Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________

FORM 10-Q

________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-33958

SELLAS Life Sciences Group, Inc.

(Exact name of registrant as specified in its charter)


Delaware						20-8099512
(State of incorporation)						(I.R.S. Employer Identification No.)

7 Times Square, Suite 2503, New York, NY 10036

(646) 200-5278

(Address, including zip code, and telephone number, including

area code, of registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	SLS	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter time that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ Yes ☒ No

As of November 8, 2023, SELLAS Life Sciences Group, Inc. had outstanding 32,062,258 shares of common stock.

SELLAS LIFE SCIENCES GROUP, INC.

FORM 10-Q - Quarterly Report

For the Quarter Ended September 30, 2023

TABLE OF CONTENTS


		Page
	PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	4
	Unaudited Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	4
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Unaudited Consolidated Statements of Stockholders' (Deficit) Equity for the Three and Nine Months Ended September 30, 2023 and 2022	6
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	7
	Unaudited Notes to Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4	Controls and Procedures	29
	PART II - OTHER INFORMATION
Item 1	Legal Proceedings	31
Item 1A	Risk Factors	31
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3	Defaults Upon Senior Securities	31
Item 4	Mine Safety Disclosures	31
Item 5	Other Information	31
Item 6	Exhibits	31

	Signatures

The names “SELLAS Life Sciences Group, Inc.,” “SELLAS,” the SELLAS logo, and other trademarks or service marks of SELLAS Life Sciences Group, Inc. appearing in this Quarterly Report on Form 10-Q are the property of SELLAS Life Sciences Group, Inc. Other trademarks, service marks or trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend the use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of or by either of, these other companies.

Unless the context otherwise indicates, references in these notes to the “Company,” “we,” “us” or “our” refer to SELLAS Life Sciences Group, Inc. and its wholly owned subsidiaries.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements that reflect our current views with respect to our development programs, business strategy, business plan, financial performance and other future events. These statements include forward-looking statements both with respect to us, specifically, and our industry, in general. Such forward-looking statements include the words "expect," "intend,” "plan," "believe," "project," "estimate,” "may,” "should," "anticipate," "will" and similar statements of a future or forward-looking nature identify forward-looking statements and include, without limitation, statements regarding:

•our future financial and business performance;

•strategic plans for our business and product candidates;

•our ability to develop or commercialize products;

•the expected results and timing of clinical trials and nonclinical studies;

•our ability to comply with the terms of our license agreements;

•developments and projections relating to our competitors and industry;

•our expectations regarding our ability to obtain, develop and maintain intellectual property protection and not infringe on the rights of others;

•our ability to retain key scientific or management personnel;

•our future capital requirements and the timing of those requirements and sources and uses of cash;

•our ability to obtain funding for our operations; and

•changes in applicable laws or regulations.

These statements are subject to known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected or otherwise implied by the forward-looking statements, including the following:

•risks associated with preclinical or clinical development and trials;

•changes in the assumptions underlying our expectations regarding our future business or business model;

•our ability to develop, manufacture and commercialize product candidates;

•general economic, financial, legal, political and business conditions and changes in domestic and foreign markets;

•changes in applicable laws or regulations;

•the impact of natural disasters, including climate change, and the impact of health epidemics, including the COVID-19 pandemic, on our business;

•the size and growth potential of the markets for our products, and our ability to serve those markets;

•market acceptance of our planned products;

•our ability to raise capital;

•the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and

•other risks and uncertainties set forth in this report in the section entitled “Risk Factors.”

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. There are or will be important factors that could cause actual results to differ materially from those indicated in these statements. These factors include, but are not limited to, those factors set forth in the sections captioned "Business – Overview,” “Risk Factors,” “Legal Proceedings,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Quarterly Report on Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission ("SEC") on March 16, 2023 ("2022 Annual Report") and in our other public filings with the SEC, all of which you should review carefully. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

(Unaudited)


	September 30, 2023		December 31, 2022

ASSETS
Current assets:
Cash and cash equivalents	$	3,969	$	17,125
Restricted cash and cash equivalents	100		100
Prepaid expenses and other current assets	1,134		531
Total current assets	5,203		17,756
Operating lease right-of-use assets	592		874
Goodwill	1,914		1,914
Deposits and other assets	377		399
Total assets	$	8,086	$	20,943
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	4,340	$	3,357
Accrued expenses and other current liabilities	6,929		6,286
Operating lease liabilities	466		372
Acquired in-process research and development payable	—		5,500
Total current liabilities	11,735		15,515
Operating lease liabilities, non-current	178		573
Warrant liability	—		4
Total liabilities	11,913		16,092
Commitments and contingencies (Note 7)
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; Series A convertible preferred stock, 17,500 shares designated; no shares issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 350,000,000 shares authorized, 28,393,958 and 21,005,405 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	3		2
Additional paid-in capital	205,278		184,753
Accumulated deficit	(209,108)		(179,904)
Total stockholders’ (deficit) equity	(3,827)		4,851
Total liabilities and stockholders’ (deficit) equity	$	8,086	$	20,943

See accompanying notes to these unaudited consolidated financial statements.

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SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Licensing revenue	$	—	$	—	$	—	$	1,000
Operating expenses:
Cost of licensing revenue	—		—		—		100
Research and development	5,813		4,282		18,910		14,422
General and administrative	3,548		2,864		10,782		8,982
Acquired in-process research and development	—		—		—		10,000
Total operating expenses	9,361		7,146		29,692		33,504
Operating loss	(9,361)		(7,146)		(29,692)		(32,504)
Non-operating income:
Change in fair value of warrant liability	—		2		4		39
Change in fair value of contingent consideration	—		11		—		126
Interest income	94		111		484		159
Total non-operating income	94		124		488		324
Net loss	$	(9,267)	$	(7,022)	$	(29,204)	$	(32,180)

Per share information:
Net loss per common share, basic and diluted	$	(0.33)	$	(0.34)	$	(1.09)	$	(1.70)
Weighted-average common shares outstanding, basic and diluted	28,355,427		20,562,351		26,767,914		18,932,571

See accompanying notes to these unaudited consolidated financial statements.

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SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

(Amounts in thousands, except share amounts)

(Unaudited)



	Three Months Ended September 30, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount
Balance at June 30, 2023	28,347,920	$	3	$	204,681	$	(199,841)	$	4,843
Issuance of common stock under employee stock purchase plan	46,038	—		54		—		54
Stock-based compensation	—	—		543		—		543
Net loss	—	—		—		(9,267)		(9,267)
Balance at September 30, 2023	28,393,958	$	3	$	205,278	$	(209,108)	$	(3,827)


	Nine Months Ended September 30, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount
Balance at December 31, 2022	21,005,405	$	2	$	184,753	$	(179,904)	$	4,851
Issuance of common stock and common stock warrants, net of issuance costs	7,220,217	1		18,553		—		18,554
Issuance of common stock, net of issuance costs	76,882	—		268		—		268
Issuance of common stock under employee stock purchase plan	91,454	—		107		—		107
Stock-based compensation	—	—		1,597		—		1,597
Net loss	—	—		—		(29,204)		(29,204)
Balance at September 30, 2023	28,393,958	$	3	$	205,278	$	(209,108)	$	(3,827)



	Three Months Ended September 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at June 30, 2022	20,551,918	$	2	$	182,816	$	(163,761)	$	19,057
Issuance of common stock and common stock warrants, net of issuance costs	21,602	—		69		—		69
Issuance of common stock under employee stock purchase plan	14,727			38				38
Stock-based compensation	—	—		455		—		455
Net loss	—	—		—		(7,022)		(7,022)
Balance at September 30, 2022	20,588,247	$	2	$	183,378	$	(170,783)	$	12,597


	Nine Months Ended September 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2021	15,895,637	$	2	$	158,948	$	(138,603)	$	20,347
Issuance of common stock and common stock warrants, net of issuance costs	4,629,630	—		22,946		—		22,946
Issuance of common stock, net of issuance costs	37,891			119				119
Issuance of common stock under employee stock purchase plan	25,089	—		85		—		85
Stock-based compensation	—	—		1,280		—		1,280
Net loss	—	—		—		(32,180)		(32,180)
Balance at September 30, 2022	20,588,247	$	2	$	183,378	$	(170,783)	$	12,597

See accompanying notes to these unaudited consolidated financial statements.

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SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(29,204)	$	(32,180)
Adjustment to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development expense	—		10,000
Non-cash stock-based compensation	1,597		1,280
Non-cash lease expense	367		334
Change in fair value of common stock warrants	(4)		(39)
Change in fair value of contingent consideration	—		(126)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(581)		505
Accounts payable	983		(17)
Accrued expenses and other current liabilities	643		1,930
Operating lease liabilities	(386)		(344)
Net cash used in operating activities	(26,585)		(18,657)
Cash flows from investing activities:
Cash paid for acquisition of in-process research and development	(5,500)		(4,500)
Net cash used in investing activities	(5,500)		(4,500)
Cash flows from financing activities:
Proceeds from issuance of common stock and common stock warrants, net of issuance costs	18,554		22,946
Proceeds from issuance of common stock, net of issuance costs	268		119
Proceeds from employee stock purchases	107		85
Net cash provided by financing activities	18,929		23,150
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	(13,156)		(7)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period	17,225		21,455
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period	$	4,069	$	21,448

Supplemental disclosure of cash flow information:
Cash received during the period for interest	$	484	$	159
Supplemental disclosure of non-cash investing and financing activities:
Non-cash acquisition of in-process research and development	$	—	$	5,500
Increase in operating lease right-of-use assets and current and non-current operating lease liabilities	$	—	$	449

See accompanying notes to these unaudited consolidated financial statements.

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SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business

Overview

SELLAS Life Sciences Group, Inc. is a late-stage clinical biopharmaceutical company focused on novel therapeutics for a broad range of cancer indications. SELLAS’ lead product candidate, galinpepimut-S ("GPS"), is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center ("MSK") 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 with other immunotherapeutic agents to address a broad spectrum of hematologic, or blood, cancers and solid tumor indications. SELLAS' second product candidate is SLS009 (formerly GFH009), a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which the Company licensed from GenFleet Therapeutics (Shanghai), Inc. ("GenFleet"), for all therapeutic and diagnostic uses in the world outside of mainland China, Hong Kong, Macau and Taiwan ("SLS009 Territory").

2. Liquidity

Since inception, the Company has incurred recurring losses and negative cash flows from operations and, as of September 30, 2023, has an accumulated deficit of $209.1 million. During the nine months ended September 30, 2023, the Company incurred a net loss of $29.2 million, and used $26.6 million of cash in operations. The Company expects to continue to generate operating losses and negative cash flows from operations for the next few years and will need additional funding to support its planned operating activities through profitability. The transition to profitability is dependent upon the successful development, approval, and commercialization of the Company's product candidates and the achievement of a level of revenues adequate to support its cost structure.

On October 30, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single institutional investor (the "Investor"), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investor (the “October 2023 Registered Direct Offering”), 3,100,000 shares of its common stock and 552,300 pre-funded warrants exercisable for shares of common stock, together with accompanying warrants to purchase an aggregate of 3,652,300 shares of common stock. Each share of common stock and accompanying warrant were sold together at a combined purchase price of $1.0952 and each pre-funded warrant and accompanying warrant were sold together at a combined purchase price of $1.0951. The aggregate gross proceeds to the Company from the October 2023 Registered Direct Offering were approximately $4.0 million, before deducting placement agents' fees and related offering expenses. Subsequent to the closing of the October 2023 Registered Direct Offering, all of the pre-funded warrants were exercised into shares of common stock by the Investor.

On February 28, 2023, the Company consummated an underwritten public offering (the "February 2023 Offering"), issuing 7,220,217 shares of common stock and accompanying common stock warrants to purchase an aggregate of 7,220,217 shares of common stock. The shares of common stock and accompanying common stock warrants were sold at a combined price of $2.77 per share and accompanying common stock warrant. Each common stock warrant sold with the shares of common stock represents the right to purchase one share of the Company’s common stock at an exercise price of $2.77 per share, which was reduced to an exercise price of $1.35 per share in October 2023, and further reduced to an exercise price of $0.9702 per share in November 2023. The common stock warrants are exercisable immediately and will expire on February 28, 2028, five years from the date of issuance. The net proceeds to the Company from the February 2023 Offering were approximately $18.5 million, after deducting underwriting discounts and commissions, offering expenses, and excluding the exercise of any warrants.

On April 16, 2021, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co. (the "Agent"). From time to time during the term of the Sales Agreement, subject to certain restrictions, the Company may offer and sell shares of common stock having an aggregate offering price up to a total of $50.0 million in gross proceeds. The Agent will collect a fee equal to 3% of the gross sales price of all shares of common stock sold. Shares of common stock sold under the Sales Agreement are offered and sold pursuant to the Company's registration statement on Form S-3, which was filed with the SEC on April 16, 2021 and declared effective on April 29, 2021. During the nine months ended September 30, 2023, the

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SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Company sold a total of 76,882 shares of common stock pursuant to the Sales Agreement at an average price of $3.59 per share for aggregate net proceeds of approximately $0.3 million. Subsequent to September 30, 2023, the Company sold a total of 16,000 shares of common stock pursuant to the Sales Agreement for aggregate net proceeds of approximately $21,000.

