SLS — SELLAS Life Sciences Group, Inc.

SELLAS Life Sciences Q3 2018 Earnings Call Summary

1. Key Financial Results and Metrics

• Cash Position: As of September 30, 2018, unrestricted cash and cash equivalents were $10 million, up from $2.3 million at the end of 2017.
• Net Loss: The net loss attributable to common stockholders was $9.4 million for Q3 2018, translating to a basic and diluted loss per share of $0.53, compared to a net loss of $4.5 million (loss per share of $2.27) in Q3 2017.
• Operating Expenses: Research and development expenses increased to $1.7 million in Q3 2018 from $1.1 million in Q3 2017, driven by clinical trial activities. General and administrative expenses decreased to $1.3 million from $3.2 million year-over-year.
• Cash Burn: Net cash used in operating activities was $25.9 million for the first nine months of 2018.

2. Strategic Updates and Business Highlights

• Clinical Pipeline: The company is advancing its lead candidate, galinpepimut-S (GPS), in a pivotal Phase III trial for acute myeloid leukemia (AML), expected to start in early 2019. GPS is also being evaluated in combination with Merck's Keytruda in a Phase I/II trial across multiple tumor types.
• Nelipepimut-S (NPS): Positive Phase IIb results in triple-negative breast cancer (TNBC) were reported, with a significant reduction in relapse risk. The company plans to meet with the FDA to discuss regulatory pathways for NPS.
• Corporate Developments: SELLAS completed a $22 million financing in July 2018 and resolved litigation with JGB, eliminating all outstanding debt and securing a $6.6 million payment from the settlement.

3. Forward Guidance and Outlook

• The company expects its cash and cash equivalents to fund operations through at least March 2019. Further updates on financial guidance will be provided with the Q4 and full-year results.

4. Bad News, Challenges, or Points of Concern

• Increased Net Loss: The significant increase in net loss compared to the previous year raises concerns about the sustainability of operations without additional funding.
• Cash Burn Rate: The high cash burn rate may necessitate further financing before the end of the guidance period, which could dilute existing shareholders.
• Regulatory Risks: While the company has received fast-track and orphan drug designations, the success of regulatory discussions regarding NPS and GPS remains uncertain.

5. Notable Q&A Insights

• FDA Discussions: The company is preparing for an important meeting with the FDA regarding NPS, with expectations for updates to be shared post-discussion.
• Accelerated Approval Potential: There were inquiries about the possibility of accelerated approval for NPS in TNBC; however, the CEO refrained from speculation, emphasizing the importance of regulatory guidance.
• Global Trial for AML: The CEO confirmed that a single pivotal trial for GPS in AML could suffice for regulatory approval if successful, highlighting the unmet need in this patient population.
• Operating Expense Trends: The CFO indicated that while they have control over cash burn, specific guidance on future operating expenses will be provided in the next earnings report.

This summary encapsulates the key points from the earnings call, providing a balanced view of SELLAS Life Sciences' financial performance, strategic initiatives, and outlook.