Sellas Life Sciences Group Inc (NASDAQ: SLS) is a potential bounce-back play on the company announcing an advancement in the development of a pipeline of cancer peptide vaccines. The stock’s price action activity has also started to gather pace after a period of consolidation, on investors reacting to narrowing net loss in the recent quarter.
A solid balance sheet ideal for supporting clinical development programs also continues to strengthen the company’s market sentiments. After a 90% plus plunge to all-time lows, the stock has started correcting higher in line with improving underlying fundamentals. More investors are starting to take note of the oversold opportunity in SLS.
However, given the underlying bearish trend, Sellas Life Sciences will have to rally and find support above the $0.18 level to avert further slides. Below the critical $0.18 technical level, the stock remains susceptible to further drops in continuation of the descending trend line. For the stock to confirm bullish sentiment, it will need to rally and find support above the $0.22 level.
About Sellas Life Sciences
Sellas Life Sciences is a biopharmaceutical company engaged in the development of novel cancer treatments. GPS is the company’s lead cancer candidate licensed form the Memorial Sloan Kettering Cancer Center, under development, for the treatment of tumors. The company is also working on HER2 cancer immunotherapy for the prevention of recurrent breast cancer.
Cancer Treatment Development
Sellas Life Sciences stock has started surging from all-time lows on the confirmation that the company has made impressive strides in the development of its lead product GPS. The company is preparing for a Phase 3 registration study in patients with acute myeloid leukemia. The company is also preparing for a first patient dosed investigator study.
In addition to GPS development, Sellas Life Sciences has also completed enrollment in phase 2 randomized investigator-sponsored trial of nelipepimut-S in women struggling with ductal carcinoma.
“We believe NPS could serve as an earlier stage treatment for women with breast cancer and hope to gain through this study further insights on the immunobiological mechanism underlying the clinical activity of NP,” said CEO Angelos Stergiou.
In preparation for the clinical trials, the company has continued to strengthen its balance with string public offerings. In June, the company raised $13.5 million in gross proceeds on the issuance of 26 million shares of common stock. The company intends to use the net proceeds to commence pivotal phase 3 study of GPS as a potential treatment for acute myeloid leukemia.
Narrowing Net Loss
In addition to progress on the development of cancer treatments, Sellas Life Sciences bottom line has shown signs of improvement. The company exited the second quarter with a net loss of -$4.1 million less than half a net loss of -$8.5 million reported a year ago. Net loss attributed to shareholders stood at -$9.1 million for the first six months of the year compared to a net loss of -$18.5 million for the same period last year.
Narrowing net loss has everything to do with a reduction in the company’s operating expenditure. General and administrative expense shrunk to $2.6 million in the second quarter of 2019 from $4.9 million reported a year earlier. General and administrative expenses for the first six months of the year stood at $5.1 million down from $8.8 million a year earlier.
The company exited the quarter with cash and cash equivalents of about $12.8 million inclusive of the $13.5 million generated from an underwritten public offering of shares of common stock.
“Importantly, with our recent follow-on offering, we strengthened our balance sheet to support our clinical development programs through what we believe will be value-creating inflection points,” added Dr. Stergiou.
Sellas Life Sciences has started recovering from a harrowing plunge in the first half of the year. Progress in the development of the company’s pipeline of cancer treatment should continue to support the bounce back. Investors taking note of the company’s solid financial position as well as narrowing net loss is another development that should continue to strengthen market sentiments.
While the stock has taken a significant hit since the start of the year, improving underlying fundamentals indicates that the company’s turnaround plans are working. For those looking for a high risk/reward play, SLS checks all the boxes at current levels.
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Disclosure: We have no position in SLS and have not been compensated for this article.