In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into an Exclusive License Agreement (the “3DMed License Agreement”) with 3D Medicines Inc. ("3DMed"), pursuant to which the Company granted 3DMed a sublicensable, royalty-bearing license, under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS product candidates for all therapeutic and other diagnostic uses in mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). To date, the Company has received $10.5 million in upfront payments and certain technology transfer and regulatory milestones. In November 2022, the Company announced that the Company has agreed with 3DMed for 3DMed to participate in the REGAL study through the inclusion of approximately 20-25 patients from mainland China. Such participation by 3DMed, which the Company expects to occur in the fourth quarter of 2023, subject to any further delays due to supply chain or other operational reasons, will trigger two development milestone payments totaling $13.0 million which has been agreed with 3DMed. A total of $191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remains under the 3DMed License Agreement as of September 30, 2023, which milestones are all variable in nature and not under the Company's control.

As of September 30, 2023, the Company had cash and cash equivalents of approximately $4.0 million and restricted cash and cash equivalents of $0.1 million. In accordance with Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the consolidated financial statements are issued. The Company expects its cash and cash equivalents, together with the net proceeds from the October 2023 Registered Direct Offering, will not be sufficient to fund its current planned operations for at least the next twelve months from the date of issuance of these consolidated financial statements. The $13.0 million of development milestone payments to the Company triggered by 3DMed's participation in the REGAL study through the enrollment of patients in China are variable in nature and not under the Company's control, and therefore cannot be included in the Company's going concern assumption.

The Company will require substantial additional financing to commercially develop any current or future product candidates. If the Company is unable to obtain additional funding on a timely basis, it will be required to scale back its plans and place certain activities on hold. Other than the Sales Agreement, the Company currently does not have any commitments to obtain additional funds. The Company's management continues to evaluate different strategies to obtain the required funding for future operations. These strategies may include utilizing the Sales Agreement or public and private placements of equity and/or debt securities, which may be subject to lock-up, as well as payments from potential strategic research and development collaborations or licensing and/or marketing arrangements with pharmaceutical companies. Additionally, the Company may continue to pursue discussions with global and regional pharmaceutical companies for licensing and/or co-development rights to its product candidates. The Company has prepared its consolidated financial statements assuming that it will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

3. Basis of Presentation and Significant Accounting Policies

The Company's complete summary of significant accounting policies can be found in "Item 8. Financial Statements and Supplementary Data - Note 3. Basis of Presentation and Significant Accounting Policies" in the audited annual consolidated financial statements included in the 2022 Annual Report. The significant accounting policies summarized and included in the 2022 Annual Report have not materially changed, except as set forth below.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Any reference in these notes to applicable

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SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

guidance is meant to refer to U.S. GAAP as found in the ASC and Accounting Standards Updates ("ASUs") of the Financial Accounting Standards Board ("FASB").

Principles of Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. Unless the context otherwise indicates, reference in these notes to the "Company" refer to SELLAS Life Sciences Group, Inc., and its wholly owned subsidiaries, SELLAS Life Sciences Group, Ltd., a privately held Bermuda exempted company, SLSG Limited, LLC, Sellas Life Sciences Limited, and Apthera, Inc. The functional currency of the Company's non-U.S. operations is the U.S. dollar.

Unaudited Interim Results

These consolidated financial statements and accompanying notes should be read in conjunction with the Company's annual consolidated financial statements and the notes thereto included in the 2022 Annual Report. The accompanying consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022, are unaudited, but include all adjustments, consisting of normal recurring entries, that management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2022 have been derived from the audited financial statements as of that date.

Reclassification

Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications had no effect on the Company's loss from operations, net loss, and net loss per share.

Net Loss Per Share

Net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share, the weighted average number of shares remains the same for both calculations due to the fact that, when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive (in thousands):


	Nine Months Ended September 30,
	2023	2022
Common stock warrants	12,221	5,148
Stock options	1,643	1,071
Restricted stock units ("RSUs")	433	297
	14,297	6,516

4. Fair Value Measurements

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in thousands):

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SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)


Description	September 30, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	3,006	$	3,006	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	3,106	$	3,106	$	—	$	—
Liabilities:
Warrant liability	$	—	$	—	$	—	$	—
Total liabilities measured and recorded at fair value	$	—	$	—	$	—	$	—


Description	December 31, 2022		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	16,609	$	16,609	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	16,709	$	16,709	$	—	$	—
Liabilities:
Warrant liability	$	4	$	—	$	—	$	4
Total liabilities measured and recorded at fair value	$	4	$	—	$	—	$	4

The Company did not transfer any financial instruments into or out of Level 3 classification during the nine months ended September 30, 2023 or during the year ended December 31, 2022. See Note 9, Warrants to Acquire Shares of Common Stock, for a reconciliation of the changes in the fair value of the warrant liability for the nine months ended September 30, 2023.

5. Acquired In-Process Research and Development

Exclusive License Agreement with GenFleet Therapeutics (Shanghai) Inc.

On March 31, 2022, the Company entered into an exclusive license agreement with GenFleet pursuant to which GenFleet granted to the Company a sublicensable royalty-bearing license under certain of its intellectual property, to develop, manufacture, and commercialize SLS009 for the treatment, diagnosis or prevention of disease in humans and animals in the SLS009 Territory.

In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $10.0 million, all of which has been paid as of September 30, 2023, (ii) development and regulatory milestone payments for up to three indications totaling up to $48.0 million in the aggregate upon the achievement of such milestones, and (iii) sales milestone payments totaling up to $92.0 million in the aggregate upon the achievement of certain net sales thresholds in a given calendar year. The Company also agreed to pay GenFleet single-digit tiered royalties based upon a percentage of annual net sales, with the royalty rate escalating based on the level of annual net sales of SLS009 in the SLS009 Territory ranging from the low to high single digits.

During the nine months ended September 30, 2022, the Company expensed $10.0 million related to the acquired technology as in-process research and development based on the assessment that the technology has no alternative future use. During the three and nine months ended September 30, 2023, the Company made cash payments of $3.0 million and $5.5 million, respectively, pursuant to the exclusive license agreement.

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(Unaudited)

6. Balance Sheet Accounts

Prepaid expenses and other current assets consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Insurance	$	596	$	219
Clinical development	425		184
Professional fees	113		82
Other	—		46
Prepaid expenses and other current assets	$	1,134	$	531

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Clinical trial costs	$	4,864	$	4,509
Compensation and related benefits	1,547		1,439
Professional fees	304		338
Other	214		—
Accrued expenses and other current liabilities	$	6,929	$	6,286

7. Commitments and Contingencies

Leases

The Company has a non-cancelable operating lease for certain executive, administrative, and general business office space for its headquarters in New York, New York, which began on June 5, 2020, was amended in February 2022 to add additional space, and has a term through December 31, 2024. The Company assessed the lease amendment for the additional space and determined it should be accounted for as a separate contract.

The weighted average discount rate of the Company's operating leases under FASB Topic ASC 842, Leases ("ASC 842") is approximately 13.95%. As of September 30, 2023, the leases have a remaining term of 1.25 years.

Rent expense related to the Company's operating leases was approximately $0.1 million for each of the three months ended September 30, 2023 and 2022, and $0.4 million and $0.3 million for the nine months ended September 30, 2023 and 2022, respectively.

The Company made cash payments related to its operating leases of approximately $0.1 million for each of the three months ended September 30, 2023 and 2022, and $0.4 million and $0.3 million for the nine months ended September 30, 2023 and 2022, respectively.

Future minimum lease payments are as follows as of September 30, 2023 (in thousands):


Future minimum lease payments:
2023 (remaining)	$	132
2024	533
Total future minimum lease payments	665
Less: imputed interest	(21)
Current and non-current operating lease liabilities	$	644

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(Unaudited)

Legal Proceedings

From time to time, the Company is subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business, which may include employment matters, breach of contract disputes and stockholder litigation. Such actions and proceedings are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, when the Company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. As of September 30, 2023, there was no pending or threatened litigation.

8. Stockholders’ Equity

Preferred Stock

The Company has authorized up to 5,000,000 shares of preferred stock, $0.0001 par value per share, for issuance. There were no preferred shares outstanding as of September 30, 2023 and December 31, 2022.

Common Stock

The Company has authorized up to 350,000,000 shares of common stock, $0.0001 par value per share, for issuance.

As of September 30, 2023, the Company has shares of common stock reserved for future issuance as follows (in thousands):


Warrants outstanding			12,221
Stock options outstanding			1,643
RSUs outstanding			433
Shares reserved for future issuance under the 2023 Amended and Restated Equity Incentive Plan			3,905
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan			183
Total common stock reserved for future issuance			18,385

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(Unaudited)

9. Warrants to Acquire Shares of Common Stock

Warrants Outstanding

The following is a summary of the activity of the Company's warrants to acquire shares of common stock for the nine months ended September 30, 2023 (in thousands):


Warrant Issuance	Outstanding, December 31, 2022	Granted	Expired	Outstanding, September 30, 2023	Exercise Price per Share		Expiration
Warrants classified as equity:
February 2023 Offering	—	7,220	—	7,220	$	2.77	February 2028
April 2022 Offering	4,630	—	—	4,630	$	4.08	April 2027
January 2020 Offering	309	—	—	309	$	3.93	July 2025
July 2020 PIPE Offering	25	—	—	25	$	3.30	August 2025


Other	164	—	(133)	31	$	7.50	March 2024 - June 2024
	5,128	7,220	(133)	12,215
Warrants classified as liability	13	—	(7)	6	$	7.50	November 2023
	5,141	7,220	(140)	12,221

The exercise price per share of the common stock warrants issued in the February 2023 Offering was reduced to $1.35 per share in October 2023 upon the issuance of shares of common stock sold pursuant to the Sales Agreement, and was subsequently reduced to $0.9702 per share in November 2023 upon the closing of the October 2023 Registered Direct Offering due to the issuance of warrants at an exercise price of $0.9702 per share.

Warrants to acquire shares of common stock primarily consist of equity-classified warrants. In addition, warrants to acquire shares of common stock that may require the Company to settle in cash are liability-classified warrants.

Warrants Classified as Equity

The warrants to acquire shares of common stock issued during the February 2023 Offering were recorded as equity upon issuance. During its evaluation of equity classification of these warrants, the Company considered the conditions as prescribed within ASC 815-40, Derivatives and Hedging, Contracts in an Entity’s own Equity (“ASC 815-40”). The conditions within ASC 815-40 are not subject to a probability assessment. The warrants to acquire shares of common stock do not fall under the liability criteria within ASC 480, Distinguishing Liabilities from Equity, as they are not puttable and do not represent an instrument that has a redeemable underlying security. The warrants do meet the definition of a derivative instrument under ASC 815 but are eligible for the scope exception as they are indexed to the Company’s own stock and would be classified in permanent equity if freestanding.

On February 28, 2023, in connection with closing of the February 2023 Offering, the Company entered into amendments to an aggregate of 3,438,851 warrants, which had been previously issued by the Company in an underwritten public offering that closed on April 5, 2022 (the "April 2022 Offering"), to reduce the exercise price of such warrants from $5.40 to $3.62, the average closing price of the Company’s common stock, as reported on the Nasdaq Capital Market, for the five trading days immediately preceding the pricing of the February 2023 Offering. The Company accounted for the amendment as a cost to issue equity with the incremental fair value of approximately $0.3 million recognized as an offset to the proceeds received. However, there was no net impact to the consolidated statements of stockholders' equity because the warrants are equity classified.

In November 2023, in connection with the closing of the October 2023 Registered Direct Offering, the Company entered into an amendment to reduce the exercise price of warrants to purchase up to 887,000 shares of the Company’s common stock which were issued in the April 2022 Offering and held by the purchaser in the

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(Unaudited)

October 2023 Registered Direct Offering to $0.9702 per share, and amended the termination date of such warrants to November 2, 2028.

Warrants Classified as Liabilities

Liability-classified warrants consist of warrants to acquire common stock issued in connection with certain previous equity financings. These warrants may be settled in cash and were determined not to be indexed to the Company’s common stock.

The estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the consolidated statement of operations as change in fair value of warrant liability. The fair value of the warrants is estimated using a Black-Scholes pricing model with the following inputs:


	September 30, 2023			December 31, 2022
Risk free interest rate	5.55		%	4.75		%
Volatility	77.15		%	120.60		%
Expected term (years)	0.09			0.75
Expected dividend yield	—		%	—		%
Strike price	$	7.50		$	7.50

The expected volatility assumptions are based on the Company's implied volatility in combination with the implied volatilities of similar publicly traded entities. The expected life assumption is based on the remaining contractual terms of the warrants. The risk-free rate is based on the zero-coupon rates in effect at the time of valuation. The dividend yield used in the pricing model is zero, because the Company has no present intention to pay cash dividends.

The changes in fair value of the warrant liability for the nine months ended September 30, 2023 were as follows (in thousands):


Warrant liability, December 31, 2022	$	4


Change in fair value of warrants	(4)
Warrant liability, September 30, 2023	$	—

10. Licensing Revenue

Exclusive License Agreement with 3D Medicines Inc.

