SELLAS Life Sciences Group, Inc. (NASDAQ: SLS), is a clinical-stage biopharmaceutical company focused on the development of novel cancer immunotherapies for a broad range of cancer indications.
In the recent past, the company continues to make significant progress in laying the foundation for executing its clinical programs. Sellas’s business risk profile is supported by multiple breakthroughs on the research and development side. Also, from an industry perspective, biotech continues to remain lucrative and the popularity of the industry is driven by new drug developments, continuous innovations in various fields and regulatory support from U.S. Food and Drug Administration (FDA) amongst others. According to a research report published by Grand View Research, the global biotech sector is currently surging again and on track to a possible value of $727 billion by 2025.
Analyst tracking the stock believes that the company is in a critical inflection point and is having a favorable risk-reward position. Thus, value investors should consider exposure in this sector as the backdrop remains favorable. Per www.marketbeat.com, SLS’s average twelve-month price target is $11.00, suggesting that the stock has a possible upside of 497.83%.
Recent announcements:
On 9th Nov, the company announced data from a preplanned secondary efficacy analysis across human leukocyte antigen (HLA) allele subgroups from the prospective, randomized, single-blinded, controlled Phase 2b independent investigator-sponsored clinical trial of the combination of nelipepimut-S (NeuVax™, NPS) +/- trastuzumab (Herceptin®) targeting HER2 low-expressing breast cancer patient cohorts.
The data presented confirm Clinically meaningful and statistically significant benefit in the HLA-A24+ subgroup (p=0.003), highly prevalent in the Asian population, with a 90.6% decrease in the relative risk of relapse or death at 24 months in favor of the combination arm. SLS is scheduled to meet with the U.S. regulatory authorities in December 2018 on the most optimal and expeditious development path for NPS in TNBC, and continue to advance ongoing interactions with potential partners
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On 9th Nov, the company announced that it has agreed to a settlement with JGB (Cayman) Newton, Ltd. (JGB) regarding Sellas’ counterclaims against JGB which were asserted in the litigation commenced initially by JGB. As part of the settlement, JGB has paid SELLAS approximately $6.6 million in exchange for a full discharge of all claims and counterclaims asserted by SELLAS and JGB in the litigation. SELLAS and JGB have also agreed to terminate the debenture agreement and all related agreements, with JGB releasing all of its interests in the collateral for the debenture.
On 22nd October, SELLAS Life Sciences Announces Positive Final Data in Triple Negative Breast Cancer Patients from Phase 2b Clinical Trial of Nelipepimut-S (NeuVax™) in Combination with Trastuzumab (Herceptin®) Presented at the European Society for Medical Oncology (ESMO) 2018 Annual Meeting.
On 13th September, the company announced that it has received Orphan Medicinal Product Designation Approval by the Committee for Orphan Medicinal Products of the European Medicines Agency for Galinpepimut-S for the Treatment of Patients with Multiple Myeloma.
Upcoming results: The Company is scheduled to host a conference call and live audio webcast on Thursday, November 15, 2018, at 8:00 a.m. ET to report third-quarter 2018 financial results and provide a corporate update.
Clinical Development Pipeline:
*Pending Funding
**Granted Orphan Drug Product Designation from FDA and Orphan Medicinal Product Designation from EMA and Fast Track status from FDA
***Granted Fast Track status from FDA
****Since the closing of the Merger, management has been evaluating GALE-301, GALE-302, and GALE-401 for potential internal development, strategic partnership, or other types of product rationalization
About the Company:
SELLAS is a clinical-stage biopharmaceutical company focused on novel cancer immunotherapeutics for a broad range of cancer indications. SELLAS’ lead product candidate, galinpepimut-S (GPS), is licensed from Memorial Sloan Kettering Cancer Center and targets the Wilms Tumor 1 (WT1) protein, which is present in an array of tumor types.
GPS has potential as a monotherapy or in combination to address a broad spectrum of hematologic malignancies and solid tumor indications.
SELLAS has Phase 3 clinical trials planned (pending funding availability) for GPS in two indications, acute myeloid leukemia (AML) and malignant pleural mesothelioma (MPM) and is also developing GPS as a potential treatment for multiple myeloma (MM) and ovarian cancer.
