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 June 30, 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 August 9, 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 June 30, 2023

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	4
	Unaudited Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	4
	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	5
	Unaudited Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2023 and 2022	6
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	7
	Unaudited Notes to Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4	Controls and Procedures	28
	PART II - OTHER INFORMATION
Item 1	Legal Proceedings	30
Item 1A	Risk Factors	30
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3	Defaults Upon Senior Securities	30
Item 4	Mine Safety Disclosures	30
Item 5	Other Information	30
Item 6	Exhibits	30
	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;

2

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

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

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

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)

	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	13,807	$	17,125
Restricted cash and cash equivalents	100		100
Prepaid expenses and other current assets	1,674		531
Total current assets	15,581		17,756
Operating lease right-of-use assets	690		874
Goodwill	1,914		1,914
Deposits and other assets	381		399
Total assets	$	18,566	$	20,943
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,734	$	3,357
Accrued expenses and other current liabilities	6,240		6,286
Operating lease liabilities	447		372
Acquired in-process research and development payable	3,000		5,500
Total current liabilities	13,421		15,515
Operating lease liabilities, non-current	302		573
Warrant liability	—		4
Total liabilities	13,723		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 June 30, 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 June 30, 2023 and December 31, 2022, respectively	3		2
Additional paid-in capital	204,681		184,753
Accumulated deficit	(199,841)		(179,904)
Total stockholders’ equity	4,843		4,851
Total liabilities and stockholders’ equity	$	18,566	$	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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Licensing revenue	$	—	$	—	$	—	$	1,000
Operating expenses:
Cost of licensing revenue	—		—		—		100
Research and development	5,923		5,529		13,097		10,140
General and administrative	3,127		3,094		7,234		6,118
Acquired in-process research and development	—		—		—		10,000
Total operating expenses	9,050		8,623		20,331		26,358
Operating loss	(9,050)		(8,623)		(20,331)		(25,358)
Non-operating income:
Change in fair value of warrant liability	2		48		4		37
Change in fair value of contingent consideration	—		115		—		115
Interest income	208		46		390		48
Total non-operating income	210		209		394		200
Net loss	$	(8,840)	$	(8,414)	$	(19,937)	$	(25,158)
Per share information:
Net loss per common share, basic and diluted	$	(0.31)	$	(0.41)	$	(0.77)	$	(1.39)
Weighted-average common shares outstanding, basic and diluted	28,347,920		20,286,624		25,961,001		18,104,176

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 June 30, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at March 31, 2023	28,347,920	$	3	$	204,167	$	(191,001)	$	13,169
Stock-based compensation	—	—		514		—		514
Net loss	—	—		—		(8,840)		(8,840)
Balance at June 30, 2023	28,347,920	$	3	$	204,681	$	(199,841)	$	4,843
	Six Months Ended June 30, 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	—	—		1,054		—		1,054
Net loss	—	—		—		(19,937)		(19,937)
Balance at June 30, 2023	28,347,920	$	3	$	204,681	$	(199,841)	$	4,843

	Three Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at March 31, 2022	15,905,999	$	2	$	159,370	$	(155,347)	$	4,025
Issuance of common stock and common stock warrants, net of issuance costs	4,629,630	—		22,946		—		22,946
Issuance of common stock, net of issuance costs	16,289			50				50
Stock-based compensation	—	—		450		—		450
Net loss	—	—		—		(8,414)		(8,414)
Balance at June 30, 2022	20,551,918	$	2	$	182,816	$	(163,761)	$	19,057
	Six Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2021	15,895,637	$	2	$	158,948	$	(138,603)	$	20,347
Issuance of common stock and common stock warrants, net of issuance costs	4,629,630	—		22,946		—		22,946
Issuance of common stock, net of issuance costs	16,289			50				50
Issuance of common stock under employee stock purchase plan	10,362	—		47		—		47
Stock-based compensation	—	—		825		—		825
Net loss	—	—		—		(25,158)		(25,158)
Balance at June 30, 2022	20,551,918	$	2	$	182,816	$	(163,761)	$	19,057

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 Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(19,937)	$	(25,158)
Adjustment to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development expense	—		10,000
Non-cash stock-based compensation	1,054		825
Non-cash lease expense	245		127
Change in fair value of common stock warrants	(4)		(37)
Change in fair value of contingent consideration	—		(115)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(1,125)		19
Accounts payable	377		1,195
Accrued expenses and other current liabilities	(46)		366
Operating lease liabilities	(257)		(133)
Net cash used in operating activities	(19,693)		(12,911)
Cash flows from investing activities:
Cash paid for acquisition of in-process research and development	(2,500)		(4,500)
Net cash used in investing activities	(2,500)		(4,500)
Cash flows from financing activities:
Proceeds from issuance of common stock and common stock warrants, net of issuance costs	18,554		22,946
Proceeds from issuance of common stock, net of issuance costs	268		50
Proceeds from employee stock purchases	53		47
Net cash provided by financing activities	18,875		23,043
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(3,318)		5,632
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	$	13,907	$	27,087
Supplemental disclosure of cash flow information:
Cash received during the period for interest	$	390	$	48
Supplemental disclosure of non-cash investing and financing activities:
Non-cash acquisition of in-process research and development	$	—	$	5,500
Increase in operating lease right-of-use assets and current and non-current operating lease liabilities	$	—	$	449

See accompanying notes to these unaudited consolidated financial statements.

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 SLS009 (formerly GFH009), a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which the Company licensed from GenFleet Therapeutics (Shanghai), Inc. ("GenFleet"), for all therapeutic and diagnostic uses in the world outside of mainland China, Hong Kong, Macau and Taiwan ("SLS009 Territory").

2. Liquidity

Since inception, the Company has incurred recurring losses and negative cash flows from operations and, as of June 30, 2023, has an accumulated deficit of $199.8 million. During the six months ended June 30, 2023, the Company incurred a net loss of $19.9 million, and used $19.7 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 six months ended June 30, 2023, the Company sold a total of 76,882 shares of common stock pursuant to the Sales Agreement at an average price of $3.59 per share for aggregate net proceeds of approximately $0.3 million. There remains approximately $39.2 million available for future sales of shares of common stock under the Sales Agreement. 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 in the third quarter of 2023. A total of $191.5 million in potential

8

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

future development, regulatory, and sales milestones, not including future royalties, remains under the 3DMed License Agreement as of June 30, 2023, which milestones are all variable in nature and not under the Company's control.

As of June 30, 2023, the Company had cash and cash equivalents of approximately $13.8 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 consolidated 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 ("ASUs") of the Financial Accounting Standards Board ("FASB").

Principles of Consolidation

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

Unaudited Interim Results

These consolidated financial statements and accompanying notes should be read in conjunction with the Company's annual consolidated financial statements and the notes thereto included in the 2022 Annual Report. The accompanying consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022, are unaudited, but include all adjustments, consisting of normal recurring entries, that

9

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2022 have been derived from the audited financial statements as of that date.

Reclassification

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

Net Loss Per Share

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

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

	Six Months Ended June 30,
	2023	2022
Common stock warrants	12,361	5,148
Stock options	1,665	1,012
Restricted stock units ("RSUs")	433	297
	14,459	6,457

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	June 30, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	13,192	$	13,192	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	13,292	$	13,292	$	—	$	—
Liabilities:
Warrant liability	$	—	$	—	$	—	$	—
Total liabilities measured and recorded at fair value	$	—	$	—	$	—	$	—

10

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 six months ended June 30, 2023 or during the year ended December 31, 2022. See Note 9, Warrants to Acquire Shares of Common Stock, for a reconciliation of the changes in the fair value of the warrant liability for the six months ended June 30, 2023.

5. Acquired In-Process Research and Development

Exclusive License Agreement with GenFleet Therapeutics (Shanghai) Inc.

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

In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $10.0 million, $7.0 million of which was paid as of June 30, 2023 and the remaining $3.0 million of which is expected to be paid during the third quarter of 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 SLS009 in the SLS009 Territory ranging from the low to high single digits.

During the six months ended June 30, 2022, the Company expensed $10.0 million related to the acquired technology as in-process research and development based on the assessment that the technology has no alternative future use, $7.0 million of which has been paid as of June 30, 2023, and the Company has recorded an acquired in-process research and development payable as of June 30, 2023 for the remaining $3.0 million which is expected to be paid during the third quarter of 2023.

11

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

6. Balance Sheet Accounts

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

	June 30, 2023		December 31, 2022
Insurance	$	1,123	$	219
Clinical development	375		184
Professional fees	176		82
Other	—		46
Prepaid expenses and other current assets	$	1,674	$	531

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

	June 30, 2023		December 31, 2022
Clinical trial costs	$	4,839	$	4,509
Compensation and related benefits	1,111		1,439
Professional fees	208		338
Other	82		—
Accrued expenses and other current liabilities	$	6,240	$	6,286

7. Commitments and Contingencies

Leases

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

The weighted average discount rate of the Company's operating leases under FASB Topic ASC 842, Leases ("ASC 842") is approximately 13.95%. As of June 30, 2023, the leases have a remaining term of 1.5 years.

Rent expense related to the Company's operating leases was approximately $0.1 million for each of the three months ended June 30, 2023 and 2022 and $0.2 million for each of the six months ended June 30, 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 June 30, 2023 and 2022 and $0.3 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively.

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

Future minimum lease payments:
2023 (remaining)	$	261
2024	533
Total future minimum lease payments	794
Less: imputed interest	(45)
Current and non-current operating lease liabilities	$	749

12

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Legal Proceedings

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

8. Stockholders’ Equity

Preferred Stock

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

Common Stock

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

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

Warrants outstanding	12,361
Stock options outstanding	1,665
RSUs outstanding	433
Shares reserved for future issuance under the Company’s 2019 Equity Incentive Plan	3,883
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan	229
Total common stock reserved for future issuance	18,571

13

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

9. Warrants to Acquire Shares of Common Stock

Warrants Outstanding

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

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

14

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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:

	June 30, 2023			December 31, 2022
Risk free interest rate	5.44		%	4.75		%
Volatility	65.03		%	120.60		%
Expected term (years)	0.25			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 six months ended June 30, 2023 were as follows (in thousands):

 

Warrant liability, December 31, 2022	$	4
Change in fair value of warrants	(4)
Warrant liability, June 30, 2023	$	—

10. Licensing Revenue

Exclusive License Agreement with 3D Medicines Inc.

In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into an Exclusive License Agreement (the “3DMed License Agreement”) with 3D Medicines Inc. ("3DMed"), pursuant to which the Company granted 3DMed a sublicensable royalty-bearing license under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS (referred to as GPS Plus) product candidates ("GPS Licensed Products") for all therapeutic and other diagnostic uses in mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). The license is exclusive, except with respect to certain know-how that has been non-exclusively licensed to the Company and is sublicensed to 3DMed on a non-exclusive basis. The Company has retained development, manufacturing and commercialization rights with respect to the GPS Licensed Products in the rest of the world.