In partial consideration for the rights granted by the Company, 3DMed agreed to pay the Company (i) a one-time upfront cash payment of $7.5 million, and (ii) milestone payments totaling up to $194.5 million in the aggregate upon the achievement of certain technology transfer, development and regulatory milestones, as well as sales milestones based on certain net sales thresholds of GPS Licensed Products in the 3DMed Territory in a given

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

calendar year. 3DMed also agreed to pay tiered royalties based upon a percentage of annual net sales of GPS Licensed Products in the 3DMed Territory ranging from the high single digits to the low double digits.

Revenue Recognition

At the inception of the 3DMed License Agreement, the Company recognized an initial transaction price of $9.5 million as licensing revenue, which included the $7.5 million upfront fee as well as $2.0 million in development milestones that were assessed as probable of being achieved, while the remaining milestones were variable consideration subject to constraint at inception. In the first quarter of 2022, an additional $1.0 million in licensing revenue was recognized upon approval by China’s National Medical Products Administration (“NMPA”) for a small Phase 1 clinical trial investigating safety of GPS in China.

There is $191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remaining under the 3DMed License Agreement as of September 30, 2023, which milestones are variable in nature and not under the Company's control. At the end of each reporting period, the Company reevaluates the probability of achievement of the future development, regulatory, and sales milestones subject to constraint and, if necessary, will adjust its estimate of the overall transaction price. Any such adjustments will be recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

For the sales-based royalties, the Company will recognize revenue when the related sales occur. To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

There was no licensing revenue recognized during each of the three months ended September 30, 2023 and 2022. There was no licensing revenue recognized during the nine months ended September 30, 2023, and $1.0 million licensing revenue recognized during the nine months ended September 30, 2022 related to the IND approval by the NMPA.

There was no cost of licensing revenue recognized during each of the three months ended September 30, 2023 and 2022. There was no cost of licensing revenue recognized during the nine months ended September 30, 2023, and $0.1 million in cost of licensing revenue for the nine months ended September 30, 2022 for sublicensing fees incurred in connection with the 3DMed License Agreement.

11. Stock-Based Compensation

2017 Equity Incentive Plan

On December 29, 2017, the 2017 Equity Incentive Plan was approved by the stockholders of the Company, which currently allows for issuance of up to approximately 22,000 shares of common stock underlying stock options granted prior to September 10, 2019. The 2017 Equity Incentive Plan was terminated upon the approval of the 2019 Incentive Plan subject to outstanding stock options granted under the 2017 Equity Incentive Plan that remain exercisable through maturity for the Company's employees and directors.

2023 Amended and Restated Equity Incentive Plan

On September 10, 2019, the 2019 Equity Incentive Plan ("2019 Equity Plan") was approved by the stockholders of the Company, which currently allows for issuance of up to approximately 6,036,000 shares of common stock in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate.

The number of shares reserved for issuance under the 2019 Equity Plan automatically increased on January 1 of each year, for a period of four years, which commenced on January 1, 2020 and ended on (and including) January 1, 2023, by an amount equal to the lesser of (i) 5% of the total number of shares of common stock outstanding at the end of the prior fiscal year; and (ii) an amount determined by the board of directors or authorized committee.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

On June 20, 2023, an amendment to the 2019 Equity Plan was approved by the stockholders of the Company, which amended and restated the 2019 Equity Plan (as amended and restated, the "2023 Amended and Restated Equity Incentive Plan") to increase the number of shares of common stock authorized for issuance under the 2019 Equity Plan by 3,000,000 shares.

As of September 30, 2023, approximately 3,905,000 shares of common stock were reserved for future grants under the 2023 Amended and Restated Equity Incentive Plan.

The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022, respectively (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	93	$	72	$	281	$	197
General and administrative	450		383		1,316		1,083
Total stock-based compensation	$	543	$	455	$	1,597	$	1,280

Options to Purchase Shares of Common Stock

The following table summarizes stock option activity of the Company for the nine months ended September 30, 2023:


	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2022	1,040	$	7.57		$	91
Granted	682	3.20

Canceled	(79)	5.28
Outstanding at September 30, 2023	1,643	$	5.87	8.40	$	3
Options exercisable at September 30, 2023	586	$	9.08	7.49	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at September 30, 2023 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on September 29, 2023 of $1.64 per share. The aggregate intrinsic value equals the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying stock options.

The Company uses the Black-Scholes option-pricing model to determine the fair value of all its stock options granted. The weighted average assumptions used during the three and nine months ended September 30, 2023 and 2022, respectively, were as follows:


	Three Months Ended September 30,			Nine Months Ended September 30,
	2023	2022		2023		2022
Risk free interest rate	n/a	3.00	%	3.78	%	1.95	%
Volatility	n/a	138.57	%	127.77	%	131.54	%
Expected lives (years)	n/a	6.03		6.20		6.18
Expected dividend yield	n/a	—	%	—	%	—	%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

There were no options granted during the three months ended September 30, 2023. The weighted-average grant date fair value of options granted during the three months ended September 30, 2022 was $2.78. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022 was $2.88 and $4.52, respectively.

The Company’s expected common stock price volatility assumption is based upon the Company's own implied volatility in combination with the implied volatility of a basket of comparable companies. The expected life assumptions for employee grants were based upon the simplified method, which averages the contractual term of the Company’s options of ten years with the average vesting term of four years for an average of approximately six years. The expected life assumptions for non-employees were based upon the contractual term of the option. The dividend yield assumption is zero because the Company has never paid cash dividends and presently has no intention to do so. The risk-free interest rate used for each grant was also based upon prevailing short-term interest rates. The Company accounts for forfeitures as they occur.

As of September 30, 2023, there was $3.4 million of unrecognized compensation cost related to outstanding stock options that is expected to be recognized as a component of the Company’s operating expenses over a weighted-average period of 2.53 years.

Time-vested RSUs and RSUs with Performance Conditions

The following table summarizes RSU activity of the Company for the nine months ended September 30, 2023:


	Shares (In Thousands)	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	255	$	3.25
Granted	195	$	3.34
Canceled	(17)	$	3.76
Unvested at September 30, 2023	433	$	3.27

As of September 30, 2023, there was $1.1 million of unrecognized compensation cost related to outstanding RSUs that is expected to be recognized as a component of the Company's operating expenses over a weighted-average period of 2.36 years. No RSUs vested during the nine months ended September 30, 2023.

2021 Employee Stock Purchase Plan

On April 22, 2021, the Board of Directors adopted the 2021 Employee Stock Purchase Plan ("2021 ESPP") which was approved by the Company's stockholders on June 8, 2021 and authorized the issuance of up to 300,000 shares of common stock pursuant to the 2021 ESPP. The 2021 ESPP allows employees to contribute up to 20% of their cash earnings, subject to a maximum of $25,000 per year under Internal Revenue Service rules, to be used to purchase shares of the Company’s common stock on semi-annual purchase dates. The 2021 ESPP allows eligible employees to purchase shares of common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six-month offering period during the term of the 2021 ESPP.

During the three and nine months ended September 30, 2023, 46,038 and 91,454 shares of common stock, respectively, were purchased by employees under the 2021 ESPP for proceeds of approximately $54,000 and $107,000, respectively. There are currently 183,457 shares of common stock reserved for issuance under the 2021 ESPP as of September 30, 2023.

12. Subsequent Events

The Company evaluated all events or transactions that occurred after September 30, 2023 up through the date these consolidated financial statements were issued. Other than as disclosed elsewhere in the notes to the consolidated financial statements, the Company did not have any material subsequent events.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis of financial condition as of September 30, 2023 and results of operations for the three and nine months ended September 30, 2023 and 2022, respectively, should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission, or SEC, on March 16, 2023, or our 2022 Annual Report, and our other public reports filed with the SEC.

Overview

We are a late-stage clinical biopharmaceutical company focused on the development of novel therapeutics for a broad range of cancer indications. Our product candidates currently include galinpepimut-S, or GPS, a peptide immunotherapy directed against the Wilms tumor 1, or WT1, antigen, and SLS009 (formerly GFH009), a highly selective small molecule cyclin-dependent kinase 9, or CDK9, inhibitor.

Galinpepimut-S, or GPS: Highly Novel and Engineered Immunotherapy Targeting the WT1 Antigen

Our lead product candidate, GPS, is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center, or MSK, that targets the WT1 protein, which is present in 20 or more cancer types. Based on its mechanism of action as a directly immunizing agent, GPS has potential as a monotherapy or in combination with other immunotherapeutic agents to address a broad spectrum of hematologic, or blood, cancers and solid tumor indications.

In January 2020, we commenced in the United States an open label randomized Phase 3 clinical trial, the REGAL study, for GPS monotherapy in patients with acute myeloid leukemia, or AML, in the maintenance setting after achievement of second complete remission, or CR2, following successful completion of second-line antileukemic therapy. Patients are randomized (1:1) to receive either GPS or best available treatment, or BAT. We expect this study will be used as the basis for submission of a Biologics License Application, or BLA, subject to a statistically significant and clinically meaningful data outcome and agreement with the U.S. Food and Drug Administration, or the FDA. The primary endpoint of the clinical trial is overall survival. We plan to enroll approximately 125 to 140 patients at approximately 95 clinical sites in North America, Europe and Asia with a planned interim safety, efficacy and futility analysis after 60 events (deaths). We expect to complete enrollment in the REGAL study, other than the approximately 20 to 25 patients anticipated to be enrolled in China, in November 2023. Under our current assumptions with respect to completion of enrollment and the estimated survival times for both the treated and control groups in the study, we believe, after previous discussions with our external statisticians and experts, that the planned interim analysis after 60 events (deaths) per the protocol will occur by the end of 2023 or early 2024 and the final analysis after 80 events will occur by the end of 2024. The number of patients needed for the events for the pre-specified interim and final analyses have already been enrolled, but it is important to note that because these analyses are event driven, they may occur at a different time than currently expected.

In December 2020, we entered into an exclusive license agreement, or 3DMed License Agreement, with 3D Medicines Inc., or 3DMed, a China-based biopharmaceutical company developing next-generation immuno-oncology drugs, for the development and commercialization of GPS, as well as the Company’s next generation heptavalent immunotherapeutic GPS+, which is at preclinical stage, across all therapeutic and diagnostic uses in mainland China, Hong Kong, Macau and Taiwan, which we collectively refer to as Greater China, or the 3DMed Territory. We have retained sole rights to GPS and GPS+ outside of Greater China. In November 2022, we announced that we have agreed with 3DMed for 3DMed to participate in the REGAL study through the inclusion of approximately 20 to 25 patients from mainland China. Such participation by 3DMed, which we expect to occur in the fourth quarter of 2023, subject to any further delays due to supply chain or other operational reasons, will trigger two development milestone payments totaling $13.0 million. If the REGAL study meets its primary endpoint for efficacy and the Chinese regulatory authorities determine that the REGAL data is sufficient for approval in China, GPS could potentially reach the market in Greater China much earlier than we and 3DMed had anticipated when we entered into the license agreement in December 2020. As of September 30, 2023, we have received an aggregate of $10.5 million in upfront and milestone payments under our license agreement with 3DMed and a total of $191.5 million in

potential future development, regulatory and sales milestones, not including future royalties, remains under the license agreement, which milestones are variable in nature and not under our control.

In December 2018, pursuant to a Clinical Trial Collaboration and Supply Agreement, we initiated a Phase 1/2 multi-arm "basket" type clinical study of GPS in combination with Merck & Co., Inc.’s anti-PD-1 therapy, pembrolizumab (Keytruda). In 2020, we, together with Merck, determined to focus on ovarian cancer (second or third line). In November 2022, we reported topline clinical and initial immune response data from this study, which showed that treatment with the combination of GPS and pembrolizumab compared favorably to treatment with anti-PD-1 therapy alone in a similar patient population. We presented final data from this study at a medical conference in November 2023.

In February 2020, a Phase 1 open-label investigator-sponsored clinical trial of GPS, in combination with Bristol-Myers Squibb’s anti-PD-1 therapy, nivolumab (Opdivo), in patients with malignant pleural mesothelioma, or MPM, who harbor relapsed or refractory disease after having received frontline standard of care multimodality therapy was commenced at MSK. Enrollment of a target total of 10 evaluable patients was completed at the end of 2022. In June 2023, we reported that the primary endpoint of safety and the efficacy endpoint were both met with clinical activity and increased survival in this study. Additional immune response data from all 10 evaluable patients is expected in the fourth quarter of 2023.

GPS was granted Orphan Drug Product Designations, or ODD, from the FDA, as well as Orphan Medicinal Product Designations from the European Medicines Agency, or EMA, for GPS in AML, MPM, and multiple myeloma, or MM, as well as Fast Track Designation for AML, MPM, and MM from the FDA.

SLS009: Highly Selective Next Generation CDK9 Inhibitor

On March 31, 2022, we entered into an exclusive license agreement, or the SLS009 Agreement, with GenFleet Therapeutics (Shanghai), Inc., or GenFleet, a clinical-stage biotechnology company developing cutting-edge therapeutics in oncology and immunology, that grants rights to us for the development and commercialization of SLS009, a highly selective small molecule CDK9 inhibitor, across all therapeutic and diagnostic uses worldwide, except for Greater China.

