Seelos Therapeutics, Inc. (SEEL) is a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapies for the treatment of Central Nervous System (CNS) disorders and other rare diseases. The company’s diverse pipeline of product candidates has been shaped by a strategic vision to address significant unmet medical needs, leveraging their expertise and innovative approaches.
Business Overview and Company History
Seelos Therapeutics has a rich history dating back to 1987 when it was originally incorporated as NexMed, Inc. The company underwent several name changes over the years, including Apricus Biosciences, Inc. in 2010. In 2018, Apricus Biosciences entered into a merger agreement with the privately-held biopharmaceutical company Seelos Therapeutics, Inc. The merger was completed in January 2019, resulting in the company adopting its current name, Seelos Therapeutics, Inc.
Prior to the merger, the company was primarily focused on the development and commercialization of products for the treatment of erectile dysfunction and Raynaud’s Phenomenon, secondary to scleroderma. However, these legacy programs were deprioritized following the merger as the company shifted its strategic direction towards the development of novel therapies for CNS disorders and other rare diseases.
Since the merger, Seelos has made significant strides in advancing its pipeline of product candidates. The company’s lead programs include SLS-2.00, an intranasal racemic ketamine formulation for the treatment of acute suicidal ideation and behavior (ASIB) in patients with major depressive disorder (MDD), and SLS-5.00, an intravenous formulation of trehalose for the potential treatment of amyotrophic lateral sclerosis (ALS), spinocerebellar ataxia (SCA), and Huntington’s disease.
Throughout its history, Seelos has faced various challenges, including delays in product development and difficulties in securing sufficient funding. However, the company has also achieved several important milestones, such as obtaining Orphan Drug Designation for SLS-5.00 in various indications, receiving acceptance of Investigational New Drug (IND) applications for its product candidates, and initiating multiple clinical trials.
Financial Snapshot and Liquidity
As of June 30, 2024, Seelos Therapeutics reported a cash balance of $0.30 million, which highlights the company’s need to secure additional funding to support its ongoing operations and clinical development activities. The company’s net loss for the six months ended June 30, 2024 was $1.00 million, and its net operating cash outflow during the same period was $5.60 million.
Seelos Therapeutics has historically relied on the issuance of convertible notes, the sale of common stock and warrants, and the exercise of warrants to fund its operations. In 2021, the company entered into a $22.00 million convertible promissory note agreement with Lind Global Asset Management V, LLC, which has been subsequently amended several times. As of June 30, 2024, the outstanding principal amount of the convertible note was $11.40 million.
The company’s ability to continue as a going concern is dependent on its success in raising additional capital, as its current cash resources are not sufficient to satisfy its operating cash needs for at least one year. Seelos Therapeutics has filed a shelf registration statement with the SEC, which provides the company with the flexibility to raise additional funds through the sale of various securities, subject to certain limitations.
For the most recent quarter (Q2 2024), Seelos reported revenue of $376,000, primarily consisting of grant funding. The company’s net income for the quarter was $1,710,000, largely driven by changes in the fair value of convertible notes and warrant liabilities. Operating cash flow and free cash flow for the quarter were both negative at $972,000, reflecting ongoing research and development expenses.
As of December 31, 2023, Seelos had a debt-to-equity ratio of -0.36, with $14.23 million in total debt and -$33.51 million in stockholders’ equity. The company’s current ratio and quick ratio as of June 30, 2024, were both 0.076, indicating potential liquidity challenges.
The convertible promissory note with Lind Global Asset Management V, LLC contains certain restrictive covenants, including a requirement to maintain a minimum cash balance equal to 50% of the outstanding principal amount. This requirement further constrains the company’s available liquidity.
Clinical Pipeline and Regulatory Milestones
SLS-2.00, Seelos Therapeutics’ lead product candidate, is a novel intranasal racemic ketamine formulation being developed for the treatment of ASIB in patients with MDD. The company has completed a Phase II proof-of-concept study for this program, with positive topline data reported in September 2023. Seelos is currently exploring potential partnerships and collaborations to advance the development of SLS-2.00, leveraging its unique expertise in the field of ketamine-based therapies for mental health indications.
