SELLAS Life Sciences Down Sharply After Raising $25 Million

Edward Kim  |

Video source: YouTube, Memorial Sloan Kettering

Shares of SELLAS Life Sciences ( SLS) are taking a beating in Friday pre-market trading, down 37% to $4.19 per share as of 8:30am EDT after closing Thursday at $6.68.

The company announced the pricing Thursday night of 4,629,630 shares of common stock and an equal number of warrants at a combined price of $5.40.

The warrants have a five-year term and are exercisable at $5.40.

SELLAS is developing therapeutics for a broad range of cancer indications. Its lead candidate is in Phase 3 trials for acute myeloid leukemia (AML).

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Image source: SELLAS Life Sciences

Galinpepimut-S (GPS), the company's lead product candidate, targets malignancies and tumors characterized by an overexpression of the Wilms Tumor 1 (WT1) antigen, one of the most widely expressed cancer antigens in multiple malignancies. The WT1 antigen has been ranked by the National Cancer Institute as the top priority among cancer antigens for immunotherapy. 

Investment thesis

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SELLAS has been a public company since its 2017 merger with troubled Galena Biopharma. 

  • While the latest equity offering has disappointed existing investors with additional dilution at a significant discount, new investors may view SELLAS as a cheap call option on a therapeutic candidate that was discovered by and licensed from Memorial Sloan Kettering Cancer Center.
  • The post-money market cap of $86 million seems low for a company with a Phase 3 asset.
  • SELLAS has a clinical partnership with Merck in a Phase 1/2 study of GPS in combination with Merck's blockbuster Keytruda in various tumor types.
  • The company also has an investigator sponsored Phase 1/2 trial (IST) to study GPS in combination with Bristol Myers Squibb's Opdivo.
  • SELLAS has an out-licensing opportunity with its second product candidate, nelipepimut-S (NPS), for the treatment of patients in the maintenance setting with triple negative breast cancer.
  • The company expects to have follow-up data on the Merck and Bristol Myers Squibb trials in the first half of 2022.
  • SELLAS expects interim Phase 3 data on GPS in AML in the second half of 2022.
  • The company has composition of matter patent protection until at least 2033.

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Source: Equities News

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