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 product candidates include galinpepimut-S (GPS), a peptide immunotherapy targeting the Wilms tumor 1 (WT1) antigen, and SLS009, a highly selective small molecule cyclin-dependent kinase 9 (CDK9) inhibitor.
Business Overview and History
SELLAS was founded in 2012 with the goal of developing innovative cancer treatments. The company's lead product candidate, GPS, was licensed from Memorial Sloan Kettering Cancer Center in 2015. GPS targets the WT1 antigen, which is present in over 20 different cancer types, making it a potentially versatile immunotherapeutic agent.
In January 2020, SELLAS commenced an open-label randomized Phase 3 clinical trial called the REGAL study for GPS monotherapy in patients with acute myeloid leukemia (AML) in the maintenance setting after achievement of second complete remission. This study was planned to enroll approximately 125 to 140 patients across North America, Europe, and Asia.
In December 2020, SELLAS entered into an exclusive license agreement with 3D Medicines Inc., a China-based biopharmaceutical company, for the development and commercialization of GPS and a next-generation heptavalent immunotherapeutic across Greater China. SELLAS has received $10.5 million in upfront and milestone payments to date under this agreement, with an additional $191.5 million in potential future development, regulatory and sales milestones, not including future royalties. However, in December 2023, SELLAS commenced a binding arbitration proceeding against 3D Medicines regarding the trigger and payment of certain milestone payments due under their 2020 licensing agreement.
In March 2022, SELLAS entered into an exclusive license agreement with GenFleet Therapeutics Shanghai, Inc. that granted the company rights to develop and commercialize SLS009, a highly selective small molecule cyclin-dependent kinase 9 (CDK9) inhibitor, worldwide except for Greater China. SELLAS completed a Phase 1 dose-escalating clinical trial for SLS009 in 2023 and reported positive safety and efficacy data.
Throughout its history, SELLAS has faced challenges common to clinical-stage biopharmaceutical companies, including the need to continually raise capital through various financing transactions, such as registered direct offerings, to fund its research and development activities. The company has not yet generated any revenue from product sales, relying on partnerships and financing to sustain its operations and advance its pipeline.
Financial Overview
SELLAS has not generated any revenue from product sales to date, with its primary source of revenue coming from the 3D Medicines licensing agreement. The company's financial statements reflect the significant investments it has made in research and development to advance its pipeline.
For the fiscal year ended December 31, 2023, SELLAS reported a net loss of $37.3 million, with no revenue generated. The company's cash and cash equivalents totaled $2.6 million as of December 31, 2023, with an additional $0.1 million in restricted cash. SELLAS' cash position was bolstered by a series of financing activities in 2024, including a $19.5 million registered direct offering in August 2024 and an $18.5 million registered direct offering in March 2024.
For the nine months ended September 30, 2024, SELLAS reported total operating expenses of $24.59 million, consisting of $14.66 million in research and development expenses and $9.94 million in general and administrative expenses. The company's net loss for this period was $24.14 million. As of September 30, 2024, SELLAS had $21.03 million in cash and cash equivalents and $100,000 in restricted cash and cash equivalents.
The company's most recent fiscal year's annual operating cash flow was -$31.41 million, with an annual free cash flow of -$36.91 million. For the most recent quarter, SELLAS reported a net loss of $7.11 million.
Liquidity
The company's financial ratios indicate a strong liquidity position, with a current ratio of 2.26 and a quick ratio of 2.26 as of September 30, 2024. However, SELLAS has a significant accumulated deficit of $241.4 million as of September 30, 2024, reflecting the ongoing investments required to advance its clinical pipeline.
SELLAS' debt-to-equity ratio stands at 0.036, indicating a relatively low level of debt. The company expects its current cash resources will not be sufficient to fund its planned operations for at least the next twelve months, and it will require substantial additional financing to advance the development of its product candidates.
Pipeline and Key Developments
Galinpepimut-S (GPS)
SELLAS' lead product candidate, GPS, is a cancer immunotherapeutic agent that targets the WT1 antigen. GPS has received Orphan Drug Designations from the FDA and the EMA for the treatment of acute myeloid leukemia (AML), malignant pleural mesothelioma (MPM), and multiple myeloma (MM), as well as Fast Track designations from the FDA for AML, MPM, and MM.