The SLS-2.00 program includes two parallel healthy volunteer studies (Phase I) and a proof-of-concept study conducted in two parts. Part 1 was an open-label study of 17 subjects, while Part 2 was a double-blind, placebo-controlled study of approximately 175 subjects. The company announced positive topline data from Part 1, demonstrating a significant treatment effect and a well-tolerated safety profile for ASIB in patients with MDD.
SLS-5.00, the company’s other key asset, is an intravenous formulation of trehalose being evaluated for the treatment of ALS and SCA. In March 2024, Seelos reported topline data from the Phase III HEALEY ALS platform trial, which showed a potential signal of efficacy in a pre-specified subgroup of patients. The company is currently analyzing the full dataset and exploring next steps for the continued development of SLS-5.00 in ALS and SCA.
SLS-5.00 has received Orphan Drug Designation from both the FDA and European Medicines Agency for SCA3 and oculopharyngeal muscular dystrophy, as well as Fast Track designation for oculopharyngeal muscular dystrophy. The company completed enrollment for a clinical study in ALS in February 2023 and began enrollment for a clinical study in SCA in October 2022.
Seelos Therapeutics has also made progress with its earlier-stage pipeline programs, such as SLS-4.00 and SLS-7.00, which target Parkinson’s Disease through different mechanisms of action. SLS-4.00 is licensed from Duke University, while SLS-7.00 is licensed from The Regents of the University of California. The company has reported positive preclinical data for these programs and is working to advance them towards clinical development, subject to the availability of additional funding.
Challenges and Risks
Seelos Therapeutics, like many other clinical-stage biopharmaceutical companies, faces several significant challenges and risks that could impact its future success. These include the inherent uncertainties and risks associated with the drug development process, the need to secure additional funding to support its operations and pipeline advancement, and the highly competitive nature of the CNS and rare disease therapeutic landscapes.
The company’s reliance on third-party manufacturers and contract research organizations for the production and testing of its product candidates also introduces potential supply chain and operational risks. Additionally, Seelos Therapeutics must navigate the complex regulatory environment, including the need to obtain and maintain necessary approvals from the U.S. Food and Drug Administration (FDA) and other regulatory authorities.
Furthermore, the company’s financial position and liquidity concerns, as evidenced by its limited cash resources and recurring losses, could pose significant hurdles to the successful execution of its strategic and operational plans. Seelos Therapeutics will need to demonstrate its ability to effectively manage these challenges and risks to achieve its goal of bringing novel therapies to market and creating value for its shareholders.
The company has received notices from Nasdaq indicating non-compliance with the minimum bid price and market value of listed securities requirements. While Seelos is working to regain compliance, there is no assurance it will be successful, which could potentially impact its ability to maintain its listing on the Nasdaq exchange.
Outlook and Conclusion
Seelos Therapeutics remains focused on advancing its key clinical programs, SLS-2.00 and SLS-5.00, while also exploring strategic partnerships and collaborations to bolster its financial position and pipeline development efforts. The company’s ability to navigate the evolving biopharmaceutical landscape and successfully commercialize its product candidates will be crucial in determining its future success.
In April 2024, Seelos announced a strategic focus on mental health initiatives related to its ketamine expertise with SLS-2 in suicidality. This shift in focus demonstrates the company’s adaptability in response to clinical results and market opportunities. The appointment of Richard Pascoe as the Chairman of the Board to lead ongoing strategic processes and business development discussions further underscores the company’s commitment to exploring all avenues for growth and value creation.
Despite the significant challenges and uncertainties faced by the company, Seelos Therapeutics’ commitment to innovation and its diverse pipeline of product candidates suggest that it may be well-positioned to make meaningful contributions to the treatment of CNS disorders and other rare diseases, should it be able to overcome its current financial and operational hurdles. Investors and stakeholders will closely monitor the company’s progress in the coming quarters and years as it works to transform its promising research and development efforts into tangible clinical and commercial achievements.
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