009 for these indications.
Risks and Challenges
SELLAS faces several risks and challenges in the development and commercialization of its product candidates:
1. Clinical development risks: The success of SELLAS' pipeline is dependent on the positive outcomes of its ongoing and future clinical trials. Delays or failures in these trials could significantly impact the company's timeline and financial resources.
2. Regulatory approval uncertainty: Even if SELLAS' product candidates demonstrate positive results in clinical trials, there is no guarantee that they will receive regulatory approval from the FDA or other global regulatory authorities.
3. Competitive landscape: SELLAS operates in a highly competitive oncology market, with numerous other companies developing therapies targeting similar indications. The company's products will need to demonstrate superior efficacy and safety to gain market share.
4. Liquidity and funding concerns: As mentioned earlier, SELLAS' current cash resources may not be sufficient to fund its planned operations for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern. Securing additional financing will be crucial for the company's future.
Outlook and Conclusion
SELLAS' pipeline of novel cancer therapies, including the promising GPS and SLS009 candidates, holds significant potential to address unmet needs in the oncology landscape. The company's recent regulatory designations for SLS009 further validate the therapeutic potential of its product candidates.
However, SELLAS' financial performance and liquidity position remain a concern, as the company continues to invest heavily in its clinical development programs while generating no revenue. The company's ability to secure additional funding will be crucial in determining its long-term viability and the successful advancement of its pipeline.
Investors should closely monitor SELLAS' progress in its clinical trials, regulatory milestones, and efforts to address its liquidity challenges. The company's ability to navigate these obstacles will be key in determining the future success of its novel cancer therapies and the potential value they may bring to patients and shareholders alike.