10-Q

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 March 31, 2023

OR

☐ 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 May 10, 2023, SELLAS Life Sciences Group, Inc. had outstanding 28,347,920 shares of common stock.

SELLAS LIFE SCIENCES GROUP, INC.

FORM 10-Q - Quarterly Report

For the Quarter Ended March 31, 2023

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	4
	Unaudited Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	4
	Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022	5
	Unaudited Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2023 and 2022	6
	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 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	20
Item 3	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4	Controls and Procedures	27
	PART II - OTHER INFORMATION
Item 1	Legal Proceedings	29
Item 1A	Risk Factors	29
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3	Defaults Upon Senior Securities	29
Item 4	Mine Safety Disclosures	29
Item 5	Other Information	29
Item 6	Exhibits	29
	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.

1

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

2

•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.

3

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)

	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	23,902	$	17,125
Restricted cash and cash equivalents	100		100
Prepaid expenses and other current assets	2,020		531
Total current assets	26,022		17,756
Operating lease right-of-use assets	784		874
Goodwill	1,914		1,914
Deposits and other assets	384		399
Total assets	$	29,104	$	20,943
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,099	$	3,357
Accrued expenses and other current liabilities	6,485		6,286
Operating lease liabilities	427		372
Acquired in-process research and development payable	5,500		5,500
Total current liabilities	15,511		15,515
Operating lease liabilities, non-current	422		573
Warrant liability	2		4
Total liabilities	15,935		16,092
Commitments and contingencies (Note 7)
Stockholders’ 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 March 31, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 350,000,000 shares authorized, 28,347,920 and 21,005,405 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	3		2
Additional paid-in capital	204,167		184,753
Accumulated deficit	(191,001)		(179,904)
Total stockholders’ equity	13,169		4,851
Total liabilities and stockholders’ equity	$	29,104	$	20,943

See accompanying notes to these unaudited consolidated financial statements.

4

SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Licensing revenue	$	—	$	1,000
Operating expenses:
Cost of licensing revenue	—		100
Research and development	7,174		4,611
General and administrative	4,107		3,024
Acquired in-process research and development	—		10,000
Total operating expenses	11,281		17,735
Operating loss	(11,281)		(16,735)
Non-operating income (expense), net:
Change in fair value of warrant liability	2		(11)
Interest income	182		2
Total non-operating income (expense), net	184		(9)
Net loss	$	(11,097)	$	(16,744)
Per share information:
Net loss per common share, basic and diluted	$	(0.47)	$	(1.05)
Weighted-average common shares outstanding, basic and diluted	23,547,562		15,897,479

See accompanying notes to these unaudited consolidated financial statements.

5

SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in thousands, except share amounts)

(Unaudited)

	Three Months Ended March 31, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' 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	45,416	—		53		—		53
Stock-based compensation	—	—		540		—		540
Net loss	—	—		—		(11,097)		(11,097)
Balance at March 31, 2023	28,347,920	$	3	$	204,167	$	(191,001)	$	13,169

	Three Months Ended March 31, 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 under employee stock purchase plan	10,362	—		47		—		47
Stock-based compensation	—	—		375		—		375
Net loss	—	—		—		(16,744)		(16,744)
Balance at March 31, 2022	15,905,999	$	2	$	159,370	$	(155,347)	$	4,025

See accompanying notes to these unaudited consolidated financial statements.

6

SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net loss	$	(11,097)	$	(16,744)
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	540		375
Non-cash lease expense	87		45
Change in fair value of common stock warrants	(2)		11
Changes in operating assets and liabilities:
Accounts receivable	—		(1,000)
Prepaid expenses and other assets	(1,474)		(606)
Accounts payable	(284)		667
Accrued expenses and other current liabilities	196		151
Operating lease liabilities	(93)		(49)
Net cash used in operating activities	(12,127)		(7,150)
Cash flows from financing activities:
Issuance of common stock and common stock warrants, net of issuance costs	18,583		—
Issuance of common stock, net of issuance costs	268		—
Proceeds from employee stock purchases	53		47
Net cash provided by financing activities	18,904		47
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	6,777		(7,103)
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	$	24,002	$	14,352
Supplemental disclosure of cash flow information:
Cash received during the period for interest	$	182	$	2
Supplemental disclosure of non-cash investing and financing activities:
Payable for acquired in-process research and development	$	5,500	$	10,000
Increase in operating right of use assets and current and non-current lease liabilities	$	—	$	449
Offering expenses included in accounts payable and accrued expenses and other current liabilities	$	29	$	252
Warrant modification recorded in stockholders' equity	$	252	$	—

See accompanying notes to these unaudited consolidated financial statements.

7

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 GFH009, a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which we 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 ("GFH009 Territory").

2. Liquidity

Since inception, the Company has incurred recurring losses and negative cash flows from operations and, as of March 31, 2023, has an accumulated deficit of $191.0 million. During the three months ended March 31, 2023, the Company incurred a net loss of $11.1 million, and used $12.1 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 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. 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, 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 three months ended March 31, 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. There remains approximately $39.2 million available for future sales of shares of common stock under the Sales Agreement as of March 31, 2023. Other than the Sales Agreement, the Company currently does not have any commitments to obtain additional funds.

8

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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. The participation of 3DMed in the Company's REGAL Phase 3 clinical trial in China will trigger two development milestone payments totaling $13.0 million to the Company, which the Company expects to receive prior to the end of the third quarter of 2023. 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 March 31, 2023, which milestones are all variable in nature and not under the Company's control.

As of March 31, 2023, the Company had cash and cash equivalents of approximately $23.9 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 will not be sufficient to fund its 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 the Company triggered by 3DMed's participation in the REGAL study are variable in nature and not under the Company's control, and therefore are not 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, public and private placements of equity and/or debt securities, payments from potential strategic research and development collaborations, and 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 guidance is meant to refer to U.S. GAAP as found in the ASC and Accounting Standards Updates 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

9

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 March 31, 2023 and for the three months ended March 31, 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.

Acquired In-Process Research and Development

Costs incurred in obtaining technology licenses are immediately recognized as acquired in-process research and development expense, provided the technology licensed has no alternative future use. Payments related to contingent consideration such as development milestones, commercial milestones and royalties (Note 5) will be recognized when the contingency is probable and reasonably estimable as prescribed by ASC 450, Contingencies.

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):

	Three Months Ended March 31,
	2023	2022
Common stock warrants	12,361	518
Stock options	1,661	1,006
Restricted stock units ("RSUs")	444	297
	14,466	1,821

10

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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):

Description	March 31, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	22,984	$	22,984	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	23,084	$	23,084	$	—	$	—
Liabilities:
Warrant liability	$	2	$	—	$	—	$	2
Total liabilities measured and recorded at fair value	$	2	$	—	$	—	$	2

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 three months ended March 31, 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 three months ended March 31, 2023.

11

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 GFH009 for the treatment, diagnosis or prevention of disease in humans and animals in the GFH009 Territory.

In consideration for the exclusive license, the Company has agreed to pay to GenFleet (i) an upfront and technology transfer fee of $10.0 million, $4.5 million of which was paid in April 2022 and $5.5 million of which is due on June 1, 2023, (ii) development and regulatory milestone payments for up to three indications totaling up to $48.0 million in the aggregate, 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 has 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 GFH009 in the GFH009 Territory ranging from the low to high single digits.

During the three months ended March 31, 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, $4.5 million of which was paid in April 2022 and the remaining $5.5 million which is due on June 1, 2023 for which the Company has recorded an acquired in-process research and development payable as of March 31, 2023.

6. Balance Sheet Accounts

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

	March 31, 2023		December 31, 2022
Insurance	$	1,644	$	219
Clinical development	218		184
Professional fees	88		82
Other	70		46
Prepaid expenses and other current assets	$	2,020	$	531

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

	March 31, 2023		December 31, 2022
Clinical trial costs	$	5,001	$	4,509
Professional fees	828		338
Compensation and related benefits	623		1,439
Other	33		—
Accrued expenses and other current liabilities	$	6,485	$	6,286

12

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 March 31, 2023, the leases have a remaining term of 1.75 years. Rent expense related to the Company's operating leases was approximately $0.1 million for each of the three months ended March 31, 2023 and 2022. The Company made cash payments related to its operating leases of approximately $0.1 million for each of the three months ended March 31, 2023 and 2022.