CDK9 activity has been shown to correlate negatively with overall survival in a number of cancer types, including hematologic cancers, such as AML and lymphomas, as well as solid cancers, such as osteosarcoma, pediatric soft tissue sarcomas, melanoma, endometrial, lung, prostate, breast and ovarian. As demonstrated in preclinical and clinical data, to date, SLS009’s high selectivity has the potential to reduce toxicity as compared to older CDK9 inhibitors and other next-generation CDK9 inhibitors currently in clinical development and to potentially be more efficacious.

In the second quarter of 2023, we announced the completion of the safety evaluation stage of the highest dose cohort of patients with AML who relapsed after or were refractory to available antileukemic therapies in our Phase 1 dose escalation clinical trial of SLS009 as well as positive topline data, and that the recommended Phase 2 dose, or RP2D, in AML, was established at 60 mg and submitted to the U.S. Food and Drug Administration. We also announced that the first patient was dosed in a Phase 2a clinical trial with SLS009 in combination with venetoclax and azacitidine, or aza/ven, in patients with AML who relapsed after or are refractory to treatment with venetoclax-based therapies. The trial is an open label, single arm, multi-center study that is designed to evaluate safety, tolerability, and efficacy at two dose levels of SLS009 (once weekly 45 mg or 60 mg) in combination with aza/ven. In addition to safety and tolerability of SLS009 in combination with aza/ven, the primary endpoints are complete response composite rate and duration of response. Additional endpoints include event free survival, overall survival, and pharmacokinetic and pharmacodynamic assessments. The trial includes several sites in the United States, will enroll up to 20 patients and, based on initial results, may be expanded into a registrational trial.

In October 2023, we announced positive initial topline data at the 45 mg (safety) dose level from the Phase 2a study. Six of the seven patients are alive as of the latest follow-up, and five remain on treatment. The first patient enrolled achieved a complete response and is in the sixth month of treatment, while the second enrolled patient remains alive and is in the fifth month of treatment. Anti-leukemic effects have been observed in all patients without any significant safety issues to date. Additional topline data for the 45 mg dose and for the recommended Phase 2 dose (60mg) is expected in the fourth quarter of 2024.

In September 2023, we announced positive topline data for the patient group with relapsed/refractory (r/r) lymphomas from the Phase 1 dose-escalation trial of SLS009 as well as the RP2D of 100 mg for this patient population. All primary and secondary study objectives, including safety, clinical activity, pharmacokinetics (PK), and pharmacodynamics (PD), were successfully achieved for the group of patients with lymphomas. Among 34 evaluable r/r lymphoma patients, five (14.7%) achieved a clinical response with a reduction of tumor burden of up to 68.9%. An additional seven patients (20.6%) achieved stable disease resulting in an overall disease control rate (clinical response plus stable disease) of 35.3%. In the subset of patients with peripheral T-cell lymphomas, or PTCL, four out of 11 (36.4%) evaluable patients achieved a clinical response. Additionally, one patient achieved a complete response in late October 2023 and remains on the trial after 16 weeks of treatment. In October 2023 we announced that our partner, GenFleet, dosed the first patient in a Phase 1b/2 trial evaluating SLS009 in patients with relapsed/refractory PTCL. The open-label, single-arm trial will enroll up to 95 patients to evaluate safety and efficacy and, based on the results, may serve as a registrational study. This initial PTCL study is fully funded by GenFleet and is being conducted in China.

SLS009 is also currently being evaluated in pediatric solid tumors and leukemia models through the NCI Pediatric Preclinical in Vivo Testing, or PIVOT, program. Studies are supported through cooperative agreement grants from the NCI to the seven PIVOT research programs performing the PK and efficacy testing in pediatric tumors and a centralized coordinating center. Preclinical data are scheduled to be generated continuously through the remainder of 2023 and the first half of 2024.

In October 2023, we announced that SLS009 was granted ODD for AML and Fast Track Designation for PTCL by the FDA.

Components of Results of Operations

Licensing Revenue

Licensing revenue consists of revenue recognized pursuant to the 3DMed License Agreement. In the future, we may generate revenue from a combination of reimbursements, up-front payments, milestone payments and royalties in connection with the 3DMed License Agreement.

Cost of Licensing Revenue

Cost of licensing revenue consists of sublicensing fees incurred under our license from MSK in connection with the 3DMed License Agreement.

Research and Development

Research and development expense consists of expenses incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses include:

•expenses incurred under agreements with CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;

•manufacturing and clinical drug supply expenses;

•outsourced professional scientific development services;

•employee-related expenses, which include salaries, benefits and stock-based compensation;

•payments made under our license agreements, under which we acquired certain intellectual property;

•expenses relating to certain regulatory activities, including filing fees paid to regulatory agencies;

•laboratory materials and supplies used to support our research activities; and

•allocated expenses, utilities, and other facility-related costs.

The successful development of our current and future product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from, any current or future product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of our clinical trials, which vary significantly over the life of a project as a result of many factors, including:

•the number and geographical location of clinical sites included in the trials;

•the length of time required to enroll suitable patients;

•the number and geographical location of patients that ultimately participate in the trials;

•the number of doses patients receive;

•the duration of patient follow-up;

•the results of clinical trials;

•the expenses associated with manufacturing and clinical drug supply;

•the receipt of marketing approvals; and

•the commercialization of current and future product candidates.

Research and development activities are central to our business model. Oncology product candidates in the later stages of clinical development generally have higher development costs than those in the earlier stages of clinical development, primarily due to the increased size and duration of the later-stage clinical trials. We expect our research and development expenses to increase for the foreseeable future as we conduct and complete our ongoing early and late-stage clinical trials and initiate additional clinical trials.

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for any of our current or future product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or target indications or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

General and Administrative

General and administrative expenses consist principally of salaries and related costs for personnel in executive, administrative, finance and legal functions, including stock-based compensation, travel expenses and recruiting expenses, fees for outside legal counsel, amortization of contract acquisition costs (commissions), and director and officer insurance premiums. Other general and administrative expenses include facility related costs, patent filing and prosecution costs, professional fees for business development, accounting, consulting, legal and tax-related services associated with maintaining compliance with our Nasdaq listing and SEC reporting requirements, investor relations costs, and other expenses associated with being a public company.

If and when we believe that regulatory approval of a product candidate appears likely, we anticipate that an increase in general and administrative expenses will occur as a result of our preparation for commercial operations, particularly as it relates to the sales and marketing of such product candidate. Oncology product commercialization may take several years and millions of dollars in development costs.

Acquired In-Process Research and Development

Acquired in-process research and development consists of costs to acquire or license product candidates from third-parties for development with no alternative future use.

Non-Operating Income

Non-operating income consists of changes in fair value of our warrant liability, changes in fair value of our contingent consideration, and interest income. Interest income primarily reflects interest earned from our cash and cash equivalents.

Critical Accounting Policies and Estimates

In the 2022 Annual Report, we disclosed our critical accounting policies and estimates upon which our consolidated financial statements are derived. There have been no material changes to these policies and estimates since December 31, 2022 that are not included in Note 3 of the accompanying consolidated financial statements for the nine months ended September 30, 2023. Readers are encouraged to read the 2022 Annual Report in conjunction with this Quarterly Report on Form 10-Q.

Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022

The following table summarizes our results of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,
	2023		2022		Change
Licensing revenue	$	—	$	—	$	—
Operating expenses:
Cost of licensing revenue	—		—		—
Research and development	5,813		4,282		1,531
General and administrative	3,548		2,864		684

Total operating expenses	9,361		7,146		2,215
Operating loss	(9,361)		(7,146)		(2,215)
Non-operating income	94		124		(30)
Net loss	$	(9,267)	$	(7,022)	$	(2,245)


	Nine Months Ended September 30,
	2023		2022		Change
Licensing revenue	$	—	$	1,000	$	(1,000)
Operating expenses:
Cost of licensing revenue	—		100		(100)
Research and development	18,910		14,422		4,488
General and administrative	10,782		8,982		1,800
Acquired in-process research and development	—		10,000		(10,000)
Total operating expenses	29,692		33,504		(3,812)
Operating loss	(29,692)		(32,504)		2,812
Non-operating income	488		324		164
Net loss	$	(29,204)	$	(32,180)	$	2,976

Further analysis of the changes and trends in our operating results are discussed below.

Licensing Revenue

There was no licensing revenue for each of the three months ended September 30, 2023 and 2022.

There was no licensing revenue for the nine months ended September 30, 2023. Licensing revenue was $1.0 million for the nine months ended September 30, 2022 and was related to China's National Medical Products Administration, or NMPA, approving an IND application for a small Phase I clinical trial investigating safety of GPS in China, which triggered a development milestone under the 3DMed License Agreement.

Cost of Licensing Revenue

There was no cost of licensing revenue for each of the three months ended September 30, 2023 and 2022.

There was no cost of licensing revenue for the nine months ended September 30, 2023. We incurred $0.1 million of sublicensing fees payable under our license from MSK in connection with the 3DMed License Agreement during the nine months ended September 30, 2022.

Research and Development

Research and development expenses were $5.8 million for the three months ended September 30, 2023 compared to $4.3 million for the three months ended September 30, 2022. The $1.5 million increase was primarily attributable to a $0.7 million increase in clinical trial expenses related to our Phase 3 REGAL clinical trial of GPS and our Phase 2a and Phase 1 clinical trials of SLS009, a $0.3 million increase in manufacturing expenses related to clinical drug supply purchases, a $0.3 million increase in clinical and regulatory consulting expenses, and a $0.2 million increase in personnel related expenses due to increased headcount. We anticipate that our research and development expenses will increase in the future as we continue to advance the development of GPS and SLS009, including our Phase 3 clinical trial of GPS in AML and the ongoing and planned clinical trials of SLS009.

Research and development expenses were $18.9 million for the nine months ended September 30, 2023 compared to $14.4 million for the nine months ended September 30, 2022. The $4.5 million increase was primarily attributable to a $2.0 million increase in clinical trial expenses related to our Phase 3 REGAL clinical trial of GPS and our Phase 2a and Phase 1 clinical trials of SLS009, a $1.7 million increase in clinical and regulatory consulting expenses, and a $1.0 million increase in personnel related expenses due to increased headcount. These increases were partially offset by a $0.2 million decrease in manufacturing expenses primarily due to the timing of the manufacturing of a registration batch of GPS in the prior period. We anticipate that our research and development expenses will increase in the future as we continue to advance the development of GPS and SLS009, including our Phase 3 clinical trial of GPS in AML and the ongoing and planned clinical trials of SLS009.

General and Administrative

General and administrative expenses were $3.5 million for the three months ended September 30, 2023 compared to $2.9 million for the three months ended September 30, 2022. The $0.6 million increase was primarily attributable to a $0.2 million increase in outside services and public company costs, a $0.2 million increase in legal and intellectual property fees, and a $0.2 million increase in other general and administrative costs.

General and administrative expenses were $10.8 million for the nine months ended September 30, 2023 compared to $9.0 million for the nine months ended September 30, 2022. The $1.8 million increase was primarily attributable to a $0.7 million increase in personnel related expenses due to increased headcount, a $0.4 million increase in legal and intellectual property fees, a $0.4 million increase in outside services and public company costs, and a $0.3 million increase in other general and administrative costs.

Acquired In-Process Research and Development

There was no acquired in-process research and development expense during each of the three months ended September 30, 2023 and 2022.

There was no acquired in-process research and development expense during the nine months ended September 30, 2023. During the nine months ended September 30, 2022, we recognized $10.0 million for the acquisition of in-process research and development related to the in-licensing of SLS009.

Non-Operating Income

Non-operating income for the three and nine months ended September 30, 2023 and 2022, respectively, was as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		Change		2023		2022		Change
Change in fair value of warrant liability	$	—	$	2	$	(2)	$	4	$	39	$	(35)
Change in fair value of contingent consideration	—		11		(11)		—		126		(126)
Interest income	94		111		(17)		484		159		325
Total non-operating income	$	94	$	124	$	(30)	$	488	$	324	$	164

Non-operating income of $0.1 million and $0.5 million during the three and nine months ended September 30, 2023, respectively, was primarily interest income earned from our cash and cash equivalents.

Non-operating income of $0.1 million during the three months ended September 30, 2022 was due to interest income earned from our cash and cash equivalents. Non-operating income of $0.3 million during the nine months ended September 30, 2022 was due to interest income earned from our cash and cash equivalents, a decrease in the fair value of the contingent consideration liability driven by an increase in discount rates, and a decrease in the fair value of the warrant liability driven by a decrease in our common stock price.

The change in fair value of warrant liability and change in fair value of contingent consideration are non-cash in nature.

Income Tax Expense

There was no income tax expense for the three and nine months ended September 30, 2023 and 2022. We continue to maintain a full valuation allowance against our net deferred tax assets.

Liquidity and Capital Resources

We did not generate any revenue from product sales during the nine months ended September 30, 2023 and 2022. Through September 30, 2023, we have only generated licensing revenue from the 3DMed License Agreement. Since inception, we have incurred net losses, used net cash in our operations, and have funded substantially all of our operations through proceeds of the sale of equity securities and convertible notes.