In partial consideration for the rights granted by the Company, 3DMed agreed to pay the Company (i) a one-time upfront cash payment of $7.5 million, and (ii) milestone payments totaling up to $194.5 million in the aggregate upon the achievement of certain technology transfer, development and regulatory milestones, as well as sales milestones based on certain net sales thresholds of GPS Licensed Products in the 3DMed Territory in a given calendar year. 3DMed also agreed to pay tiered royalties based upon a percentage of annual net sales of GPS Licensed Products in the 3DMed Territory ranging from the high single digits to the low double digits.

Revenue Recognition

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. As of December 31, 2021, the full $9.5 million initial transaction price was fully recognized as licensing revenue. The

15

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Company determined that the remaining $192.5 million in certain future development, regulatory, and sales milestones is 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 June 30, 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 licensing revenue recognized during each of the three months ended June 30, 2023 and 2022. There was no licensing revenue recognized during the six months ended June 30, 2023, and $1.0 million licensing revenue recognized during the six months ended June 30, 2022 related to the IND approval by the NMPA.

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

11. Stock-Based Compensation

2017 Equity Incentive Plan

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

2023 Amended and Restated Equity Incentive Plan

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

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

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

16

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

As of June 30, 2023, approximately 3,883,000 shares of common stock were reserved for future grants under the 2023 Amended and Restated Equity Incentive Plan.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	92	$	70	$	188	$	125
General and administrative	422		380		866		700
Total stock-based compensation	$	514	$	450	$	1,054	$	825

Options to Purchase Shares of Common Stock

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

	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2022	1,040	$	7.57		$	91
Granted	682	3.20
Canceled	(57)	5.66
Outstanding at June 30, 2023	1,665	$	5.85	8.63	$	1
Options exercisable at June 30, 2023	527	$	9.58	7.62	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at June 30, 2023 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on June 30, 2023 of $1.57 per share. The aggregate intrinsic value equals the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying stock options.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Risk free interest rate	3.69	%	2.87	%	3.78	%	1.80	%
Volatility	129.55	%	144.75	%	127.77	%	130.60	%
Expected lives (years)	6.25		6.25		6.20		6.21
Expected dividend yield	—	%	—	%	—	%	—	%

The weighted-average grant date fair value of options granted during the three months ended June 30, 2023 and 2022 was $1.45 and $2.13, respectively. The weighted-average grant date fair value of options granted during the six months ended June 30, 2023 and 2022 was $2.88 and $4.76, respectively.

17

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 June 30, 2023, there was $3.8 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 2.72 years.

Time-vested RSUs and RSUs with Performance Conditions

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

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

As of June 30, 2023, there was $1.2 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 2.98 years. No RSUs vested during the six months ended June 30, 2023.

2021 Employee Stock Purchase Plan

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

During the six months ended June 30, 2023, 45,416 shares of common stock were purchased by employees under the 2021 ESPP for proceeds of approximately $53,000. There are currently 229,495 shares of common stock reserved for issuance under the 2021 ESPP as of June 30, 2023.

12. Subsequent Events

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

18

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

Overview

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

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

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

In January 2020, we commenced in the United States an open label randomized Phase 3 clinical trial, the REGAL study, for GPS monotherapy in patients with acute myeloid leukemia, or AML, in the maintenance setting after achievement of second complete remission, or CR2, following successful completion of second-line antileukemic therapy. Patients are randomized (1:1) to receive either GPS or best available treatment, or BAT. We expect this study will be used as the basis for submission of a Biologics License Application, or BLA, subject to a statistically significant and clinically meaningful data outcome and agreement with the U.S. Food and Drug Administration, or the FDA. The primary endpoint of the clinical trial is overall survival. We plan to enroll approximately 125 to 140 patients at approximately 95 clinical sites in North America, Europe and Asia with a planned interim safety, efficacy and futility analysis after 60 events (deaths). 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, or the 3DMed Territory. We have retained sole rights to GPS and GPS+ outside of Greater China. In November 2022, we announced that we have agreed with 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 in 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 June 30, 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.

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,

19

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. In June 2023, we reported that the primary endpoint of safety and the efficacy endpoint were both met with clinical activity and increased survival in this study. Additional immune response data from all 10 evaluable patients is expected in the fourth quarter of 2023.

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

SLS009: Highly Selective Next Generation CDK9 Inhibitor

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

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

In 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 SLS009. No further dose escalations are planned in the AML group, while dose escalation continues in the lymphoma group with the addition of 75 mg and 100 mg once-a-week dose cohorts. The 100 mg cohort is planned to likely be the highest dose level for the lymphoma group. In the third quarter of 2023, we expect enrollment in the lymphoma group to be completed and to report clinical activity observed in the lymphoma group. 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.

In June 2023, we announced that the first patient was dosed in a Phase 2a clinical trial with SLS009 in combination with venetoclax and azacitidine, or aza/ven, in patients with AML who relapsed after or are refractory to treatment with venetoclax-based therapies. The trial is an open label, single arm, multi-center study that is designed to evaluate safety, tolerability, and efficacy at two dose levels of SLS009 (once weekly 45 mg or 60 mg) in combination with aza/ven. In addition to safety and tolerability of SLS009 in combination with aza/ven, the primary endpoints are complete response composite rate and duration of response. Additional endpoints include event free survival, overall survival, and pharmacokinetic and pharmacodynamic assessments. The trial includes several sites in the United States, will enroll up to 20 patients and, based on initial results, may be expanded into a registrational trial. Topline data from this study is expected in the fourth quarter of 2023.

We are also planning to potentially commence a Phase 2 clinical trial of SLS009 in certain solid tumors and/or lymphoma in the fourth quarter of 2023 and are exploring various options with respect to clinical development for SLS009 in several pediatric indications.

20

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

21

Components of Results of Operations

Licensing Revenue

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

Cost of Licensing Revenue

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

Research and Development

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

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

•manufacturing and clinical drug supply expenses;

•outsourced professional scientific development services;

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

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

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

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

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

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

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

•the length of time required to enroll suitable patients;

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

•the number of doses patients receive;

•the duration of patient follow-up;

•the results of clinical trials;

•the expenses associated with manufacturing and clinical drug supply;

22

•the receipt of marketing approvals; and

•the commercialization of current and future product candidates.

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

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

General and Administrative

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

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

Acquired In-Process Research and Development

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

Non-Operating Income

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

Critical Accounting Policies and Estimates

In the 2022 Annual Report, we disclosed our critical accounting policies and estimates upon which our consolidated financial statements are derived. There have been no material changes to these policies and estimates since December 31, 2022 that are not included in Note 3 of the accompanying consolidated financial statements for the six months ended June 30, 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 Six Months Ended June 30, 2023 and 2022

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

	Three Months Ended June 30,
	2023		2022		Change
Licensing revenue	$	—	$	—	$	—
Operating expenses:
Cost of licensing revenue	—		—		—
Research and development	5,923		5,529		394
General and administrative	3,127		3,094		33
Total operating expenses	9,050		8,623		427
Operating loss	(9,050)		(8,623)		(427)
Non-operating income	210		209		1
Net loss	$	(8,840)	$	(8,414)	$	(426)

	Six Months Ended June 30,
	2023		2022		Change
Licensing revenue	$	—	$	1,000	$	(1,000)
Operating expenses:
Cost of licensing revenue	—		100		(100)
Research and development	13,097		10,140		2,957
General and administrative	7,234		6,118		1,116
Acquired in-process research and development	—		10,000		(10,000)
Total operating expenses	20,331		26,358		(6,027)
Operating loss	(20,331)		(25,358)		5,027
Non-operating income	394		200		194
Net loss	$	(19,937)	$	(25,158)	$	5,221

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

Licensing Revenue

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

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

Cost of Licensing Revenue

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

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

Research and Development

24

Research and development expenses were $5.9 million for the three months ended June 30, 2023 compared to $5.5 million for the three months ended June 30, 2022. The $0.4 million increase was primarily attributable to a $0.6 million increase in clinical and regulatory consulting expenses, a $0.4 million increase in clinical trial expenses related to our Phase 3 REGAL clinical trial of GPS and our Phase 2a and Phase 1 clinical trials of SLS009, and a $0.3 million increase in personnel related expenses due to increased headcount. These increases were partially offset by a $0.9 million decrease in manufacturing expenses primarily due to the timing of a manufacturing of a registration batch of GPS in the prior period. We anticipate that our research and development expenses will increase in the future as we continue to advance the development of GPS and SLS009, including our Phase 3 clinical trial of GPS in AML and the ongoing Phase 2a and Phase 1 clinical trials of SLS009.

Research and development expenses were $13.1 million for the six months ended June 30, 2023 compared to $10.1 million for the six months ended June 30, 2022. The $3.0 million increase was primarily attributable to a $1.4 million increase in clinical and regulatory consulting expenses, a $1.2 million increase in clinical trial related expenses related to our ongoing Phase 3 REGAL clinical trial of GPS and our Phase 2a and Phase 1 clinical trials of SLS009, and a $0.8 million increase in personnel related expenses due to increased headcount. These increases were partially offset by a $0.4 million decrease in manufacturing expenses primarily due to the timing of a manufacturing of a registration batch of GPS in the prior period. We anticipate that our research and development expenses will increase in the future as we continue to advance the development of GPS and SLS009, including our Phase 3 clinical trial of GPS in AML and the ongoing Phase 2a and Phase 1 clinical trials of SLS009.

General and Administrative

General and administrative expenses were $3.1 million for each of the three months ended June 30, 2023 and three months ended June 30, 2022. There was a $0.2 million decrease in outside services and public company costs, which were offset by a $0.1 million increase in personnel related expenses due to increased headcount and a $0.1 million increase in office related expenses and other general and administrative costs.

General and administrative expenses were $7.2 million for the six months ended June 30, 2023 compared to $6.1 million for the six months ended June 30, 2022. The $1.1 million increase was primarily due to a $0.6 million increase in personnel related expenses due to increased headcount, including a $0.2 million increase in non-cash stock-based compensation, a $0.2 million increase in legal fees, and a $0.3 million increase in office related expenses and other general and administrative costs.

Acquired In-Process Research and Development

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

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

Non-Operating Income

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change
Change in fair value of warrant liability	$	2	$	48	$	(46)	$	4	$	37	$	(33)
Change in fair value of contingent consideration	—		115		(115)		—		115		(115)
Interest income	208		46		162		390		48		342
Total non-operating income	$	210	$	209	$	1	$	394	$	200	$	194

Non-operating income of $0.2 million and $0.4 million during the three and six months ended June 30, 2023, respectively, was primarily interest income earned from our cash and cash equivalents.

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Non-operating income of $0.2 million during each of the three and six months ended June 30, 2022 was primarily due to decreases in the fair value of the contingent consideration liability driven by an increase in discount rates, a decrease in the fair value of the warrant liability driven by a decrease in our common stock price, and interest income earned from our cash and cash equivalents.

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

Income Tax Expense

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

Liquidity and Capital Resources

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

Sources of Liquidity

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

On April 16, 2021, we entered into a Controlled Equity OfferingSM Sales Agreement, or the Sales Agreement, with Cantor Fitzgerald & Co., or the Agent. From time to time during the term of the Sales Agreement, 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 six months ended June 30, 2023, we sold a total of 76,882 shares of common stock pursuant to the Sales Agreement at an average price of $3.59 per share for aggregate net proceeds of approximately $0.3 million. There remains approximately $39.2 million available for future sales of shares of common stock under the Sales Agreement as of June 30, 2023. Other than the Sales Agreement, we currently do not have any commitments to obtain additional funds.