Future minimum lease payments are as follows as of March 31, 2023 (in thousands):

Future minimum lease payments:
2023 (remaining)	$	390
2024	533
Total future minimum lease payments	923
Less: imputed interest	(74)
Current and non-current operating lease liabilities	$	849

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 March 31, 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 March 31, 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 March 31, 2023, the Company has shares of common stock reserved for future issuance as follows (in thousands):

13

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Warrants outstanding	12,361
Stock options outstanding	1,661
RSUs outstanding	444
Shares reserved for future issuance under the 2019 Equity Incentive Plan	880
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan	229
Total common stock reserved for future issuance	15,575

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 three months ended March 31, 2023 (in thousands):

Warrant Issuance	Outstanding, December 31, 2022	Issued	Outstanding, March 31, 2023	Weighted Average 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
July 2018 Offering	132	—	132	$	7.50	July 2023
March 2019 Exercise Agreement	30	—	30	$	7.50	March 2024
Other	2	—	2	$	7.50	June 2024
	5,128	7,220	12,348
Warrants classified as liability	13	—	13	$	7.50	September 2023 - November 2023
	5,141	7,220	12,361

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.

14

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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.

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:

	March 31, 2023			December 31, 2022
Risk free interest rate	4.94		%	4.75		%
Volatility	167.84		%	120.60		%
Expected term (years)	0.50			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 three months ended March 31, 2023 were as follows (in thousands):

 

Warrant liability, December 31, 2022	$	4
Change in fair value of warrants	(2)
Warrant liability, March 31, 2023	$	2

15

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

10. License Revenue

Exclusive License Agreement with 3D Medicines Inc.

In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into the 3DMed License Agreement, 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 ("GPS Plus") product candidates ("GPS Licensed Products") for all therapeutic and other diagnostic uses in the 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

The Company determined the initial transaction price of the single performance obligation to be $9.5 million, 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 at the inception of the 3DMed License Agreement and therefore were not constrained, and the full $9.5 million initial transaction price was fully recognized as licensing revenue. The Company determined that the remaining $192.5 million in certain future development, regulatory, and sales milestones was variable consideration subject to constraint at inception. 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.

On March 31, 2022, the Company announced that an IND application filed by 3DMed, pursuant to its 3DMed License Agreement for GPS, for a small Phase 1 clinical trial investigating safety of GPS in China was approved by China's National Medical Products Administration ("NMPA"). The IND approval by the NMPA triggered a $1.0 million milestone payment to the Company which was recognized as licensing revenue in the first quarter of 2022. An additional $191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remains under the 3DMed License Agreement as of March 31, 2023, which milestones are variable in nature and not under the Company's control.

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 license revenue recognized during the three months ended March 31, 2023, and $1.0 million of license revenue recognized during the three months ended March 31, 2022.

There was no cost of license revenue recognized during the three months ended March 31, 2023, and $0.1 million in cost of license revenue for sublicensing fees incurred during the three months ended March 31, 2022 under the Company's license from MSK in connection with the 3DMed License Agreement.

16

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 provided for the 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.

2019 Equity Incentive Plan

On September 10, 2019, the 2019 Equity Incentive Plan was approved by the stockholders of the Company, which currently allows for issuance of up to approximately 3,014,000 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 Incentive Plan automatically increased on January 1 of each year, for a period of four years, commencing on January 1, 2020 and ending 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. As of March 31, 2023, approximately 880,000 shares of common stock were reserved for future grants under the 2019 Equity Incentive Plan.

The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively (in thousands):

	Three Months Ended March 31,
	2023		2022
Research and development	$	96	$	55
General and administrative	444		320
Total stock-based compensation	$	540	$	375

Options to Purchase Shares of Common Stock

The following table summarizes stock option activity of the Company for the three months ended March 31, 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
Granted	648	3.28
Canceled	(27)	6.44
Outstanding at March 31, 2023	1,661	$	5.92	8.55	$	—
Options exercisable at March 31, 2023	477	$	10.02	7.84	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at March 31, 2023 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on March 31, 2023 of $1.43 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.

17

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 nine months ended March 31, 2023 and 2022, respectively, were as follows:

	Three Months Ended March 31,
	2023		2022
Risk free interest rate	3.79	%	1.79	%
Volatility	127.68	%	130.43	%
Expected lives (years)	6.20		6.20
Expected dividend yield	—	%	—	%

The weighted-average grant date fair value of options granted during the three months ended March 31, 2023 and March 31, 2022 was $2.95 and $4.79, 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 March 31, 2023, there was $4.3 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 2.9 years.

Time-vested RSUs and RSUs with Performance Conditions

The following table summarizes RSU activity of the Company for the three months ended March 31, 2023:

	Shares (In Thousands)	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	255	$	3.25
Granted	195	$	3.34
Canceled	(6)	$	3.34
Unvested at March 31, 2023	444	$	3.29

As of March 31, 2023, there was $1.4 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 2.5 years. No RSUs vested during the three months ended March 31, 2023.

18

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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. 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 months ended March 31, 2023, 45,416 shares of common stock were purchased by employees under the 2021 ESPP. There are currently 229,495 shares of common stock reserved for issuance under the 2021 ESPP as of March 31, 2023.

12. Subsequent Events

The Company evaluated all events or transactions that occurred after March 31, 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.

19

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 March 31, 2023 and results of operations for the three months ended March 31, 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 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). 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. 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 3D Medicines, 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 refer to as Greater China. We have retained sole rights to GPS and GPS+ outside of Greater China. 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 patients from mainland China. Such participation by 3D Medicines will trigger two development milestone payments totaling $13.0 million, which we expect to receive prior to the end of the third quarter of 2023. 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 3D Medicines had anticipated when we entered into the license agreement in December 2020. As of March 31, 2023, we have received an aggregate of $10.5 million in upfront and milestone payments under our license agreement with 3D Medicines 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.

20

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 plan to present final data from this study at a medical conference in the fourth quarter of 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. We expect to report topline data from this study in the second quarter of 2023.

GPS was granted Orphan Drug Product Designations 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.

GFH009: Highly Selective Next Generation CDK9 Inhibitor

On March 31, 2022, we entered into an exclusive license agreement, or the GFH009 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 GFH009, 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, GFH009’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 April 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 GFH009. No further dose escalations are planned in the AML group, while dose escalation continues in the lymphoma group with the addition of a 75 mg once-a-week dose cohort, which is planned to be the highest dose level for that group. We expect enrollment in the lymphoma group to be completed in the second quarter of 2023 and to report analyzed data from the lymphoma group in the third quarter of 2023. In May 2023, we announced positive topline data from this study for the group of patients with AML and that the recommended Phase 2 dose, or RP2D, in AML, was established and submitted to the U.S. Food and Drug Administration.

We plan to initiate a Phase 2a clinical trial during the second quarter of 2023 with GFH009 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 will be a single arm, open label dose ranging study with one dose level at the RP2D and one dose below RP2D. Primary endpoints will be complete response composite rate, and safety, and secondary endpoints will include duration of response, event free survival, overall survival, and proportion of patients proceeding to transplant. The trial will include several sites in the United States, will initially enroll approximately 20 patients and, based on initial results, may be expanded into a registrational trial. Topline data from this study are expected in the fourth quarter of 2023.

We are also planning to potentially commence a Phase 2 clinical trial of GFH009 in certain solid tumors and/or lymphoma in the third quarter of 2023 and are exploring various options with respect to clinical development for GFH009 in several pediatric indications.

21

Components of Results of Operations

License Revenue

License revenue consists of revenue recognized pursuant to the 3DMed License Agreement. In the future, we may generate revenue from a combination of regulatory, development, and sales milestone payments and royalties in connection with the 3DMed License Agreement.

Cost of License Revenue

Cost of license 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.

22

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, 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 as the technology and know-how acquired are not currently commercially viable.

Non-Operating Income (Expense), Net

Non-operating income (expense), net 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 the 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 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 three months ended March 31, 2023. Readers are encouraged to read the 2022 Annual Report in conjunction with this Quarterly Report on Form 10-Q.