The ongoing Phase 3 REGAL study is evaluating GPS as a monotherapy in the maintenance setting for AML patients who have achieved second complete remission. In June 2024, the Independent Data Monitoring Committee (IDMC) conducted a pre-specified risk-benefit assessment of unblinded data from the REGAL study and recommended that the trial continue without modifications. The IDMC projected with a high level of confidence that the interim analysis, which is event-driven, will occur by the fourth quarter of 2024. SELLAS completed enrollment for the REGAL study in March 2024.
In October 2024, the FDA granted Rare Pediatric Disease Designation (RPDD) to GPS for the treatment of pediatric AML. This designation provides eligibility for GPS to receive a Priority Review Voucher upon marketing approval, which can be transferred or sold to other parties. Recent valuations for such vouchers have remained attractive, around $100 million each.
SLS009 (Tambiciclib)
SLS009 is a highly selective small molecule CDK9 inhibitor licensed from GenFleet Therapeutics. CDK9 activity has been shown to correlate negatively with overall survival in various cancer types, including hematological cancers and solid tumors.
In mid-2023, SELLAS completed a Phase 1 dose-escalating clinical trial for SLS009 in relapsed/refractory AML and refractory lymphoma patients, reporting positive safety and efficacy data. The company established a recommended Phase 2 dose (RP2D) of 60 mg once weekly for AML and 100 mg once weekly for lymphomas.
In the second quarter of 2023, SELLAS commenced an open-label, single-arm, multi-center Phase 2a clinical trial evaluating the safety, tolerability, and efficacy of SLS009 in combination with venetoclax and azacitidine (azaven) in patients with AML who failed or did not respond to treatment with venetoclax-based therapies. Positive topline data from this trial were reported in March 2024, with overall response rates of 10%, 20%, and 50% observed in the 45 mg, 60 mg once weekly, and 30 mg twice weekly dose cohorts, respectively. The company also observed strong anti-leukemic activity, defined as 50% or more bone marrow blast reduction, in 67% of patients across all dose levels.
In May 2024, SELLAS announced that it had identified potential biomarkers, including the ASXL1 mutation, that are predictive of response to SLS009. The company has expanded the ongoing Phase 2a trial to include additional cohorts focused on these biomarkers. Preliminary data showed a 100% response rate in relapsed/refractory AML patients with ASXL1 mutations at the optimal 30 mg twice weekly dose level.
The FDA has granted Orphan Drug Designations to SLS009 for AML and peripheral T-cell lymphoma, as well as Fast Track designations for relapsed/refractory AML and relapsed/refractory peripheral T-cell lymphoma. Additionally, the FDA granted Rare Pediatric Disease Designations to SLS009 for the treatment of pediatric acute lymphoblastic leukemia and pediatric AML.
Risks and Challenges
SELLAS faces several risks and challenges common to clinical-stage biopharmaceutical companies, including the inherent uncertainties of drug development, the ability to successfully execute its clinical trials, and the potential for regulatory setbacks or delays. The company's reliance on key partnerships, such as the agreement with 3D Medicines, also introduces risks related to the timely achievement of milestones and the successful commercialization of its product candidates in the licensed territories.
The competitive landscape in the oncology space is another significant risk factor, as SELLAS' product candidates may face competition from other novel therapies in development or already on the market. Additionally, the company's limited financial resources and ongoing need for capital raise concerns about its ability to sustain operations and advance its pipeline without additional financing.
Conclusion
SELLAS Life Sciences Group is a promising biopharmaceutical company with a diversified pipeline of novel cancer therapies. Its lead product candidate, GPS, is currently being evaluated in a pivotal Phase 3 trial for AML, with an interim analysis expected in the fourth quarter of 2024. Meanwhile, the company's selective CDK9 inhibitor, SLS009, has demonstrated encouraging results in early-stage trials and is being explored for its potential in both hematological and solid tumor indications.
While SELLAS faces the typical risks associated with clinical-stage biotechnology companies, its unique approaches to targeting the WT1 antigen and CDK9 pathway, as well as the recent advancements in its pipeline, position the company as a compelling investment opportunity in the oncology space. Investors should closely monitor the upcoming REGAL study interim analysis and the continued development of SLS009 to gauge the company's progress and future potential.