In December 2020, together with our wholly-owned subsidiary, SLSG Limited, LLC, we entered into the 3DMed License Agreement pursuant to which we granted 3DMed a sublicensable royalty-bearing license under certain intellectual property owned or controlled by us, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS product candidates for all therapeutic and other diagnostic uses in the 3DMed Territory. To date, we have received $10.5 million in upfront payments and certain technology transfer and regulatory milestones. 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 in 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 June 30, 2023, which milestones are all variable in nature and not under our control.

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Funding Requirements

As of June 30, 2023, we had an accumulated deficit of $199.8 million, cash and cash equivalents of $13.8 million and restricted cash and cash equivalents of $0.1 million. In addition, we had current liabilities of $13.4 million as of June 30, 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 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.

Cash Flows

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

	Six Months Ended June 30,
	2023		2022
Net cash (used in) provided by:
Operating activities	$	(19,693)	$	(12,911)
Investing activities	(2,500)		(4,500)
Financing activities	18,875		23,043
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	$	(3,318)	$	5,632

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Net Cash Used in Operating Activities

Net cash used in operating activities of $19.7 million during the six months ended June 30, 2023 was primarily attributable to our net loss of $19.9 million and net change in our operating assets and liabilities of approximately $1.1 million, which were partially offset by various net non-cash charges of $1.3 million. The net change in our operating assets and liabilities of $1.1 million is primarily attributable to an increase in prepaid expenses and other current assets of $1.1 million. Net non-cash charges were driven by $1.1 million in non-cash stock-based compensation and expense and $0.2 million in non-cash lease expense.

Net cash used in operating activities of $12.9 million during the six months ended June 30, 2022 was primarily attributable to our net loss of $25.2 million, which was partially offset by various net non-cash charges of $10.8 million and the net change in our operating assets and liabilities of approximately $1.5 million. Net non-cash charges were driven by $10.0 million in expense related to the acquired in-process research and development and $0.8 million in non-cash stock compensation expense. The net change in our operating assets and liabilities of $1.5 million is primarily attributable to an increase in accounts payable of $1.2 million and an increase in accrued expenses and other current liabilities of $0.4 million, which were partially offset by a decrease in operating lease liabilities of $0.1 million.

Net Cash Used in Investing Activities

Net cash used in investing activities of $2.5 million during the six months ended June 30, 2023 related to license payments made for the acquisition of in-process research and development under the GenFleet License Agreement.

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

Net Cash Provided by Financing Activities

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

We generated $23.0 million in net cash from financing activities during the six months ended June 30, 2022 that was due to $23.0 million in aggregate net proceeds received from our underwritten public offering, which closed in April 2022.

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

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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 June 30, 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
10.1	2023 Amended and Restated Equity Incentive Plan
10.2	Addendum to the Side Letter Agreement dated May 24, 2023 by and between the Registrant and 3DMedicines Inc.
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.

31

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: August 10, 2023
By:	/s/ John T. Burns
	John T. Burns, CPA
	Chief Financial Officer
	(Principal Financial and Principal Accounting Officer)
	Date: August 10, 2023

32

EX-10.1

SELLAS LIFE SCIENCES GROUP, INC.

2023 AMENDED AND RESTATED EQUITY INCENTIVE PLAN

Amended and Restated on June 20, 2023

1.DEFINITIONS.

Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Sellas Life Sciences Group, Inc. 2023 Amended and Restated Equity Incentive Plan, have the following meanings:

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the term “Administrator” means the Committee.

Affiliate means a corporation or other entity, which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

Agreement means a written or electronic document setting forth the terms of a Stock Right delivered pursuant to the Plan in such form as the Administrator shall approve.

Board of Directors means the Board of Directors of the Company.

Cause means, with respect to a Participant (a) dishonesty with respect to the Company or any Affiliate, (b) insubordination, substantial malfeasance or non-feasance of duty, (c) unauthorized disclosure of confidential information, (d) breach by a Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company or any Affiliate, and (e) conduct substantially prejudicial to the business of the Company or any Affiliate; provided, however, that any provision in an agreement between a Participant and the Company or an Affiliate, which contains a conflicting definition of Cause for termination and which is in effect at the time of such termination, shall supersede this definition with respect to that Participant. The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company.

Change of Control means the occurrence of any of the following events:

Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose any such voting securities held by the Company or its Affiliates or by any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or

Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as

the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval; or

Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date of initial adoption of this Plan, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company) provided, that if any payment or benefit payable hereunder upon or following a Change of Control would be required to comply with the limitations of Section 409A(a)(2)(A)(v) of the Code in order to avoid an additional tax under Section 409A of the Code, such payment or benefit shall be made only if such Change of Control constitutes a change in ownership or control of the Company, or a change in ownership of the Company’s assets in accordance with Section 409A of the Code.

Code means the United States Internal Revenue Code of 1986, as amended including any successor statute, regulation and guidance thereto.

Committee means the committee of the Board of Directors, if any, to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.

Common Stock means shares of the Company’s common stock, $0.0001 par value per share.

Company means Sellas Life Sciences Group, Inc., a Delaware corporation.

Consultant means any natural person who is an advisor or consultant who provides bona fide services to the Company or its Affiliates, provided that such services are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s or its Affiliates’ securities.

Corporate Transaction means a merger, consolidation, or sale of all or substantially all of the Company’s assets or the acquisition of all of the outstanding voting stock of the Company in a single transaction or a series of related transactions by a single entity other than a transaction to merely change the state of incorporation.

Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.

Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.

Exchange Act means the United States Securities Exchange Act of 1934, as amended.

Fair Market Value of a Share of Common Stock means:

If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common Stock, the closing or, if not applicable, the last price of the Common Stock on the composite tape or other comparable reporting system for the trading day on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date;

If the Common Stock is not traded on a national securities exchange but is traded on the over-the- counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the most recent trading day on which Common Stock was traded on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date; and

If the Common Stock is neither listed on a national securities exchange nor traded in the over-the- counter market, such value as the Administrator, in good faith, shall determine in compliance with applicable laws.

ISO means a stock option intended to qualify as an incentive stock option under Section 422 of the Code.

Non-Qualified Option means a stock option which is not intended to qualify as an ISO. Option means an ISO or Non-Qualified Option granted under the Plan.

Participant means an Employee, director or Consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.

Performance-Based Award means a Stock Grant or Stock-Based Award which vests based on the attainment of written Performance Goals as set forth in Paragraph 9 hereof.

Performance Goals means performance goals determined by the Committee in its sole discretion and set forth in an Agreement. The satisfaction of Performance Goals shall be subject to certification by the Committee. The Committee has the authority to take appropriate action with respect to the Performance Goals (including, without limitation, making adjustments to the Performance Goals or determining the satisfaction of the Performance Goals in connection with a Corporate Transaction) provided that any such action does not otherwise violate the terms of the Plan.

Plan means this Sellas Life Sciences Group, Inc. 2023 Amended and Restated Equity Incentive Plan.

Securities Act means the United States Securities Act of 1933, as amended.

Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.

Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award, which is not an Option or a Stock Grant.

Stock Grant means a grant by the Company of Shares under the Plan.

Stock Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award.

Survivor means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution.

2.     PURPOSES OF THE PLAN.

The Plan is intended to encourage ownership of Shares by Employees and directors of and certain Consultants to the Company and its Affiliates in order to attract and retain such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.

3.    SHARES SUBJECT TO THE PLAN.

(a)    The number of Shares of Common Stock which may be issued from time to time pursuant to this Plan shall be the aggregate of (A) 3,882,694 Shares, for new awards, which is the sum of (1) 3,000,000 Shares plus (2) 882,694 Shares, which is the number of Shares remaining available for grant under the Plan as of June 20, 2023, (B) 2,098,023 Shares underlying awards outstanding under the Plan as of June 20, 2023, and (C) up to 21,520 Shares that are represented by awards granted under the Company’s 2017 Equity Incentive Plan that are forfeited, expire or are cancelled without delivery of shares of Common Stock or which result in the forfeiture of shares of Common Stock back to the Company on or after June 20, 2023, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 25 of this Plan.

(b)    If an Option ceases to be “outstanding”, in whole or in part (other than by exercise), or if the Company shall reacquire (at not more than its original issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the unissued or reacquired Shares which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan.

Notwithstanding the foregoing, if a Stock Right is exercised, in whole or in part, by tender or withholding of Shares or if the Company or an Affiliate’s tax withholding obligation is satisfied by the tender or withholding of Shares, the number of Shares deemed to have been issued under the Plan for purposes of the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to the Stock Right or portion thereof, and not the net number of Shares actually issued. In addition, Shares repurchasedby the Company with the proceeds of the option exercise price may not be reissued under the Plan. However, in the case of ISOs, the foregoing provisions shall be subject to any limitations under the Code.

(c)    The maximum number of Shares that may be issued as ISOs under the Plan shall be eighty million (80,000,000).

4.    ADMINISTRATION OF THE PLAN.

The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:

(a)    Interpret the provisions of the Plan and all Stock Rights and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan;

(b)    Determine which Employees, directors and Consultants shall be granted Stock Rights;

(c)    Determine the number of Shares for which a Stock Right or Stock Rights shall be granted, provided however that in no event shall the aggregate grant date fair value of Stock Rights to be granted to any non-employee director under the Plan in any calendar year, taken together with any cash fees paid by the Company to such non-employee director during such calendar year for service on the Board of Directors, exceed four hundred thousand dollars ($400,000), except that the foregoing limitation shall not apply to awards granted to a non-employee director in the calendar year in which the director is first appointed or elected to the Board of Directors;

(d)    Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted provided that no dividends or dividend equivalents shall be paid on any Stock Right prior to the vesting of the underlying Shares;

(e)    Amend any term or condition of any outstanding Stock Right, other than reducing the exercise price or purchase price or extending the expiration date of an Option, provided that (i) such term or condition as amended is not prohibited by the Plan; (ii) any such amendment shall not impair the rights of a Participant under any Stock Right previously granted without such Participant’s consent or in the event of death of the Participant the Participant’s Survivors; and (iii) any such amendment shall be made only after the Administrator determines whether such amendment would cause any adverse tax consequences to the Participant, including, but not limited to, the annual vesting limitation contained in Section 422(d) of the Code and described in Paragraph 6(b)(iv) below with respect to ISOs and pursuant to Section 409A of the Code;

(f)    Determine and make any adjustments in the Performance Goals included in any Performance-Based Awards in compliance with (d) above; and

(g)    Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax or other laws applicable to the Company, any Affiliate or to Participants or to otherwise facilitate the administration of the Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Rights or Shares issuable pursuant to a Stock Right; provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed

in the context of potential tax consequences under Section 409A of the Code and preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs.

Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee.

To the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it. The Board of Directorsor the Committee may revoke any such allocation or delegation at any time. Notwithstanding the foregoing, only the Board of Directors or the Committee shall be authorized to grant a Stock Right to any directorof the Company or to any “officer” of the Company as defined by Rule 16a-1 under the Exchange Act.

