SEELAS Life Sciences (SLS) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements This section presents the unaudited consolidated financial statements for the period ended June 30, 2023, detailing a net loss of $19.9 million and a going concern warning Consolidated Balance Sheets (in thousands) | | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $13,807 | $17,125 | | Total current assets | $15,581 | $17,756 | | Total assets | $18,566 | $20,943 | | Liabilities & Equity | | | | Total current liabilities | $13,421 | $15,515 | | Total liabilities | $13,723 | $16,092 | | Total stockholders' equity | $4,843 | $4,851 | Consolidated Statements of Operations (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Licensing revenue | $— | $— | $— | $1,000 | | Research and development | $5,923 | $5,529 | $13,097 | $10,140 | | General and administrative | $3,127 | $3,094 | $7,234 | $6,118 | | Acquired in-process R&D | $— | $— | $— | $10,000 | | Operating loss | $(9,050) | $(8,623) | $(20,331) | $(25,358) | | Net loss | $(8,840) | $(8,414) | $(19,937) | $(25,158) | | Net loss per share | $(0.31) | $(0.41) | $(0.77) | $(1.39) | Consolidated Statements of Cash Flows (in thousands) | | For the Six Months Ended June 30, | | :--- | :--- | :--- | | (in thousands) | 2023 | 2022 | | Net cash used in operating activities | $(19,693) | $(12,911) | | Net cash used in investing activities | $(2,500) | $(4,500) | | Net cash provided by financing activities | $18,875 | $23,043 | | Net (decrease) increase in cash | $(3,318) | $5,632 | - The company is a late-stage clinical biopharmaceutical company focused on cancer therapeutics, with lead candidates GPS and SLS009, having incurred recurring losses since inception, with an accumulated deficit of $199.8 million as of June 30, 2023[25][26] - Management has substantial doubt about the company's ability to continue as a going concern for at least one year, as current cash and cash equivalents are not sufficient to fund planned operations, requiring substantial additional financing[31][32] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the progress of lead product candidates GPS and SLS009, analyzes increased R&D and G&A expenses, and highlights critical liquidity concerns leading to a going concern warning - The company's lead product candidate, GPS, is in a Phase 3 REGAL study for AML, with an interim analysis expected by late 2023 or early 2024, while the second candidate, SLS009, began a Phase 2a clinical trial in June 2023 for AML, with topline data expected in Q4 2023[94][103] - The company expects to receive $13.0 million in development milestone payments from its partner 3D Medicines in the third quarter of 2023, related to 3D Medicines' participation in the REGAL study[95] Key Expense Changes (Six Months Ended June 30, 2023 vs 2022, in millions) | Expense Category | Change (in millions) | Reason | | :--- | :--- | :--- | | Research & Development | +$3.0 | Increased clinical trial expenses for GPS and SLS009, and higher personnel costs | | General & Administrative | +$1.1 | Increased personnel costs, legal fees, and office expenses | | Acquired In-Process R&D | -$10.0 | A $10.0M expense for licensing SLS009 was recognized in 2022, with no similar expense in 2023 | - As of June 30, 2023, the company had $13.8 million in cash and cash equivalents, which management states is insufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern[133] - To address liquidity needs, the company raised approximately $18.5 million in net proceeds from a public offering in February 2023 and has approximately $39.2 million available for future sales under its Controlled Equity Offering Sales Agreement[131][132] Quantitative and Qualitative Disclosures About Market Risk This section is marked 'Not applicable' as the company, a smaller reporting entity, is not required to provide this information and has no material market risk exposure - The company has stated that this item is not applicable[144] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting identified during the quarter - The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[146] - There were no changes in the company's internal control over financial reporting during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, these controls[147] PART II - OTHER INFORMATION Legal Proceedings The company reported no pending or threatened litigation as of June 30, 2023, with this information incorporated by reference from the financial statements - As of June 30, 2023, the company had no pending or threatened litigation[56][150] Risk Factors This section refers readers to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K, with no new or materially changed risks presented - The company refers to the risk factors discussed in its 2022 Annual Report and states that those risks, among others, could materially and adversely affect its business[152] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the reporting period - The company reported 'None' for this item[153] Defaults Upon Senior Securities The company reported no defaults upon its senior securities - The company reported 'None' for this item[154] Mine Safety Disclosures This item is not applicable to the company's business operations - The company reported 'Not applicable' for this item[155] Other Information The company reported no other information to disclose for the period - The company reported 'None' for this item[156] Exhibits This section lists all exhibits filed with the Form 10-Q, including the 2023 Equity Incentive Plan, an addendum with 3DMedicines Inc., and required officer certifications - The report includes several exhibits, such as the 2023 Amended and Restated Equity Incentive Plan, an addendum to the Side Letter Agreement with 3DMedicines Inc., and officer certifications required by the Sarbanes-Oxley Act[158]