Sources of Liquidity

On October 30, 2023, we entered into a Securities Purchase Agreement, or the Purchase Agreement, with a single institutional investor, or the Investor, pursuant to which we agreed to issue and sell, in a registered direct offering by us directly to the Investor, or the October 2023 Registered Direct Offering, 3,100,000 shares of our common stock and 552,300 pre-funded warrants exercisable for shares of common stock, together with accompanying warrants to purchase an aggregate of 3,652,300 shares of common stock. Each share of common stock and accompanying warrant were sold together at a combined purchase price of $1.0952 and each pre-funded warrant and accompanying warrant were sold together at a combined purchase price of $1.0951. The aggregate gross proceeds to us from the October 2023 Registered Direct Offering were approximately $4.0 million, before deducting placement agents' fees and related offering expenses.

On February 28, 2023, we consummated an underwritten public offering, or the February 2023 Offering, issuing 7,220,217 shares of common stock and accompanying common stock warrants to purchase an aggregate of 7,220,217 shares of common stock. The shares of common stock and accompanying common stock warrants were sold at a combined price of $2.77 per share and accompanying common stock warrant. Each common stock warrant sold with the shares of common stock represents the right to purchase one share of our common stock at an exercise price of $2.77 per share. The common stock warrants are exercisable immediately and will expire on February 28, 2028, five years from the date of issuance. The net proceeds from the February 2023 Offering were approximately $18.5 million, after deducting underwriting discounts and commissions and offering expenses, and excluding the exercise of any warrants.

On April 16, 2021, we entered into a Controlled Equity OfferingSM Sales Agreement, or the Sales Agreement, with Cantor Fitzgerald & Co., or the Agent. From time to time during the term of the Sales Agreement, subject to certain restrictions, we may offer and sell shares of common stock having an aggregate offering price up to a total of $50.0 million in gross proceeds. The Agent will collect a fee equal to 3% of the gross sales price of all shares of common stock sold. Shares of common stock sold under the Sales Agreement are offered and sold pursuant to our registration statement on Form S-3, which was filed with the SEC on April 16, 2021 and declared effective on April 29, 2021. During the nine months ended September 30, 2023, we sold a total of 76,882 shares of common stock pursuant to the Sales Agreement at an average price of $3.59 per share for aggregate net proceeds of approximately $0.3 million. Subsequent to September 30, 2023, we sold a total of 16,000 shares of common stock pursuant to the Sales Agreement for aggregate net proceeds of approximately $21,000.

In December 2020, together with our wholly-owned subsidiary, SLSG Limited, LLC, we entered into the 3DMed License Agreement pursuant to which we granted 3DMed a sublicensable royalty-bearing license under certain intellectual property owned or controlled by us, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS product candidates for all therapeutic and other diagnostic uses in the

3DMed Territory. To date, we have received $10.5 million in upfront payments and certain technology transfer and regulatory milestones. In November 2022, we announced that we have agreed with 3D Medicines for 3D Medicines to participate in the REGAL study through the inclusion of approximately 20-25 patients from mainland China. Such participation by 3D Medicines, which we expect to occur in the fourth quarter of 2023, subject to any further delays due to supply chain or other operational reasons, will trigger two development milestone payments totaling $13.0 million. A total of $191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remains under the 3DMed License Agreement as of September 30, 2023, which milestones are all variable in nature and not under our control.

Funding Requirements

As of September 30, 2023, we had an accumulated deficit of $209.1 million, cash and cash equivalents of $4.0 million and restricted cash and cash equivalents of $0.1 million. In addition, we had current liabilities of $11.7 million as of September 30, 2023. We expect that our cash and cash equivalents, together with the net proceeds from the October 2023 Registered Direct Offering, will not be sufficient to fund our current planned operations for at least the next twelve months from the date of issuance of these financial statements. The $13.0 million of development milestone payments to us triggered by 3DMed's participation in the REGAL study are variable in nature and not under our control, and therefore are not included in our going concern assumption. These conditions give rise to a substantial doubt over our ability to continue as a going concern. This going concern assumption is based on management’s assessment of the sufficiency of our current and future sources of liquidity and whether it is probable we will be able to meet our obligations as they become due for at least one year from the date our consolidated financial statements are available to be issued, and if not, whether our liquidation is imminent.

Our consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of any current or future product candidates in development.

We will require substantial additional financing to develop any current or future product candidates. If we are unable to obtain additional funding on a timely basis, we will be required to scale back our plans and place certain activities on hold. Other than the Sales Agreement, we currently do not have any commitments to obtain additional funds. Our management continues to evaluate different strategies to obtain the required funding for future operations. These strategies may include utilizing the Sales Agreement or public and private placements of equity and/or debt securities, which may be subject to lock-up, as well as payments from potential strategic research and development collaborations or licensing and/or marketing arrangements with pharmaceutical companies. Additionally, we continue to pursue discussions with global and regional pharmaceutical companies for licensing and/or co-development rights to our product candidates. There can be no assurance that these future funding efforts will be successful.

Our future operations are highly dependent on a combination of factors, including (i) the timely and successful completion of any additional financings, (ii) our ability to complete revenue-generating partnerships with pharmaceutical and biotechnology companies, (iii) the success of our research and development activities, (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies, and, ultimately, (v) regulatory approval and market acceptance of our product candidates.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2023 and 2022 (in thousands):


	Nine Months Ended September 30,
	2023		2022
Net cash (used in) provided by:
Operating activities	$	(26,585)	$	(18,657)
Investing activities	(5,500)		(4,500)
Financing activities	18,929		23,150
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	$	(13,156)	$	(7)

Net Cash Used in Operating Activities

Net cash used in operating activities of $26.6 million during the nine months ended September 30, 2023 was primarily attributable to our net loss of $29.2 million, which was partially offset by various net non-cash charges of $2.0 million and a net change in our operating assets and liabilities of approximately $0.6 million. Net non-cash charges were driven by $1.6 million in non-cash stock-based compensation expense and $0.4 million in non-cash lease expense. The net change in our operating assets and liabilities is primarily attributable to an increase in accounts payable and accrued expenses of approximately $1.6 million, partially offset by an increase in prepaid expenses and other current assets of approximately $0.6 million and a decrease in operating lease liabilities of approximately $0.4 million.

Net cash used in operating activities of $18.7 million during the nine months ended September 30, 2022 was primarily attributable to our net loss of $32.2 million, which was partially offset by various net non-cash charges of $11.4 million and the net change in our operating assets and liabilities of approximately $2.1 million. Net non-cash charges were driven by $10.0 million in expense related to the acquired in-process research and development, $1.3 million in non-cash stock compensation expense, and $0.1 million in other net non-cash charges. The net change in our operating assets and liabilities of $2.1 million is primarily attributable to an increase in accrued expenses and other current liabilities of $1.9 million, and a decrease in prepaid expenses and other current assets of $0.5 million, which were partially offset by a decrease in operating lease liabilities of $0.3 million.

Net Cash Used in Investing Activities

Net cash used in investing activities of $5.5 million during the nine months ended September 30, 2023 related to license payments made for the acquisition of in-process research and development under the GenFleet License Agreement.

Net cash used in investing activities of $4.5 million during the nine months ended September 30, 2022 related to license payments made for the acquisition of in-process research and development under the GenFleet License Agreement.

Net Cash Provided by Financing Activities

We generated $18.9 million in net cash from financing activities during the nine months ended September 30, 2023, which was due to approximately $18.5 million in net proceeds from the February 2023 Offering, $0.3 million in net proceeds under the Sales Agreement, and $0.1 million from the purchase of shares of common stock by employees under the 2021 Employee Stock Purchase Plan.

We generated $23.2 million in net cash from financing activities during the nine months ended September 30, 2022 that was due to $23.0 million in aggregate net proceeds received from our underwritten public offering, which closed in April 2022, $0.1 million in aggregate net proceeds received from the issuance of common stock under the Sale Agreement, and $0.1 million in aggregate net proceeds received from the issuance of common stock under the employee stock purchase plan.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet financing arrangements as of September 30, 2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and our principal financial officer (the “Certifying Officers”), evaluated the effectiveness of our disclosure controls and procedures. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures are also designed to reasonably assure that such information is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure. Based on these evaluations, the Certifying Officers have concluded, that, as of the end of the period covered by this Quarterly Report on Form 10-Q:

(a)our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and

(b)our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Exchange Act was accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Please refer to Note 7 (Commitments and Contingencies) to our consolidated financial statements contained in Part I, Item 1 (Financial Statements) of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

ITEM 1A. RISK FACTORS

Please refer to our note on forward-looking statements on page 2 of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in our 2022 Annual Report. The risks described in such 2022 Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition, operating results and stock price.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit
#

Description

Form

Exhibit

Filing Date

3.1

Composite Amended and Restated Certificate of Incorporation of the Registrant (formerly, Galena Biopharma, Inc.) amended as of December 27, 2017

10-K

3.1

April 13, 2018

3.2

Amended and Restated By-Laws of the Registrant

8-K

3.3

January 5, 2018

31.1

Certification of Principal Executive Officer pursuant to Rule13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act, as amended.**

31.2

Certification of Principal Financial Officer pursuant to Rule13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act, as amended.**

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***

32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ***

101.INS

XBRL Instance Document.*

101.SCH

XBRL Taxonomy Extension Schema.*

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.*

101.DEF

XBRL Taxonomy Extension Definition Linkbase.*

101.LAB

XBRL Taxonomy Extension Label Linkbase.*

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.*


*			Indicates management contract or compensatory plans or arrangements.
**			Filed herewith
***			The certifications attached as Exhibit 32.1 and Exhibit 32.2 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			SELLAS Life Sciences Group, Inc.

			By:						/s/ Angelos M. Stergiou

									Angelos M. Stergiou, MD, ScD h.c.
									President and Chief Executive Officer
									(Principal Executive Officer)

									Date: November 9, 2023

			By:						/s/ John T. Burns

									John T. Burns, CPA
									Chief Financial Officer
									(Principal Financial and Principal Accounting Officer)

									Date: November 9, 2023

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Angelos M. Stergiou, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SELLAS Life Sciences Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2023


			/s/ Angelos M. Stergiou

			Angelos M. Stergiou, MD, ScD h.c.
			President and Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John T. Burns, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SELLAS Life Sciences Group, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2023


			/s/ John T. Burns

			John T. Burns, CPA
			Chief Financial Officer (Principal Financial and Principal Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report of SELLAS Life Sciences Group, Inc., (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the Company’s financial condition and results of operations.


			By:						/s/ Angelos M. Stergiou

									Angelos M. Stergiou, MD, ScD h.c.
									President and Chief Executive Officer (Principal Executive Officer)

									Date: November 9, 2023

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the Company’s financial condition and results of operations.


			By:						/s/ John T. Burns

									John T. Burns, CPA
									Chief Financial Officer (Principal Financial and Principal Accounting Officer)

									Date: November 9, 2023

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Nov. 08, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-33958
Entity Registrant Name	SELLAS Life Sciences Group, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-8099512
Entity Address, Address Line One	7 Times Square, Suite 2503,
Entity Address, City or Town	New York,
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10036
City Area Code	(646)
Local Phone Number	200-5278
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	SLS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,062,258
Entity Central Index Key	0001390478
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 3,969	$ 17,125
Restricted cash and cash equivalents	100	100
Prepaid expenses and other current assets	1,134	531
Total current assets	5,203	17,756
Operating lease right-of-use assets	592	874
Goodwill	1,914	1,914
Deposits and other assets	377	399
Total assets	8,086	20,943
Current liabilities:
Accounts payable	4,340	3,357
Accrued expenses and other current liabilities	6,929	6,286
Operating lease liabilities	466	372
Acquired in-process research and development payable	0	5,500
Total current liabilities	11,735	15,515
Operating lease liabilities, non-current	178	573
Warrant liability	0	4
Total liabilities	11,913	16,092
Commitments and Contingencies
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; Series A convertible preferred stock, 17,500 shares designated; no shares issued and outstanding at September 30, 2023 and December 31, 2022	0	0
Common stock, $0.0001 par value; 350,000,000 shares authorized, 28,393,958 and 21,005,405 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	3	2
Additional paid-in capital	205,278	184,753
Accumulated deficit	(209,108)	(179,904)
Total stockholders’ (deficit) equity	(3,827)	4,851
Total liabilities and stockholders’ (deficit) equity	$ 8,086	$ 20,943

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	350,000,000	350,000,000
Common stock, shares issued (in shares)	28,393,958	21,005,405
Common stock, shares outstanding (in shares)	28,393,958	21,005,405
Series A Preferred Stock
Preferred stock, shares authorized (in shares)	17,500	17,500

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Licensing revenue	$ 0	$ 0	$ 0	$ 1,000,000
Operating expenses:
Cost of licensing revenue	0	0	0	100,000
Research and development	5,813,000	4,282,000	18,910,000	14,422,000
General and administrative	3,548,000	2,864,000	10,782,000	8,982,000
Acquired in-process research and development	0	0	0	10,000,000
Total operating expenses	9,361,000	7,146,000	29,692,000	33,504,000
Operating loss	(9,361,000)	(7,146,000)	(29,692,000)	(32,504,000)
Non-operating income:
Change in fair value of warrant liability	0	2,000	4,000	39,000
Change in fair value of contingent consideration	0	11,000	0	126,000
Interest income	94,000	111,000	484,000	159,000
Total non-operating income	94,000	124,000	488,000	324,000
Net loss	$ (9,267,000)	$ (7,022,000)	$ (29,204,000)	$ (32,180,000)
Per share information:
Net loss per common share, basic (in dollars per share)	$ (0.33)	$ (0.34)	$ (1.09)	$ (1.70)
Net loss per common share, diluted (in dollars per share)	$ (0.33)	$ (0.34)	$ (1.09)	$ (1.70)
Weighted-average common shares outstanding, basic (in shares)	28,355,427	20,562,351	26,767,914	18,932,571
Weighted-average common shares outstanding, diluted (in shares)	28,355,427	20,562,351	26,767,914	18,932,571