5.    ELIGIBILITY FOR PARTICIPATION.

The Administrator will, in its sole discretion, name the Participants in the Plan; provided, however, that each Participant must be an Employee, director or Consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or Consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to Employees who are deemed to be residents of the United States for tax purposes. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or Consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights or any grant under any other benefit plan established by the Company or any Affiliate for Employees, directors or Consultants.

6.    TERMS AND CONDITIONS OF OPTIONS.

Each Option shall be set forth in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions:

(a)    Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option:

(i)    Exercise Price: Each Option Agreement shall state the exercise price (per share) of the Shares covered by each Option, which exercise price shall be determined by the Administrator and shall be at least equal to the Fair Market Value per share of the Common Stock on the date of grant of the Option.

(ii)    Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains.

(iii)    Vesting: Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain performance conditions or the attainment of stated goals or events.

(iv)    Additional Conditions: Exercise of any Option may be conditioned upon the Participant’s execution of a shareholders agreement in a form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that:

A.    The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and

B.    The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions.

(v)    Term of Option: Each Option shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide.

(b)    ISOs: Each Option intended to be an ISO shall be issued only to an Employee who is deemed to be a resident of the United States for tax purposes, and shall be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service:

(i)    Minimum Standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(a) above, except clause (i) and (v) thereunder.

(ii)    Exercise Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code:

A.    10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Common Stock on the date of grant of the Option; or

B.    More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each

ISO shall not be less than 110% of the Fair Market Value per share of the Common Stock on the date of grant of the Option.

(iii)    Term of Option: For Participants who own:

A.    10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or

B.    More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide.

(iv)    Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined on the date each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000.

7.    TERMS AND CONDITIONS OF STOCK GRANTS.

Each Stock Grant to a Participant shall state the principal terms in an Agreement duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:

(a)    Each Agreement shall state the purchase price per share, if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law, if any, on the date of the grant of the Stock Grant;

(b)    Each Agreement shall state the number of Shares to which the Stock Grant pertains;

(c)    Each Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant, including the time period or attainment of Performance Goals or such other performance criteria upon which such rights shall accrue and the purchase price therefor, if any; and

(d)    Dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) may accrue but shall not be paid prior to the time, and may be paid only to the extent that the restrictions or rights to reacquire the Shares subject to the Stock Grant lapse.

8.    TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.

The Administrator shall have the right to grant other Stock-Based Awards based upon the Common Stock having such terms and conditions as the Administrator may determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock units. The principal terms of each Stock- Based Award shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the

Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company. Each Agreement shall include the terms of any right of the Company including the right to terminate the Stock-Based Award without the issuance of Shares, the terms of any vesting conditions, Performance Goals or events upon which Shares shall be issued, provided that dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) or dividend equivalents may accrue but shall not be paid prior to and may be paid only to the extent that the Shares subject to the Stock-Based Award vest. Under no circumstances may the Agreement covering stock appreciation rights (a) have an exercise or base price (per share) that is less than the Fair Market Value per share of Common Stock on the date of grant or (b) expire more than ten years following the date of grant.

The Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4) of subsection (a) of Section 409A of the Code, to the extent applicable, and be operated in accordance with Section 409A so that any compensation deferred under any Stock-Based Award (and applicable investment earnings) shall not be included in income under Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as described in this Paragraph 8.

9.    PERFORMANCE-BASED AWARDS.

The Committee shall determine whether, with respect to a performance period, the applicable Performance Goals have been met with respect to a given Participant and, if they have, to so certify and ascertain the amount of the applicable Performance-Based Award. No Performance-Based Awards will be issued for such performance period until such certification is made by the Committee. The number of Shares issued in respect of a Performance-Based Award determined by the Committee for a performance period shall be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such performance period, and any dividends (other than stock dividends to be issued pursuant to Section 25 of the Plan) or dividend equivalents that accrue shall only be paid in respect of the number of Shares earned in respect of such Performance-Based Award.

10.    EXERCISE OF OPTIONS AND ISSUE OF SHARES.

An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee (in a form acceptable to the Administrator, which may include electronic notice), together with provision for payment of the aggregate exercise price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable to the Administrator), shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement. Payment of the exercise price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check; or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) having a Fair Market Value equal as of the date of the exercise to the aggregate cash exercise price for the number of Shares as to

which the Option is being exercised; or (c) at the discretion of the Administrator, by having the Company retain from the Shares otherwise issuable upon exercise of the Option, a number of Shares having a Fair Market Value equal as of the date of exercise to the aggregate exercise price for the number of Shares as to which the Option is being exercised; or (d) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator; or (e) at the discretion of the Administrator, by any combination of (a), (b), (c) and (d) above or (f) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.

The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be fully paid, non-assessable Shares.

11.    PAYMENT IN CONNECTION WITH THE ISSUANCE OF STOCK GRANTS AND STOCK- BASED AWARDS AND ISSUE OF SHARES.

Any Stock Grant or Stock-Based Award requiring payment of a purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being granted shall be made (a) in United States dollars in cash or by check; or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) and having a Fair Market Value equal as of the date of payment to the purchase price of the Stock Grant or Stock-Based Award; or (c) at the discretion of the Administrator, by any combination of (a) and (b) above; or (d) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine.

The Company shall when required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was made to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.

12.    RIGHTS AS A SHAREHOLDER.

No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right except after due exercise of an Option or issuance of Shares as set forth in any Agreement, tender of the aggregate exercise or purchase price, if any, for the Shares being purchased and registration of the Shares in the Company’s share register in the name of the Participant.

13.    ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Agreement provided that no Stock Right may be transferred by a Participant for value. Notwithstanding the foregoing, an ISO transferred except in compliance with clause(i) above shall no longer qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above during the Participant’s lifetime a Stock Right shall only be exercisable by or issued to such Participant (or his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.

14.    EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY.

Except as otherwise provided in a Participant’s Option Agreement, in the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:

(a)    A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate (for any reason other than termination for Cause, Disability, or death for which events there are special rules in Paragraphs 15, 16, and 17, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in a Participant’s Option Agreement.

(b)    Except as provided in Subparagraph (c) below, or Paragraph 16 or 17, in no event may an Option intended to be an ISO, be exercised later than three months after the Participant’s termination of employment.

(c)    The provisions of this Paragraph, and not the provisions of Paragraph 16 or 17, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy; provided, however, in the case of a Participant’s Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one year after the date of the Participant’s termination of service, but in no event after the date of expiration of the term of the Option.

(d)    Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Administrator determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then such Participant shall forthwith cease to have any right to exercise any Option.

(e)    A Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide; provided, however, that, for ISOs, any leave of absence granted by the Administrator of greater than three months, unless pursuant to a contract or statute that guarantees the right to reemployment, shall cause such ISO to become a Non-Qualified Option on the date that is six months following the commencement of such leave of absence.

(f)    Except as required by law or as set forth in a Participant’s Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.

15.    EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.

Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have been exercised:

(a)    All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated for Cause will immediately be forfeited.

(b)    Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then the right to exercise any Option is forfeited

16.    EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in a Participant’s Option Agreement:

(a)    A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant to the extent that the Option has become exercisable but has not been exercised on the date of the Participant’s termination of service due to Disability; and in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of the Participant’s termination of service due to Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service due to Disability.

(b)    A Disabled Participant may exercise the Option only within the period ending one year after the date of the Participant’s termination of service due to Disability, notwithstanding that the Participant might have been able to exercise the Option as to some or all

of the Shares on a later date if the Participant had not been terminated due to Disability and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option.

(c)    The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

17.    EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in a Participant’s Option Agreement:

(a)    In the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate, such Option may be exercised by the Participant’s Survivors to the extent that the Option has become exercisable but has not been exercised on the date of death; and in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death.

(b)    If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option.

18.    EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS AND STOCK- BASED AWARDS.

In the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant or a Stock-Based Award and paid the purchase price, if required, such grant shall terminate.

For purposes of this Paragraph 18 and Paragraph 19 below, a Participant to whom a Stock Grant or a Stock-Based Award has been issued under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.

In addition, for purposes of this Paragraph 18 and Paragraph 19 below, any change of employment or other service within or among the Company and any Affiliates shall not be

treated as a termination of employment, director status or consultancy so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.

19.    EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE, DEATH OR DISABILITY.

Except as otherwise provided in a Participant’s Agreement, in the event of a termination of service for any reason (whether as an Employee, director or Consultant), other than termination for Cause, death or Disability for which there are special rules in Paragraphs 20, 21, and 22 below, before all forfeiture provisions or Company rights of repurchase shall have lapsed, then the Company shall have the right to cancel or repurchase that number of Shares subject to a Stock Grant or Stock-Based Award as to which the Company’s forfeiture or repurchase rights have not lapsed.

20.    EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR CAUSE.

Except as otherwise provided in a Participant’s Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause:

(a)    All Shares subject to any Stock Grant or Stock-Based Award that remain subject to forfeiture provisions or as to which the Company shall have a repurchase right shall be immediately forfeited to the Company as of the time the Participant is notified his or her service is terminated for Cause.

(b)    Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then all Shares subject to any Stock Grant or Stock-Based Award that remained subject to forfeiture provisions or as to which the Company had a repurchase right on the date of termination shall be immediately forfeited to the Company.

21.    EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in a Participant’s Agreement, the following rules apply if a Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-Based Award through the date of Disability as would have lapsed had the Participant not become Disabled. The proration shall be based upon the number of days accrued prior to the date of Disability.

The Administrator shall make the determination both as to whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure

shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

22.    EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in a Participant’s Agreement, the following rules apply in the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such forfeiture provisionsor rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-Based Award through the date of death as wouldhave lapsed had the Participant not died. The proration shall be based upon the number of days accrued prior to the Participant’s date of death.

23.    PURCHASE FOR INVESTMENT.

Unless the offering and sale of the Shares shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue Shares under the Plan unless and until the following conditions have been fulfilled:

(a)    The person who receives a Stock Right shall warrant to the Company, prior to the receipt of Shares, that such person is acquiring such Shares for his or her own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person acquiring such Shares shall be bound by the provisions of the following legend (or a legend in substantially similar form) which shall be endorsed upon the certificate evidencing the Shares issued pursuant to such exercise or such grant of a Stock Right:

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

(b)    At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued in compliance with the Securities Act without registration thereunder.

24.    DISSOLUTION OR LIQUIDATION OF THE COMPANY.

Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted, to the extent required under the applicable Agreement, will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to

exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation.

Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement.

25.    ADJUSTMENTS.

Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participant’s Agreement.

(a)    Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, each Stock Right and the number of shares of Common Stock deliverable thereunder shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made including, in the exercise, base or purchase price per share and in the Performance Goals applicable to outstanding Performance-Based Awards to reflect such events. The number of Shares subject to the limitations in Paragraph 3 and 4(c) shall also be proportionately adjusted upon the occurrence of such events.

(b)    Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in a Corporate Transaction, the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either:

(i)    make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or

(ii)    upon written notice to the Participants, provide that such Options must be exercised (either (A) to the extent then exercisable or (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period such Options which have not been exercised shall terminate; or

(iii)    terminate such Options in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock into which such Option would have been exercisable (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph) less the aggregate exercise price thereof. For purposes of determining the payments to be made pursuant to Subclause (iii) above, in the case of a Corporate Transaction the consideration for which, in

whole or in part, is other than cash, the consideration other than cash shall be valued at the fair value thereof as determined in good faith by the Board of Directors.