23

Results of Operations for the Three and Nine Months Ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023		2022		Change
Licensing revenue	$	—	$	1,000	$	(1,000)
Operating expenses:
Cost of license revenue	—		100		(100)
Research and development	7,174		4,611		2,563
General and administrative	4,107		3,024		1,083
Acquired in-process research and development	—		10,000		(10,000)
Total operating expenses	11,281		17,735		(6,454)
Operating loss	(11,281)		(16,735)		5,454
Non-operating income (expense), net	184		(9)		193
Net loss	$	(11,097)	$	(16,744)	$	5,647

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

Licensing Revenue

There was no licensing revenue for the three months ended March 31, 2023. Licensing revenue was $1.0 million for the three months ended March 31, 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 License Revenue

There was no cost of license revenue during the three months ended March 31, 2023. We incurred $0.1 million of sublicensing fees payable under our license from MSK in connection with the 3DMed License Agreement during the three months ended March 31, 2022.

Research and Development

Research and development expenses were $7.2 million for the three months ended March 31, 2023 compared to $4.6 million for the three months ended March 31, 2022. The $2.6 million increase was primarily attributable to a $0.9 million increase in clinical trial expenses primarily related to our ongoing Phase 3 REGAL clinical trial of GPS in AML and Phase 1 clinical trial of GFH009 in hematological malignancies, a $0.8 million increase related to clinical and regulatory consulting expenses, a $0.5 million increase in personnel related expenses due to increased headcount, and a $0.4 million increase in manufacturing expenses due to clinical drug supply costs.

General and Administrative

General and administrative expenses were $4.1 million for the three months ended March 31, 2023 compared to $3.0 million for the three months ended March 31, 2022. The $1.1 million increase was primarily due to a $0.4 million increase in personnel related expenses due to increased headcount, a $0.3 million increase in legal fees, a $0.2 million increase in outside services and public company costs, and a $0.2 million increase in office and other general and administrative expenses.

24

Acquired In-Process Research and Development

There was no acquired in-process research and development during the three months ended March 31, 2023. During the three months ended March 31, 2022, we recognized $10.0 million for the acquisition of in-process research and development related to the in-licensing of GFH009.

Non-Operating Income (Expense), Net

Non-operating income (expense), net for the three months ended March 31, 2023 and 2022, respectively, was as follows (in thousands):

	Three Months Ended March 31,
	2023		2022		Change
Change in fair value of warrant liability	$	2	$	(11)	$	13
Interest income	182		2		180
Total non-operating income (expense), net	$	184	$	(9)	$	193

Non-operating income of $0.2 million during the three months ended March 31, 2023 was primarily interest income earned from our cash and cash equivalents. Net non-operating expense was nominal for the three months ended March 31, 2022.

The change in fair value of the warrant liability is non-cash in nature.

Income Tax Expense

There was no income tax expense for the three months ended March 31, 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 three months ended March 31, 2023 and 2022. Through March 31, 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 February 28, 2023, we 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 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 (the "Sales Agreement") with Cantor Fitzgerald & Co. (the "Agent"). From time to time during the term of the Sales Agreement, 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 three months ended March 31, 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. There remains approximately $39.2 million available for future sales of shares of common stock under the Sales Agreement as of March 31, 2023. Other than the Sales Agreement, we currently do not have any commitments to obtain additional funds.

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In December 2020, together with our wholly-owned subsidiary, SLSG Limited, LLC, we entered into an Exclusive License Agreement (the “3DMed License Agreement”) with 3D Medicines Inc. ("3DMed"), 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 mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). To date, we have received $10.5 million in upfront payments and certain technology transfer and regulatory milestones. The participation of 3DMed in our REGAL Phase 3 clinical trial in China will trigger two development milestone payments totaling $13.0 million to us, which we expect to receive prior to the end of the third quarter of 2023. 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 March 31, 2023, which milestones are all variable in nature and not under our control.

Funding Requirements

As of March 31, 2023, we had an accumulated deficit of $191.0 million, cash and cash equivalents of $23.9 million and restricted cash and cash equivalents of $0.1 million. In addition, we had current liabilities of $15.5 million as of March 31, 2023. We expect that our cash and cash equivalents 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 or not 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, public and private placements of equity and/or debt securities and payments from potential strategic research and development collaborations. 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.

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Cash Flows

The following table summarizes our cash flows from operating and financing activities for the three months ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023		2022
Net cash (used in) provided by:
Operating activities	$	(12,127)	$	(7,150)
Financing activities	18,904		47
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	$	6,777	$	(7,103)

We had no investing activities during the three months ended March 31, 2023 and 2022.

Net Cash Used in Operating Activities

Net cash used in operating activities of $12.1 million during the three months ended March 31, 2023 was primarily attributable to our net loss of $11.1 million and the net change in our operating assets and liabilities of approximately $1.6 million, which were partially offset by various net non-cash charges of $0.6 million. The net change in our operating assets and liabilities of $1.6 million is primarily attributable to an increase in prepaid expenses and other current assets of approximately $1.5 million, and a decrease in operating lease liabilities of approximately $0.1 million. Net non-cash charges were driven by $0.5 million in non-cash stock compensation expense and $0.1 million in non-cash lease expense.

Net cash used in operating activities of $7.2 million during the three months ended March 31, 2022 was primarily attributable to our net loss of $16.7 million and the net change in our operating assets and liabilities of approximately $0.9 million, partially offset by various net non-cash charges of $10.4 million. The net change in our operating assets and liabilities of $0.9 million is primarily attributable to an increase in accounts receivable under the 3DMed License Agreement of $1.0 million and an increase in prepaid expenses and other current assets of $0.6 million, which were partially offset by an increase in accounts payable of $0.7 million. Net non-cash charges were driven by $10.0 million in expense related to the acquired in-process research and development and $0.4 million in non-cash stock compensation expense.

Net Cash Provided by Financing Activities

We generated $18.9 million in net cash from financing activities during the three months ended March 31, 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 Company's 2021 Employee Stock Purchase Plan.

We generated $0.1 million in net cash from financing activities during the three months ended March 31, 2022 from the purchase of shares of common stock by employees under the Company's 2021 Employee Stock Purchase Plan.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet financing arrangements as of March 31, 2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

27

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 March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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.

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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
4.1	Form of Warrant	8-K	4.1	February 24, 2023
10.1	Severance Agreement, dated March 27, 2023, by and between the Registrant and Robert Francomano*
10.2	Form of Amendment to Common Stock Purchase Warrant	8-K	10.1	March 1, 2023
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.

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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: May 11, 2023
By:	/s/ John T. Burns
	John T. Burns, CPA
	Chief Financial Officer
	(Principal Financial and Principal Accounting Officer)
	Date: May 11, 2023

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EX-10.1

March 14, 2022

Mr. Robert Francomano

c/o SELLAS Life Sciences Group, Inc.

7 Times Square, Suite 2503

New York, NY 10036

Dear Robert:

The following severance benefits shall be provided to you in the event of your termination of employment with SELLAS Life Sciences Group, Inc. (the “Company”), on the terms and conditions set forth herein.

1.Severance.

(a)    Termination Without Cause; For Good Reason. If your employment is terminated at any time by the Company without Cause or by you for Good Reason (as such terms are herein defined), the Company will: (i) pay you the following amounts (the “Severance Payments”) in equal installments over the 9-month period following the Payment Commencement Date (as hereinafter defined): (A) an amount equal to 9 months of your then-current base salary, less standard employment-related withholdings and deductions and (B) an amount equal to a pro-rated portion of your annual short-term incentive compensation at your target level (“Target Bonus”) for the year in which your employment terminates, without regard to whether the performance goals with respect to such Target Bonus have been established or met and less standard employment-related withholdings and deductions, and (ii) provided you elect to continue your and your eligible dependents’ participation in the Company’s medical and dental benefit plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), reimburse you for the monthly premium to continue such coverage until the earlier of (x) the last calendar day of the 9th month anniversary following the month in which the termination of your employment occurs and (y) the end of the calendar month in which you become eligible to receive group health plan coverage under another employee benefit plan. Notwithstanding the foregoing, if the reimbursement of monthly premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 or Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”), these payments shall be treated as taxable payments to you and you shall be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h).