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021		15,895,637
Beginning balance at Dec. 31, 2021	$ 20,347	$ 2	$ 158,948	$ (138,603)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock and common stock warrants, net of issuance costs (in shares)		4,629,630
Issuance of common stock and common stock warrants, net of issuance costs	22,946		22,946
Issuance of common stock, net of issuance costs (in shares)		37,891
Issuance of common stock, net of issuance costs	119		119
Issuance of common stock under employee stock purchase plan (in shares)		25,089
Issuance of common stock under employee stock purchase plan	85		85
Stock-based compensation	1,280		1,280
Net loss	(32,180)			(32,180)
Ending balance (in shares) at Sep. 30, 2022		20,588,247
Ending balance at Sep. 30, 2022	12,597	$ 2	183,378	(170,783)
Beginning balance (in shares) at Jun. 30, 2022		20,551,918
Beginning balance at Jun. 30, 2022	19,057	$ 2	182,816	(163,761)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock and common stock warrants, net of issuance costs (in shares)		21,602
Issuance of common stock and common stock warrants, net of issuance costs	69		69
Issuance of common stock under employee stock purchase plan (in shares)		14,727
Issuance of common stock under employee stock purchase plan	38		38
Stock-based compensation	455		455
Net loss	(7,022)			(7,022)
Ending balance (in shares) at Sep. 30, 2022		20,588,247
Ending balance at Sep. 30, 2022	$ 12,597	$ 2	183,378	(170,783)
Beginning balance (in shares) at Dec. 31, 2022	21,005,405	21,005,405
Beginning balance at Dec. 31, 2022	$ 4,851	$ 2	184,753	(179,904)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock and common stock warrants, net of issuance costs (in shares)		7,220,217
Issuance of common stock and common stock warrants, net of issuance costs	18,554	$ 1	18,553
Issuance of common stock, net of issuance costs (in shares)		76,882
Issuance of common stock, net of issuance costs	268		268
Issuance of common stock under employee stock purchase plan (in shares)		91,454
Issuance of common stock under employee stock purchase plan	107		107
Stock-based compensation	1,597		1,597
Net loss	$ (29,204)			(29,204)
Ending balance (in shares) at Sep. 30, 2023	28,393,958	28,393,958
Ending balance at Sep. 30, 2023	$ (3,827)	$ 3	205,278	(209,108)
Beginning balance (in shares) at Jun. 30, 2023		28,347,920
Beginning balance at Jun. 30, 2023	4,843	$ 3	204,681	(199,841)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under employee stock purchase plan (in shares)		46,038
Issuance of common stock under employee stock purchase plan	54		54
Stock-based compensation	543		543
Net loss	$ (9,267)			(9,267)
Ending balance (in shares) at Sep. 30, 2023	28,393,958	28,393,958
Ending balance at Sep. 30, 2023	$ (3,827)	$ 3	$ 205,278	$ (209,108)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (29,204)	$ (32,180)
Adjustment to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development expense	0	10,000
Non-cash stock-based compensation	1,597	1,280
Non-cash lease expense	367	334
Change in fair value of common stock warrants	(4)	(39)
Change in fair value of contingent consideration	0	(126)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(581)	505
Accounts payable	983	(17)
Accrued expenses and other current liabilities	643	1,930
Operating lease liabilities	(386)	(344)
Net cash used in operating activities	(26,585)	(18,657)
Cash flows from investing activities:
Cash paid for acquisition of in-process research and development	(5,500)	(4,500)
Net cash used in investing activities	(5,500)	(4,500)
Cash flows from financing activities:
Proceeds from issuance of common stock and common stock warrants, net of issuance costs	18,554	22,946
Proceeds from issuance of common stock, net of issuance costs	268	119
Proceeds from employee stock purchases	107	85
Net cash provided by financing activities	18,929	23,150
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	(13,156)	(7)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period	17,225	21,455
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period	4,069	21,448
Supplemental disclosure of cash flow information:
Cash received during the period for interest	484	159
Supplemental disclosure of non-cash investing and financing activities:
Non-cash acquisition of in-process research and development	0	5,500
Increase in operating lease right-of-use assets and current and non-current operating lease liabilities	$ 0	$ 449

Description of Business	9 Months Ended
Description of Business	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business	Description of Business Overview SELLAS Life Sciences Group, Inc. is a late-stage clinical biopharmaceutical company focused on novel therapeutics for a broad range of cancer indications. SELLAS’ lead product candidate, galinpepimut-S ("GPS"), is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center ("MSK") 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 with other immunotherapeutic agents to address a broad spectrum of hematologic, or blood, cancers and solid tumor indications. SELLAS' second product candidate is SLS009 (formerly GFH009), a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which the Company licensed from GenFleet Therapeutics (Shanghai), Inc. ("GenFleet"), for all therapeutic and diagnostic uses in the world outside of mainland China, Hong Kong, Macau and Taiwan ("SLS009 Territory").

Liquidity	9 Months Ended
Liquidity	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Liquidity	Liquidity Since inception, the Company has incurred recurring losses and negative cash flows from operations and, as of September 30, 2023, has an accumulated deficit of $209.1 million. During the nine months ended September 30, 2023, the Company incurred a net loss of $29.2 million, and used $26.6 million of cash in operations. The Company expects to continue to generate operating losses and negative cash flows from operations for the next few years and will need additional funding to support its planned operating activities through profitability. The transition to profitability is dependent upon the successful development, approval, and commercialization of the Company's product candidates and the achievement of a level of revenues adequate to support its cost structure. On October 30, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a single institutional investor (the "Investor"), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investor (the “October 2023 Registered Direct Offering”), 3,100,000 shares of its common stock and 552,300 pre-funded warrants exercisable for shares of common stock, together with accompanying warrants to purchase an aggregate of 3,652,300 shares of common stock. Each share of common stock and accompanying warrant were sold together at a combined purchase price of $1.0952 and each pre-funded warrant and accompanying warrant were sold together at a combined purchase price of $1.0951. The aggregate gross proceeds to the Company from the October 2023 Registered Direct Offering were approximately $4.0 million, before deducting placement agents' fees and related offering expenses. Subsequent to the closing of the October 2023 Registered Direct Offering, all of the pre-funded warrants were exercised into shares of common stock by the Investor. On February 28, 2023, the Company consummated an underwritten public offering (the "February 2023 Offering"), issuing 7,220,217 shares of common stock and accompanying common stock warrants to purchase an aggregate of 7,220,217 shares of common stock. The shares of common stock and accompanying common stock warrants were sold at a combined price of $2.77 per share and accompanying common stock warrant. Each common stock warrant sold with the shares of common stock represents the right to purchase one share of the Company’s common stock at an exercise price of $2.77 per share, which was reduced to an exercise price of $1.35 per share in October 2023, and further reduced to an exercise price of $0.9702 per share in November 2023. The common stock warrants are exercisable immediately and will expire on February 28, 2028, five years from the date of issuance. The net proceeds to the Company from the February 2023 Offering were approximately $18.5 million, after deducting underwriting discounts and commissions, offering expenses, and excluding the exercise of any warrants. On April 16, 2021, the Company entered into a Controlled Equity OfferingSM Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co. (the "Agent"). From time to time during the term of the Sales Agreement, subject to certain restrictions, the Company may offer and sell shares of common stock having an aggregate offering price up to a total of $50.0 million in gross proceeds. The Agent will collect a fee equal to 3% of the gross sales price of all shares of common stock sold. Shares of common stock sold under the Sales Agreement are offered and sold pursuant to the Company's registration statement on Form S-3, which was filed with the SEC on April 16, 2021 and declared effective on April 29, 2021. During the nine months ended September 30, 2023, the Company sold a total of 76,882 shares of common stock pursuant to the Sales Agreement at an average price of $3.59 per share for aggregate net proceeds of approximately $0.3 million. Subsequent to September 30, 2023, the Company sold a total of 16,000 shares of common stock pursuant to the Sales Agreement for aggregate net proceeds of approximately $21,000. In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into an Exclusive License Agreement (the “3DMed License Agreement”) with 3D Medicines Inc. ("3DMed"), pursuant to which the Company granted 3DMed a sublicensable, royalty-bearing license, under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS product candidates for all therapeutic and other diagnostic uses in mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). To date, the Company has received $10.5 million in upfront payments and certain technology transfer and regulatory milestones. In November 2022, the Company announced that the Company has agreed with 3DMed for 3DMed to participate in the REGAL study through the inclusion of approximately 20-25 patients from mainland China. Such participation by 3DMed, which the Company expects to occur in the fourth quarter of 2023, subject to any further delays due to supply chain or other operational reasons, will trigger two development milestone payments totaling $13.0 million which has been agreed with 3DMed. A total of $191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remains under the 3DMed License Agreement as of September 30, 2023, which milestones are all variable in nature and not under the Company's control. As of September 30, 2023, the Company had cash and cash equivalents of approximately $4.0 million and restricted cash and cash equivalents of $0.1 million. In accordance with Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the consolidated financial statements are issued. The Company expects its cash and cash equivalents, together with the net proceeds from the October 2023 Registered Direct Offering, will not be sufficient to fund its current planned operations for at least the next twelve months from the date of issuance of these consolidated financial statements. The $13.0 million of development milestone payments to the Company triggered by 3DMed's participation in the REGAL study through the enrollment of patients in China are variable in nature and not under the Company's control, and therefore cannot be included in the Company's going concern assumption. The Company will require substantial additional financing to commercially develop any current or future product candidates. If the Company is unable to obtain additional funding on a timely basis, it will be required to scale back its plans and place certain activities on hold. Other than the Sales Agreement, the Company currently does not have any commitments to obtain additional funds. The Company's management continues to evaluate different strategies to obtain the required funding for future operations. These strategies may include utilizing the Sales Agreement or public and private placements of equity and/or debt securities, which may be subject to lock-up, as well as payments from potential strategic research and development collaborations or licensing and/or marketing arrangements with pharmaceutical companies. Additionally, the Company may continue to pursue discussions with global and regional pharmaceutical companies for licensing and/or co-development rights to its product candidates. The Company has prepared its consolidated financial statements assuming that it will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation

guidance is meant to refer to U.S. GAAP as found in the ASC and Accounting Standards Updates ("ASUs") of the Financial Accounting Standards Board ("FASB").

Principles of Consolidation

Unaudited Interim Results

Reclassification

Net Loss Per Share

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive (in thousands):


	Nine Months Ended September 30,
	2023	2022
Common stock warrants	12,221	5,148
Stock options	1,643	1,071
Restricted stock units ("RSUs")	433	297
	14,297	6,516

Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in thousands):


Description	September 30, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	3,006	$	3,006	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	3,106	$	3,106	$	—	$	—
Liabilities:
Warrant liability	$	—	$	—	$	—	$	—
Total liabilities measured and recorded at fair value	$	—	$	—	$	—	$	—


Description	December 31, 2022		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	16,609	$	16,609	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	16,709	$	16,709	$	—	$	—
Liabilities:
Warrant liability	$	4	$	—	$	—	$	4
Total liabilities measured and recorded at fair value	$	4	$	—	$	—	$	4

Acquired In-Process Research and Development	9 Months Ended
Acquired In-Process Research and Development	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Acquired In-Process Research and Development	Acquired In-Process Research and Development Exclusive License Agreement with GenFleet Therapeutics (Shanghai) Inc. On March 31, 2022, the Company entered into an exclusive license agreement with GenFleet pursuant to which GenFleet granted to the Company a sublicensable royalty-bearing license under certain of its intellectual property, to develop, manufacture, and commercialize SLS009 for the treatment, diagnosis or prevention of disease in humans and animals in the SLS009 Territory. In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $10.0 million, all of which has been paid as of September 30, 2023, (ii) development and regulatory milestone payments for up to three indications totaling up to $48.0 million in the aggregate upon the achievement of such milestones, and (iii) sales milestone payments totaling up to $92.0 million in the aggregate upon the achievement of certain net sales thresholds in a given calendar year. The Company also agreed to pay GenFleet single-digit tiered royalties based upon a percentage of annual net sales, with the royalty rate escalating based on the level of annual net sales of SLS009 in the SLS009 Territory ranging from the low to high single digits. During the nine months ended September 30, 2022, the Company expensed $10.0 million related to the acquired technology as in-process research and development based on the assessment that the technology has no alternative future use. During the three and nine months ended September 30, 2023, the Company made cash payments of $3.0 million and $5.5 million, respectively, pursuant to the exclusive license agreement.