With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall make appropriate provision for the continuation of such Stock Grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity. In lieu of the foregoing, in connection with any Corporate Transaction, the Administrator may provide that, upon consummation of the Corporate Transaction, each outstanding Stock Grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of thenumber of shares of Common Stock comprising such Stock Grant (to the extent such Stock Grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Administrator, all forfeiture and repurchase rights being waived upon such Corporate Transaction).

In taking any of the actions permitted under this Paragraph 25(b), the Administrator shall not be obligated by the Plan to treat all Stock Rights, all Stock Rights held by a Participant, or all Stock Rights of the same type, identically.

Notwithstanding the foregoing, in the event the Corporate Transaction also constitutes a Change of Control, then all Stock Rights outstanding on the date of the Corporate Transaction shall vest in full immediately prior to the occurrence of the Change of Control, unless such Stock Rights are to be assumed or continued by the acquiring or surviving entity in the Corporate Transaction as provided above, in which case such Stock Rights shall vest in full in the event the Participant is terminated without cause within12 months following the occurrence of the Change of Control.

A Stock Right may be subject to additional acceleration of vesting and exercisability upon or after a Change of Control as may be provided in the Agreement for such Stock Right, in any other written agreement between the Company or any Affiliate and the Participant or in any director compensation policy of the Company.

(c)    Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company other than a Corporate Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the recapitalization or reorganization shall be entitled to

receive for the price paid upon such exercise or acceptance if any, the number of replacement securities which would have been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization.

(d)    Adjustments to Stock-Based Awards. Upon the happening of any of the events described in Subparagraphs (a), (b) or (c) above, any outstanding Stock-Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator or the Successor Board shall determine the specific adjustments to be made under this Paragraph 25, including, but not limited to the effect of

any, Corporate Transaction and Change of Control and, subject to Paragraph 4, its determination shall be conclusive.

(e)    Modification of Options. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph (a), (b) or (c) above with respect to Options shall be made only after the Administratordetermines whether such adjustments would (i) constitute a “modification” of any ISOs (as that term is defined in Section 424(h) of the Code) or (ii) cause any adverse tax consequences for the holders of Options, including, but not limited to, pursuant to Section 409A of the Code. If the Administrator determines that such adjustments made with respect to Options would constitute a modification or other adverse tax consequence, it may in its discretion refrain from making such adjustments, unless the holder of an Option specifically agrees in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the Option. This paragraph shall not apply to the acceleration of the vesting of any ISO that would cause any portion of the ISO to violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6(b)(iv).

26.    ISSUANCES OF SECURITIES.

Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right.

27.    FRACTIONAL SHARES.

No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.

28.    WITHHOLDING.

In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or other remuneration in connection with the issuanceof a Stock Right or Shares under the Plan or for any other reason required by law, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner set forth under the definition of Fair Market Value provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the Fair Market Value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer.

20.    NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any Shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such Shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before such Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

30.    TERMINATION OF THE PLAN.

The Plan will terminate on March 2, 2033, the date which is ten years from the earlier of the date of its adoption by the Board of Directors and the date of its approval by the shareholders of the Company. The Plan may be terminated at an earlier date by vote of the shareholders or the Board of Directors of the Company; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination. Termination of the Plan shall not affect any Stock Rights theretofore granted.

31.    AMENDMENT OF THE PLAN AND AGREEMENTS.

The Plan may be amended by the shareholders of the Company. The Plan may also be amended by the Administrator; provided that any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment as may be afforded ISOs under Section 422 of the Code and to the extent necessary to qualify the Shares issuable under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers. Other than as set forth in Paragraph 25 of the Plan, the Administrator may not, without shareholder approval, reduce the exercise price of an Option or take any other action that is considered a direct or indirect “repricing” for purposes of the shareholder approvalrules of the applicable securities exchange or inter-dealer quotation system on which the Shares are listed, including any other action that is treated as a repricing under generally accepted accounting principles. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affecthis or her rights under a Stock Right previously granted to him or her, unless such amendment is required by applicable law or necessary to preserve the economic value of such Stock Right. With the consent of the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant. Nothing in this Paragraph 31 shall limit the Administrator’s authority to take any action permitted pursuant to Paragraph 25.

32.    EMPLOYMENT OR OTHER RELATIONSHIP.

Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to

prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.

33.    SECTION 409A.

If a Participant is a “specified employee” as defined in Section 409A of the Code (and as applied according to procedures of the Company and its Affiliates) as of his separation from service, to the extent any payment under this Plan or pursuant to the grant of a Stock-Based Award constitutes deferred compensation (after taking into account any applicable exemptions from Section 409A of the Code), and to the extent required by Section 409A of the Code, no payments due under this Plan or pursuant to a Stock- Based Award may be made until the earlier of: (i) the first day of the seventh month following the Participant’s separation from service, or (ii) the Participant’s date of death; provided, however, that any paymentsdelayed during this six-month period shall be paid in the aggregate in a lump sum, without interest, on the first day of the seventh month following the Participant’s separation from service.

The Administrator shall administer the Plan with a view toward ensuring that Stock Rights under the Plan that are subject to Section 409A of the Code comply with the requirements thereof and that Options under the Plan be exempt from the requirements of Section 409A of the Code, but neither the Administrator nor any member of the Board of Directors, nor the Company nor any of its Affiliates, nor any otherperson acting hereunder on behalf of the Company, the Administrator or the Board of Directors shall be liable to a Participant or any Survivor by reason of the acceleration of any income, or the imposition of any additional tax or penalty, with respect to a Stock Right, whether by reason of a failure to satisfy the requirements of Section 409A of the Code or otherwise.

34.    INDEMNITY.

Neither the Board of Directors nor the Administrator, nor any members of either, nor any employees of the Company or any parent, subsidiary, or other Affiliate, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with their responsibilities with respect to this Plan, and the Company hereby agrees to indemnify the members of the Board of Directors, the members of the Committee, and the employees of the Company and its parent or subsidiaries inrespect of any claim, loss, damage, or expense (including reasonable counsel fees) arising from any such act, omission, interpretation, construction or determination to the full extent permitted by law.

35.    CLAWBACK.

Notwithstanding anything to the contrary contained in this Plan, the Company may recover from a Participant any compensation received from any Stock Right (whether or not settled) or cause a Participant to forfeit any Stock Right (whether or not vested) in the event that the Company’s Clawback Policy asthen in effect is triggered.

36.    GOVERNING LAW.

This Plan shall be construed and enforced in accordance with the law of the State of Delaware.

EX-10.2

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE SELLAS LIFE SCIENCES GROUP, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO SELLAS LIFE SCIENCES GROUP, INC. IF PUBLICLY DISCLOSED

Addendum to the Side Letter Agreement

between

3D Medicines Inc.

and

SELLAS Life Sciences Group, Inc.

This Addendum (this “Addendum”) to the Side Letter Agreement is made as of May 5, 2023 (the “Effective Date”), by and between SELLAS Life Sciences Group, Inc., (“SELLAS”), 3D Medicines Inc. (“3D Medicines”) and 3D Medicines (Qingdao) Co., Ltd. (“3D Medicines (Qingdao),” a wholly-owned subsidiary of 3D Medicines Inc.), with the address at No. 70 Qutangxia Road, Shinan District, Qingdao, Shandong Province, China., for the research and development of SELLAS’ candidate product, Galinpepimut-S (GPS, 3D189) (the “Study Drug”). The parties to this Addendum are individually referred to as a “Party” and collectively referred to as the “Parties”.

RECITALS

WHEREAS, 3D Medicines entered into an Exclusive License Agreement dated December 7, 2020, by and among SELLAS and SLSG Limited, LLC (the “License Agreement”);

WHEREAS, SELLAS is currently conducting a Phase III clinical trial of the Study Drug in patients with Acute Myeloid Leukemia (the “Study”), having a protocol titled, “A Randomized, Open-Label Study of the Efficacy and Safety of Galinpepimut-S (GPS) Maintenance Monotherapy Compared to Investigator's Choice of Best Available Therapy in Subjects with Acute Myeloid Leukemia Who Have Achieved Complete Remission After Second-Line Salvage Therapy” (the “Protocol”).

WHEREAS, to conduct the Study in Institutions located in mainland China, 3D Medicines and SELLAS signed a Side Letter Agreement (the “Side Letter”) on November 23, 2022, which set forth the responsibilities of each Party in the conduct of the Study in mainland China.

WHEREAS, in accordance with applicable Chinese laws and regulations, 3D Medicines (Qingdao) is authorized to assume the responsibilities and right of the Sponsor to conduct, implement, and manage the Study.

THEREFORE, the Parties agree as follows:

1. Definitions.

All capitalized or defined terms in this Addendum shall have the same meaning as specified in the License Agreement and the Side letter.

“SOP” means Standard Operating Procedure.

“eTMF system” means electronic Trial Master File System.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE SELLAS LIFE SCIENCES GROUP, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO SELLAS LIFE SCIENCES GROUP, INC. IF PUBLICLY DISCLOSED

2. Responsibilities of the Parties

Clinical Trial Agreements, Study Budget, and Additional Study Costs

2.1 3D Medicines (Qingdao) shall enter into a Clinical Trial Agreement with each Institution on behalf of SELLAS upon (1) SELLAS’ consent that the Institution may conduct the Study and (2) SELLAS’ review and approval of the proposed Clinical Trial Agreement and Study budget from that Institution.

2.2    Additional Study Costs. Prior to incurring any additional expenses or costs that are not included in any Clinical Trial Agreement, but are associated with conducting the Study at the Institutions (such as GCP office review fee, ethical review fee, project initiation fee, office supplies fee, etc.) (“Additional Study Costs”), 3D Medicines and/or 3D Medicines (Qingdao) shall (1) submit to SELLAS an estimate or budget of the Additional Study Costs and (2) obtain SELLAS’ approval of the Additional Study Costs. Any documentation supporting or explaining the Additional Study Costs should also be submitted to SELLAS for consideration.

2.3    The total budget to conduct the Study in China at all planned Institutions (“Total Budget”), exclusive of the Local Vendors (as defined below), is [***]. If the final and total cost to conduct and complete the Study in China at all Institutions under fully executed Clinical Trial Agreements [***], then 3D Medicines and/or 3D Medicines Qingdao shall [***] notify SELLAS’ Clinical Operations, Alliance Manager, and Finance Department, and obtain written approval [***] from SELLAS’ Finance Department [***].

2.4    SELLAS will reimburse 3D Medicines (Qingdao) for [***].

Local Vendors in China

2.5    As set forth in the Side Letter, where possible, SELLAS shall enter into contracts directly with local vendors in China, such as drug depot and SMO (“Local Vendors”). If it is not possible for SELLAS to do so, then 3D Medicines (Qingdao) may enter into contracts directly with Local Vendors on behalf of SELLAS only for purposes of the Study.