(b)    Change of Control. If your employment is terminated within one year following a Change in Control Event (as defined in the Company’s 2017 Stock Incentive Plan), by the Company, or its successor, without Cause or by you for Good Reason, the Company or its successor will: (i) pay you the following amounts (the “Severance Payments”) in equal installments over the 12-month period following the Payment Commencement Date: (A) an amount equal to 12 months of your then-current base salary, less standard employment-related withholdings and deductions and (B) an amount equal to your Target Bonus for the year in which your employment terminates, without regard to whether the performance goals with respect to such Target Bonus have been established or met and less standard employment-related withholdings and deductions, and (ii) provided you elect to continue your and your eligible dependents’ participation in the Company’s medical and dental benefit plans pursuant to COBRA, reimburse you for the monthly premium to continue such coverage until the earlier of (x) the last calendar day of the 12th month anniversary following the month in which the termination of your employment occurs and (y) the end of the calendar month in which you become eligible to receive group health plan coverage under another employee benefit plan. Notwithstanding the foregoing, if the reimbursement of monthly premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 or Section 105(h) of the Code, these payments shall be treated as taxable payments to you and you shall be subject to imputed income tax treatment to

the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h).

(c)    Separation Agreement. Notwithstanding the foregoing, the Company shall not be obligated to pay you the Severance Payments provided for herein unless you have timely executed (and not revoked) a separation agreement in a form to be provided by the Company. Such separation agreement must be executed and become binding and enforceable within sixty (60) calendar days after the effective date of your termination of employment (such 60th day, the “Payment Commencement Date”); provided however, that if the 60th day following the date of termination occurs in the next calendar year following the date of termination, then the Payment Commencement Date shall be no earlier than January 1 of such following calendar year.

(d)    Definitions. For purposes hereof:

(i) “Cause” shall mean that: (A) you have repeatedly failed to attempt in good faith, refused or willfully neglected to perform and discharge your material duties and responsibilities; (B) you have been convicted of, or pled nolo contendere to, a felony under the laws of the United States or any state; (C) you breached your fiduciary duty of loyalty to the Company, or acted fraudulently or with material dishonesty in discharging your duties to the Company that materially harmed or was reasonably likely to materially harm the business, interests, or reputation of the Company; (D) you undertook an intentional act or omission of misconduct that materially harmed or was reasonably likely to materially harm the business, interests, or reputation of the Company; (E) you materially breached any material provision of this letter or any other agreement with the Company; or (F) you materially breached any material provision of any Company code of conduct or ethics policy which has been made available to you. Notwithstanding the foregoing, with respect to grounds set forth in subsections (A), (E) or (F) “Cause” shall not be deemed to have occurred unless: (1) the Company provides you with written notice that it intends to terminate your employment hereunder for one of the grounds set forth in subsections (A), (E) or (F) within sixty (60) days of such reason(s) occurring, (2) if such ground is capable of being cured, you have failed to cure such ground within a period of thirty (30) days from the date of such written notice, and (3) the Company terminates your employment within six (6) months from the date that Cause first occurs.

(ii) “Good Reason” shall mean, without your written consent: (A) any change in your position, reporting relationship or job title with the Company that diminishes in any material respect your authority, duties or responsibilities as the chief legal officer of the Company; (B) any reduction in your base compensation or target bonus opportunity; (C) a material change in the primary geographic location at which services are to be performed by you (unless the new location is closer to your primary residence than the prior location); or (D) a material breach of any provision hereof by the Company or any successor or assign. Notwithstanding the foregoing, “Good Reason” shall not be deemed to have occurred unless: (1) you provide the Company with written notice that you intend to terminate your employment hereunder for one of the grounds set forth in subsections (A), (B), (C) or (D) of the immediately preceding sentence within sixty (60) days of such reason(s) occurring, (2) if such ground is capable of being cured, the Company has failed to cure such ground within a period of thirty (30) days from the date of such written notice, and (3) you terminate your employment within six (6) months from the date that Good Reason first occurs. For purposes of clarification, the above-listed conditions shall apply separately to each occurrence of Good Reason and failure to adhere to such conditions in the event of Good Reason shall not disqualify you from asserting Good Reason for any subsequent occurrence of Good Reason.

2. Equity Acceleration. If your employment with the Company, or its successor, is terminated by the Company or such successor without Cause or by you for Good Reason within the one (1) year period following a Change in Control Event, then the then-unvested portion of any equity awards held by you shall immediately vest in full and become exercisable or free from forfeiture or repurchase, as applicable, as of the date of such termination.

3. Modified 280G Cutback.

(a)    To the extent that any payment, benefit or distribution of any type to or for your benefit by the Company or any of its affiliates, whether paid or payable, provided or to be provided, or distributed or distributable pursuant to the terms of this letter agreement or otherwise (including, without limitation, any accelerated vesting of stock options or other equity-based awards) (collectively, the “Total Payments”) would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the Total Payments shall be reduced (but not below zero) so that the maximum amount of the Total Payments (after reduction) shall be one dollar ($1.00) less than the amount which would cause the Total Payments to be subject to the excise tax imposed by Section 4999 of the Code, but only if the Total Payments so reduced result in you receiving a net after tax amount that exceeds the net after tax amount you would receive if the Total Payments were not reduced and were instead subject to the excise tax imposed on excess parachute payments by Section 4999 of the Code. Unless you shall have given prior written notice to the Company to effectuate a reduction in the Total Payments if such a reduction is required, any such notice consistent with the requirements of Section 409A of the Code to avoid the imputation of any tax, penalty or interest thereunder, the Company shall reduce or eliminate the Total Payments by first reducing or eliminating any cash severance benefits (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of stock options or similar awards, then by reducing or eliminating any accelerated vesting of restricted stock or similar awards, then by reducing or eliminating any other remaining Total Payments. The preceding provisions of this Section shall take precedence over the provisions of any other plan, arrangement or agreement governing your rights and entitlements to any benefits or compensation.

(b)    If the Total Payments to you are reduced in accordance with Section 3(a), as a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial reduction under Section 3(a), it is possible that Total Payments to you which will not have been made by the Company should have been made (“Underpayment”) or that Total Payments to you which were made should not have been made (“Overpayment”). If an Underpayment has occurred, the amount of any such Underpayment shall be promptly paid by the Company to or for the benefit of you. In the event of an Overpayment, then you shall promptly repay to the Company the amount of any such Overpayment together with interest on such amount (at the same rate as is applied to determine the present value of payments under Section 280G of the Code or any successor thereto), from the date the reimbursable payment was received by you to the date the same is repaid to the Company.

4. Arbitration. This letter agreement shall be governed by and construed in accordance with the laws of the State of New York (without regard to any conflicts of laws principles thereof that would give effect to the laws of another jurisdiction), and any dispute or controversy arising out of or relating to this letter agreement, other than injunctive relief, will be settled exclusively by arbitration, conducted before a single arbitrator in New York, New York in accordance with, and pursuant to, the Employment Arbitration Rules and Procedures of JAMS ( “JAMS”), a copy of which rules, which are available at http://www.jamsadr.com/rules-employment-arbitration/, have been reviewed by you in their current form. The arbitrator shall have the power to take interim measures, and to rule on such arbitrator’s own jurisdiction, including on any objections with respect to the existence, scope or validity of this arbitration clause. The arbitration shall be conducted on a strictly confidential basis, and neither party shall disclose the existence of a claim, the nature of a claim, any documents, exhibits, or information exchanged or presented in connection with such a claim, or the result of any action (collectively, “Arbitration Materials”), to any third party, except as required by law, with the sole exception of their legal counsel and parties engaged by that counsel to assist in the arbitration process, who also shall be bound by these confidentiality terms. The arbitrator shall be authorized to issue any award, relief or other remedy which a court of competent jurisdiction would be entitled to issue. The parties shall have the right to conduct discovery, including through depositions, interrogatories, requests for documents, and requests for admission. The arbitrator shall issue a written decision, which decision shall include a statement of the essential findings and conclusions on which any arbitral award is based. The decision of the arbitrator will be final and binding

