SLS — SELLAS Life Sciences Group, Inc.

Summary of SELLAS Life Sciences Q3 2018 Earnings Call

1. Key Financial Results and Metrics

• Cash Position: As of September 30, 2018, unrestricted cash and cash equivalents stood at $10 million, a significant increase from $2.3 million at the end of 2017.
• Net Loss: The net loss attributable to common stockholders for Q3 2018 was $9.4 million, 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 in the prior year, primarily due to reduced stock-based compensation and legal costs.
• Cash Burn: Net cash used in operating activities for the nine months ended September 30, 2018, was $25.9 million.

2. Strategic Updates and Business Highlights

• Clinical Pipeline:
  • Galinpepimut-S (GPS): Entering a pivotal Phase III trial for acute myeloid leukemia (AML) in early 2019, with fast-track and orphan drug designations from the FDA. A collaboration with Merck is ongoing to evaluate GPS in combination with Keytruda across multiple tumor types.
  • Nelipepimut-S (NPS): Positive Phase IIb results in triple-negative breast cancer (TNBC) were reported, showing a significant reduction in relapse risk. The company plans to meet with the FDA for regulatory guidance on NPS.
• Corporate Developments: Completed a $22 million financing in July 2018 and resolved litigation with JGB, resulting in a $6.6 million settlement and the elimination of outstanding debt.

3. Forward Guidance and Outlook

• SELLAS expects its cash reserves to fund operations through at least March 2019, with updates to this guidance anticipated during the Q4 earnings report.
• The company is positioned to ramp up clinical activities for GPS and NPS, with significant developments expected in early 2019.

4. Bad News, Challenges, or Points of Concern

• Increased Net Loss: The net loss increased year-over-year, primarily due to non-cash charges related to equity issuances, raising concerns about financial sustainability.
• Cash Burn Rate: The high cash burn rate may pose challenges if additional funding is not secured beyond the current guidance period.
• Regulatory Risks: The success of GPS and NPS is contingent on favorable regulatory outcomes, which can be unpredictable.

5. Notable Q&A Insights

• FDA Discussions: The upcoming meeting with the FDA regarding NPS is seen as crucial, with expectations for potential accelerated approval pathways discussed.
• Global Trial for AML: There is optimism that a single pivotal Phase III trial for GPS in AML could suffice for regulatory approval, contingent on meeting primary endpoints.
• Partnering Strategy: The company is actively pursuing out-licensing opportunities for NPS, with upcoming FDA discussions expected to influence these negotiations.
• Clinical Data Expectations: Anticipated data presentations at upcoming conferences are expected to provide further insights into the efficacy of NPS and could impact partnering discussions.

Overall, SELLAS Life Sciences is making significant strides in its clinical programs while navigating financial challenges and regulatory landscapes. The upcoming months will be critical for the company as it seeks to capitalize on its promising pipeline and secure its financial footing.