2.6    Prior to entering into a contract with any Local Vendors as set forth in the Side Letter and this Addendum, 3D Medicines (Qingdao) shall (1) provide to SELLAS financial proposals/budgets from each Local Vendor, (2) allow SELLAS to review and comment on financial proposals/budgets and the proposed contract from each Local Vendor, and (3) obtain SELLAS’ approval of the financial proposals/budgets and contract from each Local Vendor. 3D Medicines (Qingdao) shall not sign any contract with any Local Vendors without first obtaining SELLAS’ approval of the financial proposals/budgets and final contract.

2.7    [***] payments made by 3D Medicines (Qingdao) to each Local Vendor pursuant to a fully executed contract [***] as described in Section 2.5 above will be reimbursed by SELLAS [***]. If

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE SELLAS LIFE SCIENCES GROUP, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO SELLAS LIFE SCIENCES GROUP, INC. IF PUBLICLY DISCLOSED

any fees, expenses, or costs to a Local Vendor [***], then 3D Medicines (Qingdao) must first obtain SELLAS’ approval [***].

3.Invoices and Payments

3.1 [***].

3.2    The Study Costs and Additional Study Costs. 3D Medicines and SELLAS shall reconcile on [***] the Study Costs and Additional Study Costs incurred by 3D Medicines and/or 3D Medicines (Qingdao) in the [***]. Following such reconciliation, 3D Medicines will issue a reconciliation statement for Study Costs and Additional Study Costs. Within [***] reconciliation statement, SELLAS shall inform 3D Medicines whether SELLAS approves or disputes the statement. Following such approval, 3D Medicines may [***].

3.3    Local Vendors. 3D Medicines shall submit an invoice on [***]. SELLAS shall pay [***].

3.4    Each statement shall be in English [***] and contain the following information: (1) the name and address of the Institution or Local Vendor; (2) date(s) of the services or incurrence of the fees and/or costs; (3) a description of the services or deliverables provided or work completed, and itemization of the fees and/or costs charged; (4) the amount of the fees and/or costs owed [***]; and (4) any other documentation supporting or explaining the fees and/or costs.

3.5    SELLAS may withhold any invoice amounts that it disputes, in which case SELLAS will so notify 3D Medicines and the Parties agree to work in good faith to resolve any such disputes.

3.6    In addition to [***] invoicing, 3D Medicines and/or 3D Medicines (Qingdao) shall also provide SELLAS, on, with an estimate of any Study Costs, Additional Study Costs, and fees/costs with Local Vendors [***].

3.7 Payment. The Parties agree that payments referred to in this Addendum shall be made by SELLAS to 3D Medicines in [***].

4. Default. If SELLAS fails to pay any undisputed invoice as set forth in this Addendum, then 3D Medicines and/or 3D Medicines (Qingdao)3D Medicines and 3D Medicines(Qingdao) may, at their option exercise any and all rights and remedies available to 3D Medicines and 3D Medicines (Qingdao) at law, and may immediately terminate this Addendum.

5. The Study conducted in China shall comply with all applicable laws, regulations, the Protocol and [***] SOP.

6. Miscellaneous.

6.1    All the Study documents associated with this Study in China will be uploaded to [***] eTMF system.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE SELLAS LIFE SCIENCES GROUP, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO SELLAS LIFE SCIENCES GROUP, INC. IF PUBLICLY DISCLOSED

6.2    In case of any conflicts between this Addendum and the Exclusive License Agreement or the Side Letter, the Exclusive License Agreement controls and governs. In the event of a conflict between this Addendum and the Side Letter, this Addendum controls and governs. All other terms and conditions of the Exclusive License Agreement and the Side Letter shall remain unchanged and shall have full force and effect between the Parties.

6.3    This Addendum may be executed in two or more counterparts by original signature, facsimile or PDF files, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signatures on following page.]

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE SELLAS LIFE SCIENCES GROUP, INC. HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO SELLAS LIFE SCIENCES GROUP, INC. IF PUBLICLY DISCLOSED

IN WITNESS WHEREOF, the Parties intending to be bound have caused this Addendum to be executed by their duly authorized representatives as of the Effective Date.

SELLAS Life Sciences Group, Inc.		3D Medicines Inc.
By:	/s/ Angelos M. Stergiou	By:	/s/ Shen Xiao
Name:	Angelos M. Stergiou	Name:	Shen Xiao
Title:	President & CEO	Title:	Chief Medical Officer
Date:	May 24, 2023	Date:	May 16, 2023
3D Medicines (Qingdao) Co., Ltd.
By:	/s/ Shen Xiao
Name:	Shen Xiao
Title:	Chief Scientific Officer
Date:	May 16, 2023

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: August 10, 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: August 10, 2023

/s/ John T. Burns

John T. Burns, CPA

Chief Financial Officer
(Principal Financial 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 June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

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

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

By:	/s/ Angelos M. Stergiou
	Angelos M. Stergiou, MD, ScD h.c.
	President and Chief Executive Officer (Principal Executive Officer)
	Date: August 10, 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 June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

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

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

By:	/s/ John T. Burns
	John T. Burns, CPA
	Chief Financial Officer (Principal Financial and Principal Accounting Officer)
	Date: August 10, 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	6 Months Ended
	Jun. 30, 2023	Aug. 09, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-33958
Entity Registrant Name	SELLAS Life Sciences Group, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-8099512
Entity Address, Address Line One	7 Times Square, Suite 2503,
Entity Address, City or Town	New York,
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10036
City Area Code	(646)
Local Phone Number	200-5278
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	SLS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		28,347,920
Entity Central Index Key	0001390478
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 13,807	$ 17,125
Restricted cash and cash equivalents	100	100
Prepaid expenses and other current assets	1,674	531
Total current assets	15,581	17,756
Operating lease right-of-use assets	690	874
Goodwill	1,914	1,914
Deposits and other assets	381	399
Total assets	18,566	20,943
Current liabilities:
Accounts payable	3,734	3,357
Accrued expenses and other current liabilities	6,240	6,286
Operating lease liabilities	447	372
Acquired in-process research and development payable	3,000	5,500
Total current liabilities	13,421	15,515
Operating lease liabilities, non-current	302	573
Warrant liability	0	4
Total liabilities	13,723	16,092
Commitments and Contingencies
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 June 30, 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 June 30, 2023 and December 31, 2022, respectively	3	2
Additional paid-in capital	204,681	184,753
Accumulated deficit	(199,841)	(179,904)
Total stockholders’ equity	4,843	4,851
Total liabilities and stockholders’ equity	$ 18,566	$ 20,943

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	350,000,000	350,000,000
Common stock, shares issued (in shares)	28,347,920	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		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Licensing revenue	$ 0	$ 0	$ 0	$ 1,000,000
Operating expenses:
Cost of licensing revenue	0	0	0	100,000
Research and development	5,923,000	5,529,000	13,097,000	10,140,000
General and administrative	3,127,000	3,094,000	7,234,000	6,118,000
Acquired in-process research and development	0	0	0	10,000,000
Total operating expenses	9,050,000	8,623,000	20,331,000	26,358,000
Operating loss	(9,050,000)	(8,623,000)	(20,331,000)	(25,358,000)
Non-operating income:
Change in fair value of warrant liability	2,000	48,000	4,000	37,000
Change in fair value of contingent consideration	0	115,000	0	115,000
Interest income	208,000	46,000	390,000	48,000
Total non-operating income	210,000	209,000	394,000	200,000
Net loss	$ (8,840,000)	$ (8,414,000)	$ (19,937,000)	$ (25,158,000)
Per share information:
Net loss per common share, basic (in dollars per share)	$ (0.31)	$ (0.41)	$ (0.77)	$ (1.39)
Net loss per common share, diluted (in dollars per share)	$ (0.31)	$ (0.41)	$ (0.77)	$ (1.39)
Weighted-average common shares outstanding, basic (in shares)	28,347,920	20,286,624	25,961,001	18,104,176
Weighted-average common shares outstanding, diluted (in shares)	28,347,920	20,286,624	25,961,001	18,104,176

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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 and common stock warrants, net of issuance costs (in shares)		4,629,630
Issuance of common stock and common stock warrants, net of issuance costs	22,946		22,946
Issuance of common stock, net of issuance costs (in shares)		16,289
Issuance of common stock, net of issuance costs	50		50
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	825		825
Net loss	(25,158)			(25,158)
Ending balance (in shares) at Jun. 30, 2022		20,551,918
Ending balance at Jun. 30, 2022	19,057	$ 2	182,816	(163,761)
Beginning balance (in shares) at Mar. 31, 2022		15,905,999
Beginning balance at Mar. 31, 2022	4,025	$ 2	159,370	(155,347)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock and common stock warrants, net of issuance costs (in shares)		4,629,630
Issuance of common stock and common stock warrants, net of issuance costs	22,946		22,946
Issuance of common stock, net of issuance costs (in shares)		16,289
Issuance of common stock, net of issuance costs	50		50
Stock-based compensation	450		450
Net loss	(8,414)			(8,414)
Ending balance (in shares) at Jun. 30, 2022		20,551,918
Ending balance at Jun. 30, 2022	$ 19,057	$ 2	182,816	(163,761)
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	1,054		1,054
Net loss	$ (19,937)			(19,937)
Ending balance (in shares) at Jun. 30, 2023	28,347,920	28,347,920
Ending balance at Jun. 30, 2023	$ 4,843	$ 3	204,681	(199,841)
Beginning balance (in shares) at Mar. 31, 2023		28,347,920
Beginning balance at Mar. 31, 2023	13,169	$ 3	204,167	(191,001)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	514		514
Net loss	$ (8,840)			(8,840)
Ending balance (in shares) at Jun. 30, 2023	28,347,920	28,347,920
Ending balance at Jun. 30, 2023	$ 4,843	$ 3	$ 204,681	$ (199,841)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net loss	$ (19,937)	$ (25,158)
Adjustment to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development expense	0	10,000
Non-cash stock-based compensation	1,054	825
Non-cash lease expense	245	127
Change in fair value of common stock warrants	(4)	(37)
Change in fair value of contingent consideration	0	(115)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(1,125)	19
Accounts payable	377	1,195
Accrued expenses and other current liabilities	(46)	366
Operating lease liabilities	(257)	(133)
Net cash used in operating activities	(19,693)	(12,911)
Cash flows from investing activities:
Cash paid for acquisition of in-process research and development	(2,500)	(4,500)
Net cash used in investing activities	(2,500)	(4,500)
Cash flows from financing activities:
Proceeds from issuance of common stock and common stock warrants, net of issuance costs	18,554	22,946
Proceeds from issuance of common stock, net of issuance costs	268	50
Proceeds from employee stock purchases	53	47
Net cash provided by financing activities	18,875	23,043
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	(3,318)	5,632
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	13,907	27,087
Supplemental disclosure of cash flow information:
Cash received during the period for interest	390	48
Supplemental disclosure of non-cash investing and financing activities:
Non-cash acquisition of in-process research and development	0	5,500
Increase in operating lease right-of-use assets and current and non-current operating lease liabilities	$ 0	$ 449

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Description of Business

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Description of Business

Overview

SELLAS Life Sciences Group, Inc. is a late-stage clinical biopharmaceutical company focused on novel therapeutics for a broad range of cancer indications. SELLAS’ lead product candidate, galinpepimut-S ("GPS"), is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center ("MSK") and targets the Wilms Tumor 1 ("WT1") protein, which is present in an array of tumor types. GPS has potential as a monotherapy or in combination with other immunotherapeutic agents to address a broad spectrum of hematologic, or blood, cancers and solid tumor indications. SELLAS' second product candidate is SLS009 (formerly GFH009), a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which the Company licensed from GenFleet Therapeutics (Shanghai), Inc. ("GenFleet"), for all therapeutic and diagnostic uses in the world outside of mainland China, Hong Kong, Macau and Taiwan ("SLS009 Territory").