upon the parties hereto. Any arbitral award may be entered as a judgment or order in any court of competent jurisdiction. Either party may commence litigation in court to obtain injunctive relief in aid of arbitration, to compel arbitration, or to confirm or vacate an award, to the extent authorized by the Federal Arbitration Act or applicable state law. The Company shall pay the JAMS administrative fees and the arbitrator’s fee and expenses. Each party will pay its own attorneys’ fees; provided, however, that if you are the prevailing party, the Company shall pay your attorneys’ fees. You and the Company each agree that any arbitration will be conducted only on an individual basis and that no dispute between the parties relating to this letter agreement may be consolidated or joined with a dispute between any other employee and the Company or any of its affiliates, nor may you seek to bring your dispute on behalf of other employees, independent contractors or consultants of the Company or any of its affiliates as a class or collective action. The parties agree to take all steps necessary to protect the confidentiality of the Arbitration Materials in connection with any such proceeding and agree to the entry of an appropriate protective order encompassing the confidentiality terms of this Agreement. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, YOU AND THE COMPANY HEREBY WAIVE AND COVENANT THAT YOU AND THE COMPANY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY, WHETHER NOW OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREE THAT ANY OF THE COMPANY OR ANY OF ITS AFFILIATES OR YOU MAY FILE A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE COMPANY AND ITS AFFILIATES, ON THE ONE HAND, AND YOU, ON THE OTHER HAND, IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN SUCH PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THAT ANY PROCEEDING PROPERLY HEARD BY A COURT UNDER THIS AGREEMENT WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

5. Miscellaneous.

(a)    Code Section 409A. The intent of the parties is that payments and benefits under this letter comply with, or be exempt from, Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”). Accordingly, if any provision of this letter is ambiguous, such that one interpretation would subject a payment or benefit to the excise tax imposed by Code Section 409A and an alternative interpretation would not so subject the payment or benefit, the parties intend the interpretation that would not so subject the payment or benefit to apply. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that this clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(a) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect, and (iii) such payments shall be made on or before the last day of your taxable year following the taxable year in which the expense occurred, provided that any tax gross-ups may be reimbursed by the end of the calendar year following the calendar year in which such taxes are remitted to the taxing authorities. For purposes of Code Section 409A, each payment hereunder shall be treated as a separate payment and your right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. In no event may you, directly or indirectly, designate the calendar year of any payment to be made under this letter that is considered nonqualified deferred compensation. Termination of employment as used herein shall mean separation from service within the meaning of Code Section 409A. In the event at the time of any separation from service you are a “specified employee” within the meaning of Code Section 409A, any deferred compensation subject to Code Section 409A payable as a result of such termination shall not be

paid prior to the earlier of six (6) months after such termination and your death and shall be paid immediately thereafter.

(b)    Governing Law. This letter shall be governed by and construed in accordance with the laws of the State of New York (without reference to the conflicts of laws provisions thereof). Any action, suit, or other legal proceeding which is commenced to resolve any matter arising under or relating to any provision of this letter shall be commenced only in a court of the State of New York (or, if appropriate, a federal court located within New York), and the Company and you each consents to the jurisdiction of such a court. The Company and you each hereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision hereof.

(c)    Conflict; Amendment; Counterparts. This letter agreement sets forth the Company’s sole obligation, subject to the terms and conditions set forth herein, to provide severance benefits to you. The severance benefits set forth in this letter agreement are therefore in lieu of, and not in addition to, the severance benefits described in the Offer Letter or any other agreement or arrangement between you and us. Except as modified hereby, the terms of the Offer Letter remain in full force and effect. This agreement may only be modified in a document signed by both the Company and you. This agreement may be executed in counterparts, each of which will be deemed an original, but all of which will be deemed one and the same instrument.

[Remainder of page intentionally left blank]

If the provisions of this agreement are acceptable to you, please sign and date this agreement below and return the signed and dated agreement to me on or before March 21, 2022.

Sincerely,

SELLAS Life Sciences Group, Inc.

By: /s/ Angelos M. Stergiou_________

Angelos M. Stergiou, MD, ScD h.c.

President and Chief Executive Officer

ACCEPTED AND AGREED:

/s/ Robert Francomano_________

Robert Francomano

EX-31.1

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: May 11, 2023

/s/ Angelos M. Stergiou

Angelos M. Stergiou, MD, ScD h.c.

President and Chief Executive Officer
(Principal Executive Officer)

EX-31.2

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.;

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: May 11, 2023

/s/ John T. Burns

John T. Burns, CPA

Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

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 March 31, 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: May 11, 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.

EX-32.2

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

In connection with the accompanying Quarterly Report of SELLAS Life Sciences Group, Inc., (the “Company”) on Form 10-Q for the period ended March 31, 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/ John T. Burns
	John T. Burns, CPA
	Chief Financial Officer (Principal Financial and Principal Accounting Officer)
	Date: May 11, 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.

XML

Cover - shares	3 Months Ended
	Mar. 31, 2023	May 10, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 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		28,347,920
Entity Central Index Key	0001390478
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 23,902	$ 17,125
Restricted cash and cash equivalents	100	100
Prepaid expenses and other current assets	2,020	531
Total current assets	26,022	17,756
Operating lease right-of-use assets	784	874
Goodwill	1,914	1,914
Deposits and other assets	384	399
Total assets	29,104	20,943
Current liabilities:
Accounts payable	3,099	3,357
Accrued expenses and other current liabilities	6,485	6,286
Operating lease liabilities	427	372
Acquired in-process research and development payable	5,500	5,500
Total current liabilities	15,511	15,515
Operating lease liabilities, non-current	422	573
Warrant liability	2	4
Total liabilities	15,935	16,092
Commitments and contingencies (Note 7)
Stockholders’ 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 March 31, 2023 and December 31, 2022	0	0
Common stock, $0.0001 par value; 350,000,000 shares authorized, 28,347,920 and 21,005,405 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	3	2
Additional paid-in capital	204,167	184,753
Accumulated deficit	(191,001)	(179,904)
Total stockholders’ equity	13,169	4,851
Total liabilities and stockholders’ equity	$ 29,104	$ 20,943

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 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)	28,347,920	21,005,405
Common stock, shares outstanding (in shares)	28,347,920	21,005,405
Series A Preferred Stock
Preferred stock, shares authorized (in shares)	17,500	17,500

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Licensing revenue	$ 0	$ 1,000,000
Operating expenses:
Cost of licensing revenue	0	100,000
Research and development	7,174,000	4,611,000
General and administrative	4,107,000	3,024,000
Acquired in-process research and development	0	10,000,000
Total operating expenses	11,281,000	17,735,000
Operating loss	(11,281,000)	(16,735,000)
Non-operating income (expense), net:
Change in fair value of warrant liability	2,000	(11,000)
Interest income	182,000	2,000
Total non-operating income (expense), net	184,000	(9,000)
Net loss	$ (11,097,000)	$ (16,744,000)
Per share information:
Net loss per common share, basic (in dollars per share)	$ (0.47)	$ (1.05)
Net loss per common share, diluted (in dollars per share)	$ (0.47)	$ (1.05)
Weighted-average common shares outstanding, basic (in shares)	23,547,562	15,897,479
Weighted-average common shares outstanding, diluted (in shares)	23,547,562	15,897,479

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' 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 under employee stock purchase plan (in shares)		10,362
Issuance of common stock under employee stock purchase plan	47		47
Stock-based compensation	375		375
Net loss	(16,744)			(16,744)
Ending balance (in shares) at Mar. 31, 2022		15,905,999
Ending balance at Mar. 31, 2022	$ 4,025	$ 2	159,370	(155,347)
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)		45,416
Issuance of common stock under employee stock purchase plan	53		53
Stock-based compensation	540		540
Net loss	$ (11,097)			(11,097)
Ending balance (in shares) at Mar. 31, 2023	28,347,920	28,347,920
Ending balance at Mar. 31, 2023	$ 13,169	$ 3	$ 204,167	$ (191,001)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities:
Net loss	$ (11,097)	$ (16,744)
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	540	375
Non-cash lease expense	87	45
Change in fair value of common stock warrants	(2)	11
Changes in operating assets and liabilities:
Accounts receivable	0	(1,000)
Prepaid expenses and other assets	(1,474)	(606)
Accounts payable	(284)	667
Accrued expenses and other current liabilities	196	151
Operating lease liabilities	(93)	(49)
Net cash used in operating activities	(12,127)	(7,150)
Cash flows from financing activities:
Issuance of common stock and common stock warrants, net of issuance costs	18,583	0
Issuance of common stock, net of issuance costs	268	0
Proceeds from employee stock purchases	53	47
Net cash provided by financing activities	18,904	47
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	6,777	(7,103)
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	24,002	14,352
Supplemental disclosure of cash flow information:
Cash received during the period for interest	182	2
Supplemental disclosure of non-cash investing and financing activities:
Payable for acquired in-process research and development	5,500	10,000
Increase in operating right of use assets and current and non-current lease liabilities	0	449
Offering expenses included in accounts payable and accrued expenses and other current liabilities	29	252
Warrant modification recorded in stockholders' equity	$ 252	$ 0

XML

Description of Business

3 Months Ended

Mar. 31, 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 GFH009, a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which we 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 ("GFH009 Territory").