Balance Sheet Accounts

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Accounts

Prepaid expenses and other current assets consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Insurance	$	596	$	219
Clinical development	425		184
Professional fees	113		82
Other	—		46
Prepaid expenses and other current assets	$	1,134	$	531

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Clinical trial costs	$	4,864	$	4,509
Compensation and related benefits	1,547		1,439
Professional fees	304		338
Other	214		—
Accrued expenses and other current liabilities	$	6,929	$	6,286

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Leases

Future minimum lease payments are as follows as of September 30, 2023 (in thousands):


Future minimum lease payments:
2023 (remaining)	$	132
2024	533
Total future minimum lease payments	665
Less: imputed interest	(21)
Current and non-current operating lease liabilities	$	644

Legal Proceedings

Stockholders' Equity

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Preferred Stock

Common Stock

The Company has authorized up to 350,000,000 shares of common stock, $0.0001 par value per share, for issuance.

As of September 30, 2023, the Company has shares of common stock reserved for future issuance as follows (in thousands):


Warrants outstanding			12,221
Stock options outstanding			1,643
RSUs outstanding			433
Shares reserved for future issuance under the 2023 Amended and Restated Equity Incentive Plan			3,905
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan			183
Total common stock reserved for future issuance			18,385

Warrants to Acquire Shares of Common Stock

9 Months Ended

Sep. 30, 2023

Warrants and Rights Note Disclosure [Abstract]

Warrants to Acquire Shares of Common Stock

Warrants Outstanding

The following is a summary of the activity of the Company's warrants to acquire shares of common stock for the nine months ended September 30, 2023 (in thousands):


Warrant Issuance	Outstanding, December 31, 2022	Granted	Expired	Outstanding, September 30, 2023	Exercise Price per Share		Expiration
Warrants classified as equity:
February 2023 Offering	—	7,220	—	7,220	$	2.77	February 2028
April 2022 Offering	4,630	—	—	4,630	$	4.08	April 2027
January 2020 Offering	309	—	—	309	$	3.93	July 2025
July 2020 PIPE Offering	25	—	—	25	$	3.30	August 2025


Other	164	—	(133)	31	$	7.50	March 2024 - June 2024
	5,128	7,220	(133)	12,215
Warrants classified as liability	13	—	(7)	6	$	7.50	November 2023
	5,141	7,220	(140)	12,221

Warrants Classified as Equity

October 2023 Registered Direct Offering to $0.9702 per share, and amended the termination date of such warrants to November 2, 2028.

Warrants Classified as Liabilities


	September 30, 2023			December 31, 2022
Risk free interest rate	5.55		%	4.75		%
Volatility	77.15		%	120.60		%
Expected term (years)	0.09			0.75
Expected dividend yield	—		%	—		%
Strike price	$	7.50		$	7.50

The changes in fair value of the warrant liability for the nine months ended September 30, 2023 were as follows (in thousands):


Warrant liability, December 31, 2022	$	4


Change in fair value of warrants	(4)
Warrant liability, September 30, 2023	$	—

Licensing Revenue	9 Months Ended
Licensing Revenue	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Licensing Revenue	Licensing Revenue Exclusive License Agreement with 3D Medicines Inc. In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into an Exclusive License Agreement (the “3DMed License Agreement”) with 3D Medicines Inc. ("3DMed"), pursuant to which the Company granted 3DMed a sublicensable royalty-bearing license under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS (referred to as GPS Plus) product candidates ("GPS Licensed Products") for all therapeutic and other diagnostic uses in mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). The license is exclusive, except with respect to certain know-how that has been non-exclusively licensed to the Company and is sublicensed to 3DMed on a non-exclusive basis. The Company has retained development, manufacturing and commercialization rights with respect to the GPS Licensed Products in the rest of the world. In partial consideration for the rights granted by the Company, 3DMed agreed to pay the Company (i) a one-time upfront cash payment of $7.5 million, and (ii) milestone payments totaling up to $194.5 million in the aggregate upon the achievement of certain technology transfer, development and regulatory milestones, as well as sales milestones based on certain net sales thresholds of GPS Licensed Products in the 3DMed Territory in a given calendar year. 3DMed also agreed to pay tiered royalties based upon a percentage of annual net sales of GPS Licensed Products in the 3DMed Territory ranging from the high single digits to the low double digits. Revenue Recognition At the inception of the 3DMed License Agreement, the Company recognized an initial transaction price of $9.5 million as licensing revenue, which included the $7.5 million upfront fee as well as $2.0 million in development milestones that were assessed as probable of being achieved, while the remaining milestones were variable consideration subject to constraint at inception. In the first quarter of 2022, an additional $1.0 million in licensing revenue was recognized upon approval by China’s National Medical Products Administration (“NMPA”) for a small Phase 1 clinical trial investigating safety of GPS in China. There is $191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remaining under the 3DMed License Agreement as of September 30, 2023, which milestones are variable in nature and not under the Company's control. At the end of each reporting period, the Company reevaluates the probability of achievement of the future development, regulatory, and sales milestones subject to constraint and, if necessary, will adjust its estimate of the overall transaction price. Any such adjustments will be recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. For the sales-based royalties, the Company will recognize revenue when the related sales occur. To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements. There was no licensing revenue recognized during each of the three months ended September 30, 2023 and 2022. There was no licensing revenue recognized during the nine months ended September 30, 2023, and $1.0 million licensing revenue recognized during the nine months ended September 30, 2022 related to the IND approval by the NMPA. There was no cost of licensing revenue recognized during each of the three months ended September 30, 2023 and 2022. There was no cost of licensing revenue recognized during the nine months ended September 30, 2023, and $0.1 million in cost of licensing revenue for the nine months ended September 30, 2022 for sublicensing fees incurred in connection with the 3DMed License Agreement.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

2017 Equity Incentive Plan

2023 Amended and Restated Equity Incentive Plan

As of September 30, 2023, approximately 3,905,000 shares of common stock were reserved for future grants under the 2023 Amended and Restated Equity Incentive Plan.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	93	$	72	$	281	$	197
General and administrative	450		383		1,316		1,083
Total stock-based compensation	$	543	$	455	$	1,597	$	1,280

Options to Purchase Shares of Common Stock

The following table summarizes stock option activity of the Company for the nine months ended September 30, 2023:


	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2022	1,040	$	7.57		$	91
Granted	682	3.20

Canceled	(79)	5.28
Outstanding at September 30, 2023	1,643	$	5.87	8.40	$	3
Options exercisable at September 30, 2023	586	$	9.08	7.49	$	—


	Three Months Ended September 30,			Nine Months Ended September 30,
	2023	2022		2023		2022
Risk free interest rate	n/a	3.00	%	3.78	%	1.95	%
Volatility	n/a	138.57	%	127.77	%	131.54	%
Expected lives (years)	n/a	6.03		6.20		6.18
Expected dividend yield	n/a	—	%	—	%	—	%

Time-vested RSUs and RSUs with Performance Conditions

The following table summarizes RSU activity of the Company for the nine months ended September 30, 2023:


	Shares (In Thousands)	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	255	$	3.25
Granted	195	$	3.34
Canceled	(17)	$	3.76
Unvested at September 30, 2023	433	$	3.27

2021 Employee Stock Purchase Plan

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe Company evaluated all events or transactions that occurred after September 30, 2023 up through the date these consolidated financial statements were issued. Other than as disclosed elsewhere in the notes to the consolidated financial statements, the Company did not have any material subsequent events.

Basis of Presentation and Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the ASC and Accounting Standards Updates ("ASUs") of the Financial Accounting Standards Board ("FASB").
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. Unless the context otherwise indicates, reference in these notes to the "Company" refer to SELLAS Life Sciences Group, Inc., and its wholly owned subsidiaries, SELLAS Life Sciences Group, Ltd., a privately held Bermuda exempted company, SLSG Limited, LLC, Sellas Life Sciences Limited, and Apthera, Inc.
Reclassification	Reclassification Certain prior year amounts have been reclassified to conform to current year presentation. These reclassifications had no effect on the Company's loss from operations, net loss, and net loss per share.
Net Loss Per Share	Net Loss Per Share Net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share, the weighted average number of shares remains the same for both calculations due to the fact that, when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

Basis of Presentation and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive (in thousands):


	Nine Months Ended September 30,
	2023	2022
Common stock warrants	12,221	5,148
Stock options	1,643	1,071
Restricted stock units ("RSUs")	433	297
	14,297	6,516

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in thousands):


Description	September 30, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	3,006	$	3,006	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	3,106	$	3,106	$	—	$	—
Liabilities:
Warrant liability	$	—	$	—	$	—	$	—
Total liabilities measured and recorded at fair value	$	—	$	—	$	—	$	—


Description	December 31, 2022		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	16,609	$	16,609	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	16,709	$	16,709	$	—	$	—
Liabilities:
Warrant liability	$	4	$	—	$	—	$	4
Total liabilities measured and recorded at fair value	$	4	$	—	$	—	$	4

Balance Sheet Accounts (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Insurance	$	596	$	219
Clinical development	425		184
Professional fees	113		82
Other	—		46
Prepaid expenses and other current assets	$	1,134	$	531

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	September 30, 2023		December 31, 2022
Clinical trial costs	$	4,864	$	4,509
Compensation and related benefits	1,547		1,439
Professional fees	304		338
Other	214		—
Accrued expenses and other current liabilities	$	6,929	$	6,286

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments

Future minimum lease payments are as follows as of September 30, 2023 (in thousands):


Future minimum lease payments:
2023 (remaining)	$	132
2024	533
Total future minimum lease payments	665
Less: imputed interest	(21)
Current and non-current operating lease liabilities	$	644

Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Schedule of Common Stock Reserved for Future Issuance

As of September 30, 2023, the Company has shares of common stock reserved for future issuance as follows (in thousands):


Warrants outstanding			12,221
Stock options outstanding			1,643
RSUs outstanding			433
Shares reserved for future issuance under the 2023 Amended and Restated Equity Incentive Plan			3,905
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan			183
Total common stock reserved for future issuance			18,385

Warrants to Acquire Shares of Common Stock (Tables)

9 Months Ended

Sep. 30, 2023

Warrants and Rights Note Disclosure [Abstract]

Schedule of Warrant Activity

The following is a summary of the activity of the Company's warrants to acquire shares of common stock for the nine months ended September 30, 2023 (in thousands):


Warrant Issuance	Outstanding, December 31, 2022	Granted	Expired	Outstanding, September 30, 2023	Exercise Price per Share		Expiration
Warrants classified as equity:
February 2023 Offering	—	7,220	—	7,220	$	2.77	February 2028
April 2022 Offering	4,630	—	—	4,630	$	4.08	April 2027
January 2020 Offering	309	—	—	309	$	3.93	July 2025
July 2020 PIPE Offering	25	—	—	25	$	3.30	August 2025


Other	164	—	(133)	31	$	7.50	March 2024 - June 2024
	5,128	7,220	(133)	12,215
Warrants classified as liability	13	—	(7)	6	$	7.50	November 2023
	5,141	7,220	(140)	12,221

Schedule of Fair Value of Warrants is Estimated Using Black-Scholes Option Pricing Model

The fair value of the warrants is estimated using a Black-Scholes pricing model with the following inputs:


	September 30, 2023			December 31, 2022
Risk free interest rate	5.55		%	4.75		%
Volatility	77.15		%	120.60		%
Expected term (years)	0.09			0.75
Expected dividend yield	—		%	—		%
Strike price	$	7.50		$	7.50

Schedule of Changes in Fair Value of Warrant Liability

The changes in fair value of the warrant liability for the nine months ended September 30, 2023 were as follows (in thousands):


Warrant liability, December 31, 2022	$	4


Change in fair value of warrants	(4)
Warrant liability, September 30, 2023	$	—

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Allocated Stock-based Compensation Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	93	$	72	$	281	$	197
General and administrative	450		383		1,316		1,083
Total stock-based compensation	$	543	$	455	$	1,597	$	1,280

Schedule of Stock Option Activity

The following table summarizes stock option activity of the Company for the nine months ended September 30, 2023:


	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2022	1,040	$	7.57		$	91
Granted	682	3.20

Canceled	(79)	5.28
Outstanding at September 30, 2023	1,643	$	5.87	8.40	$	3
Options exercisable at September 30, 2023	586	$	9.08	7.49	$	—

Schedule of Assumptions for Option Grants Issued


	Three Months Ended September 30,			Nine Months Ended September 30,
	2023	2022		2023		2022
Risk free interest rate	n/a	3.00	%	3.78	%	1.95	%
Volatility	n/a	138.57	%	127.77	%	131.54	%
Expected lives (years)	n/a	6.03		6.20		6.18
Expected dividend yield	n/a	—	%	—	%	—	%

Schedule of RSU Activity

The following table summarizes RSU activity of the Company for the nine months ended September 30, 2023:


	Shares (In Thousands)	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	255	$	3.25
Granted	195	$	3.34
Canceled	(17)	$	3.76
Unvested at September 30, 2023	433	$	3.27