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Liquidity

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Liquidity

Liquidity

Since inception, the Company has incurred recurring losses and negative cash flows from operations and, as of June 30, 2023, has an accumulated deficit of $199.8 million. During the six months ended June 30, 2023, the Company incurred a net loss of $19.9 million, and used $19.7 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 six months ended June 30, 2023, the Company sold a total of 76,882 shares of common stock pursuant to the Sales Agreement at an average price of $3.59 per share for aggregate net proceeds of approximately $0.3 million. There remains approximately $39.2 million available for future sales of shares of common stock under the Sales Agreement. 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 in 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 June 30, 2023, which milestones are all variable in nature and not under the Company's control.

As of June 30, 2023, the Company had cash and cash equivalents of approximately $13.8 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 consolidated 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

6 Months Ended

Jun. 30, 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 ("ASUs") of the Financial Accounting Standards Board ("FASB").

Principles of Consolidation

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

Unaudited Interim Results

These consolidated financial statements and accompanying notes should be read in conjunction with the Company's annual consolidated financial statements and the notes thereto included in the 2022 Annual Report. The accompanying consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022, are unaudited, but include all adjustments, consisting of normal recurring entries, that

management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2022 have been derived from the audited financial statements as of that date.

Reclassification

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

Net Loss Per Share

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

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

	Six Months Ended June 30,
	2023	2022
Common stock warrants	12,361	5,148
Stock options	1,665	1,012
Restricted stock units ("RSUs")	433	297
	14,459	6,457

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Fair Value Measurements

6 Months Ended

Jun. 30, 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	June 30, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	13,192	$	13,192	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	13,292	$	13,292	$	—	$	—
Liabilities:
Warrant liability	$	—	$	—	$	—	$	—
Total liabilities measured and recorded at fair value	$	—	$	—	$	—	$	—

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

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

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Acquired In-Process Research and Development

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Acquired In-Process Research and Development

Acquired In-Process Research and Development

Exclusive License Agreement with GenFleet Therapeutics (Shanghai) Inc.

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

In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $10.0 million, $7.0 million of which was paid as of June 30, 2023 and the remaining $3.0 million of which is expected to be paid during the third quarter of 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 SLS009 in the SLS009 Territory ranging from the low to high single digits.

During the six months ended June 30, 2022, the Company expensed $10.0 million related to the acquired technology as in-process research and development based on the assessment that the technology has no alternative future use, $7.0 million of which has been paid as of June 30, 2023, and the Company has recorded an acquired in-process research and development payable as of June 30, 2023 for the remaining $3.0 million which is expected to be paid during the third quarter of 2023.

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Balance Sheet Accounts

6 Months Ended

Jun. 30, 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):

	June 30, 2023		December 31, 2022
Insurance	$	1,123	$	219
Clinical development	375		184
Professional fees	176		82
Other	—		46
Prepaid expenses and other current assets	$	1,674	$	531

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

	June 30, 2023		December 31, 2022
Clinical trial costs	$	4,839	$	4,509
Compensation and related benefits	1,111		1,439
Professional fees	208		338
Other	82		—
Accrued expenses and other current liabilities	$	6,240	$	6,286

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Commitments and Contingencies

6 Months Ended

Jun. 30, 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 June 30, 2023, the leases have a remaining term of 1.5 years.

Rent expense related to the Company's operating leases was approximately $0.1 million for each of the three months ended June 30, 2023 and 2022 and $0.2 million for each of the six months ended June 30, 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 June 30, 2023 and 2022 and $0.3 million and $0.2 million for the six months ended June 30, 2023 and 2022, respectively.

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

Future minimum lease payments:
2023 (remaining)	$	261
2024	533
Total future minimum lease payments	794
Less: imputed interest	(45)
Current and non-current operating lease liabilities	$	749

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 June 30, 2023, there was no pending or threatened litigation.

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Stockholders' Equity

6 Months Ended

Jun. 30, 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 June 30, 2023 and December 31, 2022.

Common Stock

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

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

Warrants outstanding	12,361
Stock options outstanding	1,665
RSUs outstanding	433
Shares reserved for future issuance under the Company’s 2019 Equity Incentive Plan	3,883
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan	229
Total common stock reserved for future issuance	18,571

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Warrants to Acquire Shares of Common Stock

6 Months Ended

Jun. 30, 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 six months ended June 30, 2023 (in thousands):

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

	June 30, 2023			December 31, 2022
Risk free interest rate	5.44		%	4.75		%
Volatility	65.03		%	120.60		%
Expected term (years)	0.25			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 six months ended June 30, 2023 were as follows (in thousands):

 

Warrant liability, December 31, 2022	$	4
Change in fair value of warrants	(4)
Warrant liability, June 30, 2023	$	—

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Licensing Revenue

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Licensing Revenue

Licensing Revenue

Exclusive License Agreement with 3D Medicines Inc.

In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into an Exclusive License Agreement (the “3DMed License Agreement”) with 3D Medicines Inc. ("3DMed"), pursuant to which the Company granted 3DMed a sublicensable royalty-bearing license under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS (referred to as GPS Plus) product candidates ("GPS Licensed Products") for all therapeutic and other diagnostic uses in mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). The license is exclusive, except with respect to certain know-how that has been non-exclusively licensed to the Company and is sublicensed to 3DMed on a non-exclusive basis. The Company has retained development, manufacturing and commercialization rights with respect to the GPS Licensed Products in the rest of the world.

In partial consideration for the rights granted by the Company, 3DMed agreed to pay the Company (i) a one-time upfront cash payment of $7.5 million, and (ii) milestone payments totaling up to $194.5 million in the aggregate upon the achievement of certain technology transfer, development and regulatory milestones, as well as sales milestones based on certain net sales thresholds of GPS Licensed Products in the 3DMed Territory in a given calendar year. 3DMed also agreed to pay tiered royalties based upon a percentage of annual net sales of GPS Licensed Products in the 3DMed Territory ranging from the high single digits to the low double digits.

Revenue Recognition

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. As of December 31, 2021, 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 is 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 June 30, 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 licensing revenue recognized during each of the three months ended June 30, 2023 and 2022. There was no licensing revenue recognized during the six months ended June 30, 2023, and $1.0 million licensing revenue recognized during the six months ended June 30, 2022 related to the IND approval by the NMPA.

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

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Stock-Based Compensation

6 Months Ended

Jun. 30, 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 currently allows for issuance of up to approximately 22,000 shares of common stock underlying stock options granted prior to September 10, 2019. The 2017 Equity Incentive Plan was terminated upon the approval of the 2019 Incentive Plan subject to outstanding stock options granted under the 2017 Equity Incentive Plan that remain exercisable through maturity for the Company's employees and directors.

2023 Amended and Restated Equity Incentive Plan

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

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

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

As of June 30, 2023, approximately 3,883,000 shares of common stock were reserved for future grants under the 2023 Amended and Restated Equity Incentive Plan.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	92	$	70	$	188	$	125
General and administrative	422		380		866		700
Total stock-based compensation	$	514	$	450	$	1,054	$	825

Options to Purchase Shares of Common Stock

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

	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2022	1,040	$	7.57		$	91
Granted	682	3.20
Canceled	(57)	5.66
Outstanding at June 30, 2023	1,665	$	5.85	8.63	$	1
Options exercisable at June 30, 2023	527	$	9.58	7.62	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at June 30, 2023 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on June 30, 2023 of $1.57 per share. The aggregate intrinsic value equals the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying stock options.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Risk free interest rate	3.69	%	2.87	%	3.78	%	1.80	%
Volatility	129.55	%	144.75	%	127.77	%	130.60	%
Expected lives (years)	6.25		6.25		6.20		6.21
Expected dividend yield	—	%	—	%	—	%	—	%

The weighted-average grant date fair value of options granted during the three months ended June 30, 2023 and 2022 was $1.45 and $2.13, respectively. The weighted-average grant date fair value of options granted during the six months ended June 30, 2023 and 2022 was $2.88 and $4.76, 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 June 30, 2023, there was $3.8 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 2.72 years.

Time-vested RSUs and RSUs with Performance Conditions

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

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

As of June 30, 2023, there was $1.2 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 2.98 years. No RSUs vested during the six months ended June 30, 2023.

2021 Employee Stock Purchase Plan

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

During the six months ended June 30, 2023, 45,416 shares of common stock were purchased by employees under the 2021 ESPP for proceeds of approximately $53,000. There are currently 229,495 shares of common stock reserved for issuance under the 2021 ESPP as of June 30, 2023.

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Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe Company evaluated all events or transactions that occurred after June 30, 2023 up through the date these consolidated financial statements were issued. Other than as disclosed elsewhere in the notes to the consolidated financial statements, the Company did not have any material subsequent events.

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the ASC and Accounting Standards Updates ("ASUs") of the Financial Accounting Standards Board ("FASB").

Principles of Consolidation

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

Reclassification

Reclassification

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

Net Loss Per Share

Net Loss Per Share

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

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Basis of Presentation and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

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

	Six Months Ended June 30,
	2023	2022
Common stock warrants	12,361	5,148
Stock options	1,665	1,012
Restricted stock units ("RSUs")	433	297
	14,459	6,457

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value

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

Description	June 30, 2023		Quoted Prices In Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	13,192	$	13,192	$	—	$	—
Restricted cash equivalents	100		100		—		—
Total assets measured and recorded at fair value	$	13,292	$	13,292	$	—	$	—
Liabilities:
Warrant liability	$	—	$	—	$	—	$	—
Total liabilities measured and recorded at fair value	$	—	$	—	$	—	$	—

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

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Balance Sheet Accounts (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

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

	June 30, 2023		December 31, 2022
Insurance	$	1,123	$	219
Clinical development	375		184
Professional fees	176		82
Other	—		46
Prepaid expenses and other current assets	$	1,674	$	531

Schedule of Accrued Expenses and Other Current Liabilities

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

	June 30, 2023		December 31, 2022
Clinical trial costs	$	4,839	$	4,509
Compensation and related benefits	1,111		1,439
Professional fees	208		338
Other	82		—
Accrued expenses and other current liabilities	$	6,240	$	6,286

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments

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

Future minimum lease payments:
2023 (remaining)	$	261
2024	533
Total future minimum lease payments	794
Less: imputed interest	(45)
Current and non-current operating lease liabilities	$	749

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Common Stock Reserved for Future Issuance

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

Warrants outstanding	12,361
Stock options outstanding	1,665
RSUs outstanding	433
Shares reserved for future issuance under the Company’s 2019 Equity Incentive Plan	3,883
Shares reserved for future issuance under the 2021 Employee Stock Purchase Plan	229
Total common stock reserved for future issuance	18,571