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Liquidity

3 Months Ended

Mar. 31, 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 March 31, 2023, has an accumulated deficit of $191.0 million. During the three months ended March 31, 2023, the Company incurred a net loss of $11.1 million, and used $12.1 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 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. 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, 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 three months ended March 31, 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. There remains approximately $39.2 million available for future sales of shares of common stock under the Sales Agreement as of March 31, 2023. Other than the Sales Agreement, the Company currently does not have any commitments to obtain additional funds.

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. The participation of 3DMed in the Company's REGAL Phase 3 clinical trial in China will trigger two development milestone payments totaling $13.0 million to the Company, which the Company expects to receive prior to the end of the third quarter of 2023. 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 March 31, 2023, which milestones are all variable in nature and not under the Company's control.

As of March 31, 2023, the Company had cash and cash equivalents of approximately $23.9 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 will not be sufficient to fund its 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 the Company triggered by 3DMed's participation in the REGAL study are variable in nature and not under the Company's control, and therefore are not 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, public and private placements of equity and/or debt securities, payments from potential strategic research and development collaborations, and 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.

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Basis of Presentation and Significant Accounting Policies

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

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 guidance is meant to refer to U.S. GAAP as found in the ASC and Accounting Standards Updates 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 March 31, 2023 and for the three months ended March 31, 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.

Acquired In-Process Research and Development

Costs incurred in obtaining technology licenses are immediately recognized as acquired in-process research and development expense, provided the technology licensed has no alternative future use. Payments related to contingent consideration such as development milestones, commercial milestones and royalties (Note 5) will be recognized when the contingency is probable and reasonably estimable as prescribed by ASC 450, Contingencies.

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):

	Three Months Ended March 31,
	2023	2022
Common stock warrants	12,361	518
Stock options	1,661	1,006
Restricted stock units ("RSUs")	444	297
	14,466	1,821

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Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

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	March 31, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	22,984	$	22,984	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	23,084	$	23,084	$	—	$	—
Liabilities:
Warrant liability	$	2	$	—	$	—	$	2
Total liabilities measured and recorded at fair value	$	2	$	—	$	—	$	2

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 three months ended March 31, 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 three months ended March 31, 2023.

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Acquired In-Process Research and Development

3 Months Ended

Mar. 31, 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 GFH009 for the treatment, diagnosis or prevention of disease in humans and animals in the GFH009 Territory.

In consideration for the exclusive license, the Company has agreed to pay to GenFleet (i) an upfront and technology transfer fee of $10.0 million, $4.5 million of which was paid in April 2022 and $5.5 million of which is due on June 1, 2023, (ii) development and regulatory milestone payments for up to three indications totaling up to $48.0 million in the aggregate, 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 has 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 GFH009 in the GFH009 Territory ranging from the low to high single digits.

During the three months ended March 31, 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, $4.5 million of which was paid in April 2022 and the remaining $5.5 million which is due on June 1, 2023 for which the Company has recorded an acquired in-process research and development payable as of March 31, 2023.

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Balance Sheet Accounts

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Accounts

Balance Sheet Accounts

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

	March 31, 2023		December 31, 2022
Insurance	$	1,644	$	219
Clinical development	218		184
Professional fees	88		82
Other	70		46
Prepaid expenses and other current assets	$	2,020	$	531

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

	March 31, 2023		December 31, 2022
Clinical trial costs	$	5,001	$	4,509
Professional fees	828		338
Compensation and related benefits	623		1,439
Other	33		—
Accrued expenses and other current liabilities	$	6,485	$	6,286

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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 March 31, 2023, the leases have a remaining term of 1.75 years. Rent expense related to the Company's operating leases was approximately $0.1 million for each of the three months ended March 31, 2023 and 2022. The Company made cash payments related to its operating leases of approximately $0.1 million for each of the three months ended March 31, 2023 and 2022.

Future minimum lease payments are as follows as of March 31, 2023 (in thousands):

Future minimum lease payments:
2023 (remaining)	$	390
2024	533
Total future minimum lease payments	923
Less: imputed interest	(74)
Current and non-current operating lease liabilities	$	849

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 March 31, 2023, there was no pending or threatened litigation.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Stockholders' Equity

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 March 31, 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 March 31, 2023, the Company has shares of common stock reserved for future issuance as follows (in thousands):

Warrants outstanding	12,361
Stock options outstanding	1,661
RSUs outstanding	444
Shares reserved for future issuance under the 2019 Equity Incentive Plan	880
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan	229
Total common stock reserved for future issuance	15,575

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Warrants to Acquire Shares of Common Stock

3 Months Ended

Mar. 31, 2023

Warrants and Rights Note Disclosure [Abstract]

Warrants to Acquire Shares of Common Stock

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 three months ended March 31, 2023 (in thousands):

Warrant Issuance	Outstanding, December 31, 2022	Issued	Outstanding, March 31, 2023	Weighted Average 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
July 2018 Offering	132	—	132	$	7.50	July 2023
March 2019 Exercise Agreement	30	—	30	$	7.50	March 2024
Other	2	—	2	$	7.50	June 2024
	5,128	7,220	12,348
Warrants classified as liability	13	—	13	$	7.50	September 2023 - November 2023
	5,141	7,220	12,361

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.

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:

	March 31, 2023			December 31, 2022
Risk free interest rate	4.94		%	4.75		%
Volatility	167.84		%	120.60		%
Expected term (years)	0.50			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 three months ended March 31, 2023 were as follows (in thousands):

 

Warrant liability, December 31, 2022	$	4
Change in fair value of warrants	(2)
Warrant liability, March 31, 2023	$	2

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License Revenue

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

License Revenue

License Revenue

Exclusive License Agreement with 3D Medicines Inc.

In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into the 3DMed License Agreement, 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 ("GPS Plus") product candidates ("GPS Licensed Products") for all therapeutic and other diagnostic uses in the 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

The Company determined the initial transaction price of the single performance obligation to be $9.5 million, 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 at the inception of the 3DMed License Agreement and therefore were not constrained, and the full $9.5 million initial transaction price was fully recognized as licensing revenue. The Company determined that the remaining $192.5 million in certain future development, regulatory, and sales milestones was variable consideration subject to constraint at inception. 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.

On March 31, 2022, the Company announced that an IND application filed by 3DMed, pursuant to its 3DMed License Agreement for GPS, for a small Phase 1 clinical trial investigating safety of GPS in China was approved by China's National Medical Products Administration ("NMPA"). The IND approval by the NMPA triggered a $1.0 million milestone payment to the Company which was recognized as licensing revenue in the first quarter of 2022. An additional $191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remains under the 3DMed License Agreement as of March 31, 2023, which milestones are variable in nature and not under the Company's control.

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 license revenue recognized during the three months ended March 31, 2023, and $1.0 million of license revenue recognized during the three months ended March 31, 2022.

There was no cost of license revenue recognized during the three months ended March 31, 2023, and $0.1 million in cost of license revenue for sublicensing fees incurred during the three months ended March 31, 2022 under the Company's license from MSK in connection with the 3DMed License Agreement.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

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 provided for the 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.

2019 Equity Incentive Plan

On September 10, 2019, the 2019 Equity Incentive Plan was approved by the stockholders of the Company, which currently allows for issuance of up to approximately 3,014,000 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 Incentive Plan automatically increased on January 1 of each year, for a period of four years, commencing on January 1, 2020 and ending 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. As of March 31, 2023, approximately 880,000 shares of common stock were reserved for future grants under the 2019 Equity Incentive Plan.