Liquidity (Details) $ / shares in Units, $ in Thousands					1 Months Ended		3 Months Ended		9 Months Ended
Liquidity (Details) $ / shares in Units, $ in Thousands	Oct. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2023 USD ($) $ / shares	Feb. 28, 2023 USD ($) $ / shares shares	Apr. 16, 2021 USD ($)	Nov. 09, 2023 USD ($) $ / shares shares	Nov. 30, 2022 patient	Sep. 30, 2023 USD ($) $ / shares	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2022 USD ($)	Oct. 31, 2023 $ / shares	Dec. 31, 2022 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Accumulated deficit		$ 209,108					$ 209,108		$ 209,108			$ 179,904
Net loss							9,267	$ 7,022	29,204	$ 32,180
Net cash used in operating activities									26,585	$ 18,657
Upfront fee and milestone payments									10,500
Milestone payment received									13,000
Potential milestone payments to be received		191,500
Cash and cash equivalents		3,969					3,969		3,969			17,125
Restricted cash and cash equivalents		$ 100					$ 100		$ 100			$ 100
Minimum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of patients \| patient						20
Maximum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of patients \| patient						25
Underwriting Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares) \| shares			7,220,217
Common stock to be called by warrants (in shares) \| shares			7,220,217
Offering price (in dollars per share) \| $ / shares			$ 2.77
Net proceeds of common stock			$ 18,500
Exercise price (in dollars per share) \| $ / shares			$ 2.77
Number of securities called by each warrant \| shares			1
Expiration term			5 years
Underwriting Agreement \| Subsequent Event
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Exercise price (in dollars per share) \| $ / shares					$ 0.9702						$ 1.35
Sales Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares) \| shares									76,882
Net proceeds of common stock									$ 300
Sale of shares, common stock gross proceeds				$ 50,000
Percentage gross proceeds from the sale of shares (as a percent)				3.00%
Stock price per share (in dollars per share) \| $ / shares		$ 3.59					$ 3.59		$ 3.59
Sales Agreement \| Subsequent Event
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares) \| shares					16,000
Net proceeds of common stock					$ 21
Securities Purchase Agreement \| Subsequent Event
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares) \| shares	3,100,000
Offering price (in dollars per share) \| $ / shares	$ 1.0952
Securities Purchase Agreement \| Subsequent Event \| Pre-Funded Warrants
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares) \| shares	3,652,300
Common stock to be called by warrants (in shares) \| shares	552,300
Offering price (in dollars per share) \| $ / shares	$ 1.0951
Net proceeds of common stock	$ 4,000

Basis of Presentation and Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	14,297	6,516
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	12,221	5,148
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	1,643	1,071
Restricted stock units ("RSUs")
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	433	297

Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Liabilities:
Warrant liability	$ 0	$ 4
Fair Value, Measurements, Recurring
Assets:
Cash equivalents	3,006	16,609
Restricted cash equivalents	100	100
Total assets measured and recorded at fair value	3,106	16,709
Liabilities:
Warrant liability	0	4
Total liabilities measured and recorded at fair value	0	4
Fair Value, Measurements, Recurring \| Quoted Prices In Active Markets (Level 1)
Assets:
Cash equivalents	3,006	16,609
Restricted cash equivalents	100	100
Total assets measured and recorded at fair value	3,106	16,709
Liabilities:
Warrant liability	0	0
Total liabilities measured and recorded at fair value	0	0
Fair Value, Measurements, Recurring \| Significant Other Observable Inputs (Level 2)
Assets:
Cash equivalents	0	0
Restricted cash equivalents	0	0
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrant liability	0	0
Total liabilities measured and recorded at fair value	0	0
Fair Value, Measurements, Recurring \| Unobservable Inputs (Level 3)
Assets:
Cash equivalents	0	0
Restricted cash equivalents	0	0
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrant liability	0	4
Total liabilities measured and recorded at fair value	$ 0	$ 4

Acquired In-Process Research and Development (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Acquired in-process research and development expense		$ 0	$ 0	$ 0	$ 10,000
Cash payments				5,500	4,500
GenFleet Therapeutics (Shanghai) Inc
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront fee	$ 10,000
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	48,000
Maximum amount eligible for milestones under collaborations agreement	$ 92,000
Acquired in-process research and development expense					$ 10,000
Cash payments		$ 3,000		$ 5,500

Balance Sheet Accounts - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Insurance	$ 596	$ 219
Clinical development	425	184
Professional fees	113	82
Other	0	46
Prepaid expenses and other current assets	$ 1,134	$ 531

Balance Sheet Accounts - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Clinical trial costs	$ 4,864	$ 4,509
Compensation and related benefits	1,547	1,439
Professional fees	304	338
Other	214	0
Accrued expenses and other current liabilities	$ 6,929	$ 6,286

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Operating lease, discount rate (as a percent)	13.95%		13.95%
Operating lease, remaining term			1 year 3 months
Rent expense	$ 0.1	$ 0.1	$ 0.4	$ 0.3
Cash payments related to operating lease	$ 0.1	$ 0.1	$ 0.4	$ 0.3

Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2023 (remaining)	$ 132
2024	533
Total future minimum lease payments	665
Less: imputed interest	(21)
Current and non-current operating lease liabilities	$ 644

Stockholders' Equity - Narrative (Details) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Equity [Abstract]
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares outstanding (in shares)	0	0
Common stock, shares authorized (in shares)	350,000,000	350,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001

Stockholders' Equity - Schedule of Common Stock Reserved for Future Issuance (Details) - shares shares in Thousands	Sep. 30, 2023	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrants outstanding (in shares)	12,221	5,141
Stock options outstanding (in shares)	1,643	1,040
Total common stock reserved for future issuance (in shares)	18,385
2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)	3,905
2021 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)	183
Restricted stock units ("RSUs")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs outstanding (in shares)	433	255

Warrants to Acquire Shares of Common Stock - Schedule of Warrant Activity (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	5,141
Granted (in shares)	7,220
Expired (in shares)	(140)
Outstanding, end of period (in shares)	12,221
Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	5,128
Granted (in shares)	7,220
Expired (in shares)	(133)
Outstanding, end of period (in shares)	12,215
February 2023 Offering \| Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	0
Granted (in shares)	7,220
Expired (in shares)	0
Outstanding, end of period (in shares)	7,220
Exercise price (in dollars per share) \| $ / shares	$ 2.77
April 2022 Offering \| Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	4,630
Granted (in shares)	0
Expired (in shares)	0
Outstanding, end of period (in shares)	4,630
Exercise price (in dollars per share) \| $ / shares	$ 4.08
January 2020 Offering \| Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	309
Granted (in shares)	0
Expired (in shares)	0
Outstanding, end of period (in shares)	309
Exercise price (in dollars per share) \| $ / shares	$ 3.93
July 2020 PIPE Offering \| Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	25
Granted (in shares)	0
Expired (in shares)	0
Outstanding, end of period (in shares)	25
Exercise price (in dollars per share) \| $ / shares	$ 3.30
Other \| Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	164
Granted (in shares)	0
Expired (in shares)	(133)
Outstanding, end of period (in shares)	31
Exercise price (in dollars per share) \| $ / shares	$ 7.50
Warrants classified as liability
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	13
Granted (in shares)	0
Expired (in shares)	(7)
Outstanding, end of period (in shares)	6
Exercise price (in dollars per share) \| $ / shares	$ 7.50

Warrants to Acquire Shares of Common Stock - Narrative (Details) $ / shares in Units, $ in Millions	Nov. 09, 2023 $ / shares shares	Oct. 31, 2023 $ / shares	Sep. 30, 2023	Feb. 28, 2023 USD ($) $ / shares shares	Feb. 27, 2023 $ / shares	Dec. 31, 2022
Coupon rate
Class of Warrant or Right [Line Items]
Expected dividend yield			0
Expected dividend yield
Class of Warrant or Right [Line Items]
Expected dividend yield			0			0
Underwriting Agreement
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)				$ 2.77
Common stock to be called by warrants (in shares) \| shares				7,220,217
Underwriting Agreement \| Subsequent Event
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)	$ 0.9702	$ 1.35
February 2023 Offering \| Subsequent Event
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)	0.9702	$ 1.35
October 2023 Offering \| Subsequent Event
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)	0.9702
October 2023 Offering \| Underwriting Agreement \| Subsequent Event
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)	$ 0.9702
Common stock to be called by warrants (in shares) \| shares	887,000
April 2022 Offering \| Underwriting Agreement
Class of Warrant or Right [Line Items]
Exercise price (in dollars per share)				$ 3.62	$ 5.40
Common stock to be called by warrants (in shares) \| shares				3,438,851
Warrants not settleable in cash, fair value disclosure \| $				$ 0.3

Warrants to Acquire Shares of Common Stock - Schedule of Fair Value of Warrants is Estimated Using Black-Scholes Option Pricing Model (Details)	Sep. 30, 2023 $ / shares yr	Dec. 31, 2022 yr
Risk free interest rate
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.0555	0.0475
Volatility
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.7715	1.2060
Expected term (years)
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.09	0.75
Expected dividend yield
Class of Warrant or Right [Line Items]
Warrants, measurement input	0	0
Strike price
Class of Warrant or Right [Line Items]
Warrants, measurement input	7.50	7.50

Warrants to Acquire Shares of Common Stock - Schedule of Changes in Fair Value of Warrant Liability (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, December 31, 2022	$ 4
Change in fair value of warrants	(4)
Warrant liability, September 30, 2023	$ 0

Licensing Revenue (Details) - USD ($)		1 Months Ended	3 Months Ended			9 Months Ended
Licensing Revenue (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2020	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue from Contract with Customer [Abstract]
Upfront cash payment received		$ 7,500,000
Future milestone payments received		194,500,000
Performance obligation, amount		9,500,000
Milestones probable of being achieved		$ 2,000,000
Deferred revenue recognized license					$ 1,000,000
Potential milestone payments to be received	$ 191,500,000
Licensing revenue			$ 0	$ 0		$ 0	$ 1,000,000
Cost of licensing revenue			$ 0	$ 0		$ 0	$ 100,000

Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended		9 Months Ended
	Jun. 20, 2023	Apr. 22, 2021	Sep. 10, 2019	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 29, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)				18,385,000		18,385,000
Closing price of the Company's common stock (in dollars per share)				$ 1.64		$ 1.64
Granted (in shares)				0		682,000
Weighted average exercise price, granted (in dollars per share)					$ 2.78	$ 2.88	$ 4.52
Averages contractual term						10 years
Expected dividend yield (as a percent)					0.00%	0.00%	0.00%
Unrecognized compensation cost, options				$ 3,400		$ 3,400
Proceeds from employee stock purchases						$ 107	$ 85
Restricted stock units ("RSUs")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, granted (in dollars per share)						$ 3.34
Weighted average recognition period						2 years 4 months 9 days
Unrecognized compensation cost				$ 1,100		$ 1,100
RSUs vested (in shares)						0
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average recognition period						2 years 6 months 10 days
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term						4 years
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term						6 years
2017 Equity Incentive Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for issuance (in shares)								22,000
2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for issuance (in shares)			6,036,000
Option term			4 years
Increase in number of shares available for future issuance under stock based awards (as a percent)			5.00%
Increase in number of shares authorized (in shares)	3,000,000
Shares of common stock reserved for issuance (in shares)				3,905,000		3,905,000
2021 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for issuance (in shares)		300,000
2021 ESPP \| Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)				183,457		183,457
Cash earnings contributed per year		20.00%
Purchase price of common stock		85.00%
Offering period		6 months
Shares purchased for award				46,038		91,454
Proceeds from employee stock purchases				$ 54		$ 107

Stock-Based Compensation - Schedule of Allocated Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 543	$ 455	$ 1,597	$ 1,280
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	93	72	281	197
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 450	$ 383	$ 1,316	$ 1,083

Stock-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding, beginning balance (in shares)		1,040,000
Granted (in shares)	0	682,000
Canceled (in shares)		(79,000)
Options outstanding, ending balance (in shares)	1,643,000	1,643,000
Options exercisable (in shares)	586,000	586,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted average exercise price, beginning balance (in dollars per share)		$ 7.57
Weighted average exercise price, granted (in dollars per share)		3.20
Weighted average exercise price, granted canceled (in dollars per share)		5.28
Weighted average exercise price, ending balance (in dollars per share)	$ 5.87	5.87
Weighted average exercise price, options exercisable (in dollars per share)	$ 9.08	$ 9.08
Weighted average remaining contractual term, outstanding (in years)		8 years 4 months 24 days
Weighted average remaining contractual term, options exercisable (in years)		7 years 5 months 26 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Aggregate Intrinsic Value [Roll Forward]
Aggregate intrinsic value, outstanding	$ 3	$ 3	$ 91
Aggregate intrinsic value, options exercisable	$ 0	$ 0

Stock-Based Compensation - Schedule of Assumptions for Option Grants Issued (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]
Risk free interest rate	3.00%	3.78%	1.95%
Volatility	138.57%	127.77%	131.54%
Expected lives (years)	6 years 10 days	6 years 2 months 12 days	6 years 2 months 4 days
Expected dividend yield	0.00%	0.00%	0.00%

Stock-Based Compensation - Schedule of RSU Activity (Details) - $ / shares shares in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 2.78	$ 2.88	$ 4.52
Restricted stock units ("RSUs")
Shares
Beginning balance (in shares)		255
Granted (in shares)		195
Canceled (in shares)		(17)
Ending balance (in shares)		433
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)		$ 3.25
Granted (in dollars per share)		3.34
Canceled (in dollars per share)		3.76
Ending balance (in dollars per share)		$ 3.27