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Warrants to Acquire Shares of Common Stock (Tables)

6 Months Ended

Jun. 30, 2023

Warrants and Rights Note Disclosure [Abstract]

Schedule of Warrant Activity

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

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

	June 30, 2023			December 31, 2022
Risk free interest rate	5.44		%	4.75		%
Volatility	65.03		%	120.60		%
Expected term (years)	0.25			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 six months ended June 30, 2023 were as follows (in thousands):

 

Warrant liability, December 31, 2022	$	4
Change in fair value of warrants	(4)
Warrant liability, June 30, 2023	$	—

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 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 and six months ended June 30, 2023 and 2022, respectively (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	92	$	70	$	188	$	125
General and administrative	422		380		866		700
Total stock-based compensation	$	514	$	450	$	1,054	$	825

Schedule of Stock Option Activity

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

	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2022	1,040	$	7.57		$	91
Granted	682	3.20
Canceled	(57)	5.66
Outstanding at June 30, 2023	1,665	$	5.85	8.63	$	1
Options exercisable at June 30, 2023	527	$	9.58	7.62	$	—

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 three and six months ended June 30, 2023 and 2022, respectively, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Risk free interest rate	3.69	%	2.87	%	3.78	%	1.80	%
Volatility	129.55	%	144.75	%	127.77	%	130.60	%
Expected lives (years)	6.25		6.25		6.20		6.21
Expected dividend yield	—	%	—	%	—	%	—	%

Schedule of RSU Activity

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

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

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Liquidity (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended			6 Months Ended
	Jun. 30, 2023	Feb. 28, 2023	Apr. 16, 2021	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Accumulated deficit	$ 199,841			$ 199,841			$ 199,841		$ 179,904
Net loss				$ 8,840	$ 8,414		19,937	$ 25,158
Net cash used in operating activities							$ 19,693	$ 12,911
Shares of common stock reserved for issuance (in shares)	18,571,000			18,571,000			18,571,000
Upfront fee and milestone payments							$ 10,500
Milestone payment received						$ 1,000	13,000
Potential milestone payments to be received	$ 191,500						192,500
Cash and cash equivalents	13,807			$ 13,807			13,807		17,125
Restricted cash and cash equivalents	$ 100			$ 100			$ 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
Expiration 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			$ 3.59			$ 3.59
Shares of common stock reserved for issuance (in shares)	39,200,000			39,200,000			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	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	14,459	6,457
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	12,361	5,148
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	1,665	1,012
Restricted stock units ("RSUs")
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	433	297

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Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Liabilities:
Warrant liability	$ 0	$ 4
Fair Value, Measurements, Recurring
Assets:
Cash equivalents	13,192	16,609
Restricted cash equivalents	100	100
Total assets measured and recorded at fair value	13,292	16,709
Liabilities:
Warrant liability	0	4
Total liabilities measured and recorded at fair value	0	4
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets (Level 1)
Assets:
Cash equivalents	13,192	16,609
Restricted cash equivalents	100	100
Total assets measured and recorded at fair value	13,292	16,709
Liabilities:
Warrant liability	0	0
Total liabilities measured and recorded at fair value	0	0
Fair Value, Measurements, Recurring | Significant Other Observable  Inputs (Level 2)
Assets:
Cash equivalents	0	0
Restricted cash equivalents	0	0
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrant liability	0	0
Total liabilities measured and recorded at fair value	0	0
Fair Value, Measurements, Recurring | Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	0	0
Restricted cash equivalents	0	0
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrant liability	0	4
Total liabilities measured and recorded at fair value	$ 0	$ 4

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Acquired In-Process Research and Development (Details) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended
	Jun. 30, 2023	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
License And Collaboration Agreements [Line Items]
Cash paid for acquisition of in-process research and development					$ 2,500	$ 4,500
Acquired in-process research and development payable	$ 3,000		$ 3,000		3,000		$ 5,500
Acquired in-process research and development expense			0	$ 0	0	10,000
GenFleet Therapeutics (Shanghai) Inc
License And Collaboration Agreements [Line Items]
Upfront fee		$ 10,000
Cash paid for acquisition of in-process research and development	7,000
Acquired in-process research and development payable	$ 3,000		$ 3,000		$ 3,000
Eligible payment from collaboration for development and regulatory milestone achievement under collaborations agreement		48,000
Maximum amount eligible for milestones under collaborations agreement		$ 92,000
Acquired in-process research and development expense						$ 10,000

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Balance Sheet Accounts - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Insurance	$ 1,123	$ 219
Clinical development	375	184
Professional fees	176	82
Other	0	46
Prepaid expenses and other current assets	$ 1,674	$ 531

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Balance Sheet Accounts - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Clinical trial costs	$ 4,839	$ 4,509
Compensation and related benefits	1,111	1,439
Professional fees	208	338
Other	82	0
Accrued expenses and other current liabilities	$ 6,240	$ 6,286

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Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Operating lease, discount rate (as a percent)	13.95%		13.95%
Operating lease, remaining term			1 year 6 months
Rent expense	$ 0.1	$ 0.1	$ 0.2	$ 0.2
Cash payments related to operating lease	$ 0.1	$ 0.1	$ 0.3	$ 0.2

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Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2023 (remaining)	$ 261
2024	533
Total future minimum lease payments	794
Less: imputed interest	(45)
Current and non-current operating lease liabilities	$ 749

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Stockholders' Equity - Narrative (Details) - $ / shares	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
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	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 - Schedule of Common Stock Reserved for Future Issuance (Details) - shares shares in Thousands	Jun. 30, 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)	1,665	1,040
Total common stock reserved for future issuance (in shares)	18,571
2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance (in shares)	3,883
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)	433	255

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Warrants to Acquire Shares of Common Stock - Schedule of Warrant Activity (Details) shares in Thousands	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	5,141
Granted (in shares)	7,220
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
Granted (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
Granted (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
Granted (in shares)	0
Outstanding, end of period (in shares)	4,630
Exercise price (in dollars per share) | $ / shares	$ 4.08
January 2020 Offering | Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	309
Granted (in shares)	0
Outstanding, end of period (in shares)	309
Exercise price (in dollars per share) | $ / shares	$ 3.93
July 2020 PIPE Offering | Common stock warrants
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	25
Granted (in shares)	0
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
Granted (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
Granted (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
Granted (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
Granted (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 - Schedule of Fair Value of Warrants is Estimated Using Black-Scholes Option Pricing Model (Details)	Jun. 30, 2023	Dec. 31, 2022
Risk free interest rate
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.0544	0.0475
Volatility
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.6503	1.2060
Expected term (years)
Class of Warrant or Right [Line Items]
Warrants, measurement input	0.25	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	Jun. 30, 2023	Feb. 28, 2023 USD ($) $ / shares shares	Feb. 27, 2023 $ / shares	Dec. 31, 2022
Coupon rate
Class of Warrant or Right [Line Items]
Expected dividend yield	0
Expected dividend yield
Class of Warrant or Right [Line Items]
Expected dividend yield	0			0
Underwriting Agreement
Class of Warrant or Right [Line Items]
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
Warrants not settleable in cash, fair value disclosure | $		$ 0.3

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Warrants to Acquire Shares of Common Stock - Schedule of Changes in Fair Value of Warrant Liability (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, December 31, 2022	$ 4
Change in fair value of warrants	(4)
Warrant liability, June 30, 2023	$ 0

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Licensing Revenue (Details) - USD ($)		1 Months Ended	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2023	Dec. 31, 2020	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2021
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
Milestone payment received					$ 1,000,000	13,000,000
Licensing revenue			$ 0	$ 0		0	$ 1,000,000
Cost of licensing revenue			$ 0	$ 0		$ 0	$ 100,000

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Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended		6 Months Ended
	Jun. 20, 2023	Apr. 22, 2021	Sep. 10, 2019	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 29, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)				18,571,000		18,571,000
Closing price of the Company's common stock (in dollars per share)				$ 1.57		$ 1.57
Weighted average exercise price, granted (in dollars per share)				$ 1.45	$ 2.13	$ 2.88	$ 4.76
Averages contractual term						10 years
Expected dividend yield (as a percent)				0.00%	0.00%	0.00%	0.00%
Unrecognized compensation cost, options				$ 3,800		$ 3,800
Proceeds from employee stock purchases						$ 53	$ 47
Restricted stock units ("RSUs")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, granted (in dollars per share)						$ 3.34
Weighted average recognition period						2 years 11 months 23 days
Unrecognized compensation cost				$ 1,200		$ 1,200
RSUs vested (in shares)						0
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average recognition period						2 years 8 months 19 days
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term						4 years
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term						6 years
2017 Equity Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for issuance (in shares)								22,000
2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for issuance (in shares)			6,036,000
Option term			4 years
Increase in number of shares available for future issuance under stock based awards (as a percent)			5.00%
Increase in number of shares authorized (in shares)	3,000,000
Shares of common stock reserved for issuance (in shares)				3,883,000		3,883,000
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		229,495
Cash earnings contributed per year		20.00%
Purchase price of common stock		85.00%
Offering period		6 months
Shares purchased for award						45,416
Proceeds from employee stock purchases						$ 53
2021 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock authorized for issuance (in shares)		300,000

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Stock-Based Compensation - Schedule of Allocated Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 514	$ 450	$ 1,054	$ 825
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	92	70	188	125
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 422	$ 380	$ 866	$ 700

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Stock-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding, beginning balance (in shares)	1,040
Granted (in shares)	682
Canceled (in shares)	(57)
Options outstanding, ending balance (in shares)	1,665	1,040
Options exercisable (in shares)	527
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted average exercise price, beginning balance (in dollars per share)	$ 7.57
Weighted average exercise price, granted (in dollars per share)	3.20
Weighted average exercise price, granted canceled (in dollars per share)	5.66
Weighted average exercise price, ending balance (in dollars per share)	5.85	$ 7.57
Weighted average exercise price, exercisable (in dollars per share)	$ 9.58
Weighted average remaining contractual term, outstanding (in years)	8 years 7 months 17 days
Weighted average remaining contractual term, options exercisable (in years)	7 years 7 months 13 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Aggregate Intrinsic Value [Roll Forward]
Aggregate intrinsic value, ending balance	$ 1	$ 91
Aggregate intrinsic value, options exercisable	$ 0

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Stock-Based Compensation - Schedule of Assumptions for Option Grants Issued (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]
Risk free interest rate	3.69%	2.87%	3.78%	1.80%
Volatility	129.55%	144.75%	127.77%	130.60%
Expected lives (years)	6 years 3 months	6 years 3 months	6 years 2 months 12 days	6 years 2 months 15 days
Expected dividend yield	0.00%	0.00%	0.00%	0.00%

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Stock-Based Compensation - Schedule of RSU Activity (Details) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 1.45	$ 2.13	$ 2.88	$ 4.76
Restricted stock units ("RSUs")
Shares
Beginning balance (in shares)			255
Granted (in shares)			195
Canceled (in shares)			(17)
Ending balance (in shares)	433		433
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share)			$ 3.25
Granted (in dollars per share)			3.34
Canceled (in dollars per share)			3.76
Ending balance (in dollars per share)	$ 3.27		$ 3.27