The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively (in thousands):

	Three Months Ended March 31,
	2023		2022
Research and development	$	96	$	55
General and administrative	444		320
Total stock-based compensation	$	540	$	375

Options to Purchase Shares of Common Stock

The following table summarizes stock option activity of the Company for the three months ended March 31, 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
Granted	648	3.28
Canceled	(27)	6.44
Outstanding at March 31, 2023	1,661	$	5.92	8.55	$	—
Options exercisable at March 31, 2023	477	$	10.02	7.84	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at March 31, 2023 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on March 31, 2023 of $1.43 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 nine months ended March 31, 2023 and 2022, respectively, were as follows:

	Three Months Ended March 31,
	2023		2022
Risk free interest rate	3.79	%	1.79	%
Volatility	127.68	%	130.43	%
Expected lives (years)	6.20		6.20
Expected dividend yield	—	%	—	%

The weighted-average grant date fair value of options granted during the three months ended March 31, 2023 and March 31, 2022 was $2.95 and $4.79, 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 March 31, 2023, there was $4.3 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 2.9 years.

Time-vested RSUs and RSUs with Performance Conditions

The following table summarizes RSU activity of the Company for the three months ended March 31, 2023:

	Shares (In Thousands)	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	255	$	3.25
Granted	195	$	3.34
Canceled	(6)	$	3.34
Unvested at March 31, 2023	444	$	3.29

As of March 31, 2023, there was $1.4 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 2.5 years. No RSUs vested during the three months ended March 31, 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. 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 months ended March 31, 2023, 45,416 shares of common stock were purchased by employees under the 2021 ESPP. There are currently 229,495 shares of common stock reserved for issuance under the 2021 ESPP as of March 31, 2023.

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Subsequent Events	3 Months Ended
	Mar. 31, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe Company evaluated all events or transactions that occurred after March 31, 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.

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Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 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 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. The functional currency of the Company's non-U.S. operations is the U.S. dollar.

Acquired In-Process Research and Development

Acquired In-Process Research and DevelopmentCosts incurred in obtaining technology licenses are immediately recognized as acquired in-process research and development expense, provided the technology licensed has no alternative future use. Payments related to contingent consideration such as development milestones, commercial milestones and royalties (Note 5) will be recognized when the contingency is probable and reasonably estimable as prescribed by ASC 450, Contingencies.

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.

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Basis of Presentation and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 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):

	Three Months Ended March 31,
	2023	2022
Common stock warrants	12,361	518
Stock options	1,661	1,006
Restricted stock units ("RSUs")	444	297
	14,466	1,821

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 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	March 31, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	22,984	$	22,984	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	23,084	$	23,084	$	—	$	—
Liabilities:
Warrant liability	$	2	$	—	$	—	$	2
Total liabilities measured and recorded at fair value	$	2	$	—	$	—	$	2

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

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Balance Sheet Accounts (Tables)

3 Months Ended

Mar. 31, 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):

	March 31, 2023		December 31, 2022
Insurance	$	1,644	$	219
Clinical development	218		184
Professional fees	88		82
Other	70		46
Prepaid expenses and other current assets	$	2,020	$	531

Schedule of Accrued Expenses and Other Current Liabilities

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

	March 31, 2023		December 31, 2022
Clinical trial costs	$	5,001	$	4,509
Professional fees	828		338
Compensation and related benefits	623		1,439
Other	33		—
Accrued expenses and other current liabilities	$	6,485	$	6,286

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments

Future minimum lease payments are as follows as of March 31, 2023 (in thousands):

Future minimum lease payments:
2023 (remaining)	$	390
2024	533
Total future minimum lease payments	923
Less: imputed interest	(74)
Current and non-current operating lease liabilities	$	849

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

Schedule of Common Stock Reserved for Future Issuance

As of March 31, 2023, the Company has shares of common stock reserved for future issuance as follows (in thousands):

Warrants outstanding	12,361
Stock options outstanding	1,661
RSUs outstanding	444
Shares reserved for future issuance under the 2019 Equity Incentive Plan	880
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan	229
Total common stock reserved for future issuance	15,575

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Warrants to Acquire Shares of Common Stock (Tables)

3 Months Ended

Mar. 31, 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 three months ended March 31, 2023 (in thousands):

Warrant Issuance	Outstanding, December 31, 2022	Issued	Outstanding, March 31, 2023	Weighted Average 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
July 2018 Offering	132	—	132	$	7.50	July 2023
March 2019 Exercise Agreement	30	—	30	$	7.50	March 2024
Other	2	—	2	$	7.50	June 2024
	5,128	7,220	12,348
Warrants classified as liability	13	—	13	$	7.50	September 2023 - November 2023
	5,141	7,220	12,361

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:

	March 31, 2023			December 31, 2022
Risk free interest rate	4.94		%	4.75		%
Volatility	167.84		%	120.60		%
Expected term (years)	0.50			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 three months ended March 31, 2023 were as follows (in thousands):

 

Warrant liability, December 31, 2022	$	4
Change in fair value of warrants	(2)
Warrant liability, March 31, 2023	$	2

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Allocated Stock-based Compensation Expense

The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively (in thousands):

	Three Months Ended March 31,
	2023		2022
Research and development	$	96	$	55
General and administrative	444		320
Total stock-based compensation	$	540	$	375

Schedule of Stock Option Activity

The following table summarizes stock option activity of the Company for the three months ended March 31, 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
Granted	648	3.28
Canceled	(27)	6.44
Outstanding at March 31, 2023	1,661	$	5.92	8.55	$	—
Options exercisable at March 31, 2023	477	$	10.02	7.84	$	—

Schedule of Assumptions for Option Grants Issued

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 nine months ended March 31, 2023 and 2022, respectively, were as follows:

	Three Months Ended March 31,
	2023		2022
Risk free interest rate	3.79	%	1.79	%
Volatility	127.68	%	130.43	%
Expected lives (years)	6.20		6.20
Expected dividend yield	—	%	—	%

Schedule of RSU Activity

The following table summarizes RSU activity of the Company for the three months ended March 31, 2023:

	Shares (In Thousands)	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	255	$	3.25
Granted	195	$	3.34
Canceled	(6)	$	3.34
Unvested at March 31, 2023	444	$	3.29

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Liquidity (Details) - USD ($) $ / shares in Units, $ in Thousands				1 Months Ended		3 Months Ended
	Feb. 28, 2023	Mar. 31, 2022	Apr. 16, 2021	May 12, 2022	Dec. 31, 2020	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Accumulated deficit						$ 191,001		$ 179,904
Net loss						11,097	$ 16,744
Net cash used in operating activities						$ 12,127	$ 7,150
Shares of common stock reserved for issuance (in shares)						15,575,000
Upfront fee and milestone payments						$ 10,500
Milestone payment received				$ 1,000		13,000
Potential milestone payments to be received		$ 191,500			$ 192,500	191,500
Cash and cash equivalents						23,902		17,125
Restricted cash and cash equivalents						$ 100		$ 100
Underwriting Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares)	7,220,217
Common stock to be called by warrants (in shares)	7,220,217
Offering price (in dollars per share)	$ 2.77
Number of securities called by each warrant	1
Exercise price (in dollars per share)	$ 2.77
Expired term	5 years
Net proceeds of common stock	$ 18,500
Sales Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in 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)						$ 3.59
Shares of common stock reserved for issuance (in shares)						39,200,000

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Basis of Presentation and Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	14,466	1,821
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	12,361	518
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	1,661	1,006
Restricted stock units ("RSUs")
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	444	297

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Fair Value Measurements - Contingent Purchase Price Consideration, Measured at Estimated Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Liabilities:
Warrant liability	$ 2	$ 4
Fair Value, Measurements, Recurring
Assets:
Cash equivalents	22,984	16,609
Restricted cash equivalents	100	100
Total assets measured and recorded at fair value	23,084	16,709
Liabilities:
Warrant liability	2	4
Total liabilities measured and recorded at fair value	2	4
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets (Level 1)
Assets:
Cash equivalents	22,984	16,609
Restricted cash equivalents	100	100
Total assets measured and recorded at fair value	23,084	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	2	4
Total liabilities measured and recorded at fair value	$ 2	$ 4