SELLAS plans to study GPS in up to four additional indications. SELLAS has received Orphan Drug designations for GPS from the U.S. Food & Drug Administration (FDA) and the European Medicines Agency (EMA) for AML, MPM, and MM; GPS has also received Fast Track designation for AML, MPM and MM from the FDA. SELLAS’ second product candidate, nelipepimut-S (NeuVax™, NPS), is a HER2-directed cancer immunotherapy being investigated for the prevention of the recurrence of breast cancer after the standard of care treatment in the adjuvant setting. NPS has received Fast Track status designation by FDA for the treatment of patients with early-stage breast cancer with low to intermediate HER2 expression, otherwise known as HER2 1+ or 2+, which includes TNBC patients, following standard of care
Q2 Financial Results
R&D Expenses: Research and development expenses were $1.6 million for the second quarter of 2018, as compared to $1.8 million for the second quarter of 2017. The decrease was primarily attributable to a decrease in licensing fees, partially offset by a severance charge and an increase in clinical and regulatory consulting services. Research and development expenses for the six months ended June 30, 2018, were $3.4 million, as compared to $4.0 million for the same period in 2017. The decrease was primarily attributable to a decrease in licensing fees.
Profitability: Net loss attributable to common stockholders was $8.5 million for the second quarter of 2018, or a basic and diluted loss per share attributable to common stockholders of $1.26, as compared to a net loss attributable to common stockholders of $5.9 million for the second quarter of 2017, or a basic and diluted loss per share attributable to common stockholders of $4.50. Net loss attributable to common stockholders was $18.5 million for the six months ended June 30, 2018, or a basic and diluted loss per share attributable to common stockholders of $2.89, as compared to a net loss attributable to common stockholders of $10.5 million for the prior period, or a basic and diluted loss per share attributable to common stockholders of $8.14.
Liquidity and financial flexibility: As of June 30, 2018, cash and cash equivalents were $1.3 million, compared to $2.3 million as of December 31, 2017. Net cash used in operating activities was $11.7 million for the first half of 2018, partially offset by $8.9 million of net cash provided by financing activities. On July 16, 2018, SELLAS completed an underwritten public offering of common stock and pre-funded warrants, together with accompanying common stock warrants, for aggregate net proceeds of approximately $21.6 million, after deducting underwriting discounts, commissions and offering expenses.
Key risk factors and potential stock drivers:
- Successful completion of the upcoming milestones would lead future direction for the company. Any adversities might adversely impact the overall investor sentiments.
- The company operation is still in the clinical development stage. Therefore, its ability to maintain its present strong liquidity and financial flexibility and to fund its incremental capital requirements without any significant cost or time overruns would remain a critical challenge for the company.
- SLS operates in a competitive and dynamic space and only time would differentiate between real winners and laggards. Some of its competitors may have longer operating histories and greater resources than SLS.
- As far as choosing an option with a relative advantage is concerned, SLS is preferred choice with upside potential.
Note: For accounting purposes, SELLAS Life Sciences Group Ltd., a private Bermuda exempted company (SELLAS Ltd.), is considered to have acquired the Company (which was formerly known as Galena Biopharma, Inc. (Galena)) in the business combination between SELLAS Ltd. and Galena (the Merger); therefore, upon the Merger, the financial statements of Galena became those of SELLAS Ltd. and the results reported are those of SELLAS Ltd. reflecting the acquisition of Galena as of December 29, 2017.
Stock Performance
Comments:
- On Friday, November 9th, 2018, SLS closed at $1.84, on an above average volume of 1.9 million shares exchanging hands. Market capitalization is $36.014 million. The current RSI is 60.40.
- In the past 52 weeks, shares of SLS have traded as low as $0.80 and as high as $12.00
- At $1.84, shares of SLS are trading above its 50-day moving average (MA) at $1.36 & below its 200-day moving average (MA) at $3.52
- The present support and resistance levels for the stock are at $1.4933 & $1.9533 respectively.
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