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Acquired In-Process Research and Development (Details) - USD ($)		1 Months Ended	3 Months Ended
	Mar. 31, 2022	Apr. 30, 2022	Mar. 31, 2023	Mar. 31, 2022
License And Collaboration Agreements [Line Items]
Acquired in-process research and development expense			$ 0	$ 10,000,000
GenFleet Therapeutics (Shanghai) Inc
License And Collaboration Agreements [Line Items]
Upfront fee	$ 10,000,000
Payable for acquired in-process research and development		$ 4,500,000
Research and development payable			$ 5,500,000
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement	48,000,000			48,000,000
Maximum amount eligible for milestones under collaborations agreement	$ 92,000,000			92,000,000
Acquired in-process research and development expense				$ 10,000,000

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Balance Sheet Accounts - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Insurance	$ 1,644	$ 219
Clinical development	218	184
Professional fees	88	82
Other	70	46
Prepaid expenses and other current assets	$ 2,020	$ 531

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Balance Sheet Accounts - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Clinical trial costs	$ 5,001	$ 4,509
Professional fees	828	338
Compensation and related benefits	623	1,439
Other	33	0
Accrued expenses and other current liabilities	$ 6,485	$ 6,286

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Commitments and Contingencies - Narrative (Details) - Office Space Lease Expiring December 31, 2024 - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease, discount rate (as a percent)	13.95%
Operating lease, remaining term	1 year 9 months
Rent expense	$ 0.1	$ 0.1
Cash payments related to operating lease	$ 0.1	$ 0.1

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Commitments and Contingencies - Maturities of Lease Liabilities - 842 (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2023 (remaining)	$ 390
2024	533
Total future minimum lease payments	923
Less: imputed interest	(74)
Current and non-current operating lease liabilities	$ 849

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Stockholders' Equity - Narrative (Details) - $ / shares	Mar. 31, 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

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Stockholders' Equity - Common Stock are Reserved for Future Issuance (Details) - shares shares in Thousands	Mar. 31, 2023	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrants outstanding (in shares)	12,361	5,141
Stock options outstanding (in shares)	1,661	1,040
Total common stock reserved for future issuance (in shares)	15,575
2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)	880
2021 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)	229
Restricted stock units ("RSUs")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
RSUs outstanding (in shares)	444	255

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Warrants to Acquire Shares of Common Stock - Warrants Outstanding (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	5,141
Issued (in shares)	7,220
Outstanding, end of period (in shares)	12,361
Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	5,128
Issued (in shares)	7,220
Outstanding, end of period (in shares)	12,348
February 2023 Offering | Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	0
Issued (in shares)	7,220
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
Issued (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
Issued (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
Issued (in shares)	0
Outstanding, end of period (in shares)	25
Exercise price (in dollars per share) | $ / shares	$ 3.30
July 2018 Offering | Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	132
Issued (in shares)	0
Outstanding, end of period (in shares)	132
Exercise price (in dollars per share) | $ / shares	$ 7.50
March 2019 Exercise Agreement | Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	30
Issued (in shares)	0
Outstanding, end of period (in shares)	30
Exercise price (in dollars per share) | $ / shares	$ 7.50
Other | Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	2
Issued (in shares)	0
Outstanding, end of period (in shares)	2
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
Issued (in shares)	0
Outstanding, end of period (in shares)	13
Exercise price (in dollars per share) | $ / shares	$ 7.50

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Warrants to Acquire Shares of Common Stock - Fair Value of Warrants is Estimated Using Black-Scholes Option Pricing Model (Details)	Mar. 31, 2023	Dec. 31, 2022
Risk free interest rate
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.0494	0.0475
Volatility
Class of Warrant or Right [Line Items]
Warrants, measurement input	1.6784	1.2060
Expected term (years)
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.50	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

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Warrants to Acquire Shares of Common Stock - Narrative (Details) $ / shares in Units, $ in Millions	Mar. 31, 2023	Feb. 28, 2023 USD ($) $ / shares shares	Feb. 27, 2023 $ / shares	Dec. 31, 2022
Underwriting Agreement
Class of Warrant or Right [Line Items]
Common stock to be called by warrants (in shares) | shares		7,220,217
Exercise price (in dollars per share) | $ / shares		$ 2.77
April 2022 Offering | Underwriting Agreement
Class of Warrant or Right [Line Items]
Common stock to be called by warrants (in shares) | shares		3,438,851
Exercise price (in dollars per share) | $ / shares		$ 3.62	$ 5.40
Fair value of warrants | $		$ 0.3
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

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Warrants to Acquire Shares of Common Stock - Changes in Fair Value of Warrant Liability (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Class of Warrant or Right, Fair Value [Roll Forward]
Beginning balance	$ 4
Change in fair value of warrants	(2)
Ending balance	$ 2

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License Revenue - Narrative (Details) - USD ($)		1 Months Ended		3 Months Ended
	Mar. 31, 2022	May 12, 2022	Dec. 31, 2020	Mar. 31, 2023	Mar. 31, 2022	Dec. 13, 2020
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			9,500,000
Potential milestone payments to be received	$ 191,500,000		$ 192,500,000	$ 191,500,000
Milestone payment received		$ 1,000,000		13,000,000
Licensing revenue				0	$ 1,000,000
Cost of licensing revenue				$ 0	$ 100,000

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Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended
	Apr. 22, 2021	Sep. 10, 2019	Mar. 31, 2023	Mar. 31, 2022	Dec. 29, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)			15,575,000
Closing price of the Company's common stock (in dollars per share)			$ 1.43
Weighted average exercise price, granted (in dollars per share)			$ 2.95	$ 4.79
Averages contractual term			10 years
Expected dividend yield (as a percent)			0.00%	0.00%
Unrecognized compensation cost, options			$ 4.3
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
Period for recognition			2 years 6 months
Unrecognized compensation cost			$ 1.4
RSUs vested (in shares)			0
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period for recognition			2 years 10 months 24 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term			6 years
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term			4 years
2017 Equity 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 Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for issuance (in shares)		3,014,000
Option term		4 years
Increase in number of shares available for future issuance under stock based awards (as a percent)		5.00%
Shares of common stock reserved for issuance (in shares)			880,000
2021 ESPP | Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)			229,495
Cash earnings contributed per year	20.00%
Purchase price of common stock	85.00%
Offering period	6 months
Share-based compensation arrangement by share-based payment award, shares purchased for award			45,416

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Stock-Based Compensation - Allocated Stock-based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 540	$ 375
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	96	55
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 444	$ 320

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Stock-Based Compensation - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding, beginning balance (in shares) | shares	1,040
Granted (in shares) | shares	648
Canceled (in shares) | shares	(27)
Options outstanding, ending balance (in shares) | shares	1,661
Options exercisable (in shares) | shares	477
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) | $ / shares	$ 7.57
Weighted average exercise price, granted (in dollars per share) | $ / shares	3.28
Weighted average exercise price, canceled (in dollars per share) | $ / shares	6.44
Weighted average exercise price, ending balance (in dollars per share) | $ / shares	5.92
Weighted average exercise price, exercisable (in dollars per share) | $ / shares	$ 10.02
Weighted average remaining contractual term, outstanding (in years)	8 years 6 months 18 days
Weighted average remaining contractual term, options exercisable (in years)	7 years 10 months 2 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Aggregate Intrinsic Value [Roll Forward]
Aggregate intrinsic value, ending balance | $	$ 0
Aggregate intrinsic value, options exercisable | $	$ 0

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Stock-Based Compensation - Assumptions for Option Grants Issued (Details)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-Based Payment Arrangement [Abstract]
Risk free interest rate	3.79%	1.79%
Volatility	127.68%	130.43%
Expected lives (years)	6 years 2 months 12 days	6 years 2 months 12 days
Expected dividend yield	0.00%	0.00%

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Stock-Based Compensation - Summary of RSU Activity (Details) - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 2.95	$ 4.79
Restricted stock units ("RSUs")
Shares (In Thousands)
Beginning balance (in shares)	255
Granted (in shares)	195
Canceled (in shares)	(6)
Ending balance (in shares)	444
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)	3.34
Ending balance (in dollars per share)	$ 3.29