|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
20-8099512
|
(State of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
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 Capital Market
|
Large accelerated filer
|
|
o
|
|
Accelerated filer
|
|
o
|
|
|
|
|
|||
Non-accelerated filer
|
|
x
|
|
Smaller reporting company
|
|
x
|
|
|
|
|
|
|
|
Emerging growth company
|
|
o
|
|
|
|
|
|
|
|
|
Page
|
|
|
PART I - FINANCIAL INFORMATION
|
|
Item 1
|
|
||
|
|
Condensed Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018
|
|
|
|
Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018
|
|
|
|
Unaudited Condensed Consolidated Statement of Stockholders' Equity (Deficit) for the three and nine months ended September 30, 2019 and 2018
|
|
|
|
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018
|
|
|
|
||
Item 2
|
|
||
Item 3
|
|
||
Item 4
|
|
||
|
|
PART II - OTHER INFORMATION
|
|
Item 1
|
|
Legal Proceedings
|
|
Item 1A
|
|
Risk Factors
|
|
Item 2
|
|
||
Item 3
|
|
||
Item 4
|
|
||
Item 5
|
|
||
Item 6
|
|
||
|
|
|
|
|
|
||
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
|
(Unaudited)
|
|
|||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
9,119
|
|
|
$
|
5,337
|
|
Restricted cash and cash equivalents
|
115
|
|
|
114
|
|
||
Prepaid expenses and other current assets
|
977
|
|
|
387
|
|
||
Total current assets
|
10,211
|
|
|
5,838
|
|
||
Operating lease right-of-use asset
|
306
|
|
|
—
|
|
||
In-process research and development
|
8,500
|
|
|
8,500
|
|
||
Goodwill
|
1,914
|
|
|
1,914
|
|
||
Deposits and other assets
|
553
|
|
|
663
|
|
||
Total assets
|
$
|
21,484
|
|
|
$
|
16,915
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,764
|
|
|
$
|
3,755
|
|
Accrued expenses and other current liabilities
|
1,504
|
|
|
2,219
|
|
||
Operating lease liability, current
|
306
|
|
|
—
|
|
||
Total current liabilities
|
5,574
|
|
|
5,974
|
|
||
Operating lease liability, non-current
|
—
|
|
|
—
|
|
||
Deferred tax liability
|
357
|
|
|
357
|
|
||
Warrant liability
|
80
|
|
|
1,013
|
|
||
Contingent consideration
|
4,836
|
|
|
4,326
|
|
||
Total liabilities
|
10,847
|
|
|
11,670
|
|
||
Commitments and contingencies (Note 6)
|
|
|
|
||||
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 September 30, 2019 and December 31, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value; 350,000,000 shares authorized, 4,549,208 and 440,529 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively.
|
5
|
|
|
1
|
|
||
Additional paid-in capital
|
104,360
|
|
|
87,099
|
|
||
Accumulated deficit
|
(93,728
|
)
|
|
(81,855
|
)
|
||
Total stockholders’ equity
|
10,637
|
|
|
5,245
|
|
||
Total liabilities and stockholders’ equity
|
$
|
21,484
|
|
|
$
|
16,915
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
$
|
1,799
|
|
|
$
|
1,720
|
|
|
$
|
5,039
|
|
|
$
|
5,116
|
|
General and administrative
|
2,385
|
|
|
1,341
|
|
|
7,523
|
|
|
10,130
|
|
||||
Total operating expenses and operating loss
|
(4,184
|
)
|
|
(3,061
|
)
|
|
(12,562
|
)
|
|
(15,246
|
)
|
||||
Non-operating income (expense):
|
|
|
|
|
|
|
|
||||||||
Change in fair value of warrant liability
|
(49
|
)
|
|
2,241
|
|
|
1,108
|
|
|
5,340
|
|
||||
Change in fair value of contingent consideration
|
(28
|
)
|
|
(162
|
)
|
|
(510
|
)
|
|
(4,025
|
)
|
||||
Loss on settlement of liability-classified warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
(727
|
)
|
||||
Gain on extinguishment of debt
|
—
|
|
|
766
|
|
|
—
|
|
|
766
|
|
||||
Interest income (expense), net
|
59
|
|
|
(74
|
)
|
|
91
|
|
|
(292
|
)
|
||||
Total non-operating income (expense), net
|
(18
|
)
|
|
2,771
|
|
|
689
|
|
|
1,062
|
|
||||
Loss before income taxes
|
(4,202
|
)
|
|
(290
|
)
|
|
(11,873
|
)
|
|
(14,184
|
)
|
||||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|
163
|
|
||||
Net loss
|
(4,202
|
)
|
|
(290
|
)
|
|
(11,873
|
)
|
|
(14,347
|
)
|
||||
Deemed dividend arising from beneficial conversion feature of convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,436
|
)
|
||||
Deemed dividend arising from the issuance of common stock to Series A convertible preferred stockholders under most favored nation provision
|
$
|
—
|
|
|
(8,654
|
)
|
|
—
|
|
|
(8,654
|
)
|
|||
Deemed dividend arising from warrant modifications
|
(7,268
|
)
|
|
(491
|
)
|
|
(8,659
|
)
|
|
(491
|
)
|
||||
Net loss attributable to common stockholders
|
$
|
(11,470
|
)
|
|
$
|
(9,435
|
)
|
|
$
|
(20,532
|
)
|
|
$
|
(27,928
|
)
|
|
|
|
|
|
|
|
|
||||||||
Per share information:
|
|
|
|
|
|
|
|
||||||||
Net loss per common share attributable to common stockholders, basic and diluted
|
$
|
(2.68
|
)
|
|
$
|
(26.75
|
)
|
|
$
|
(11.37
|
)
|
|
$
|
(137.43
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
4,281,855
|
|
|
352,713
|
|
|
1,805,773
|
|
|
203,223
|
|
|
Three Months Ended September 30, 2019
|
||||||||||||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity (Deficit)
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||
Balance at June 30, 2019
|
—
|
|
|
$
|
—
|
|
|
2,002,702
|
|
|
$
|
2
|
|
|
$
|
103,862
|
|
|
$
|
(89,526
|
)
|
|
$
|
14,338
|
|
Issuance of common stock upon exercise of warrants, net of offering costs
|
—
|
|
|
—
|
|
|
2,032,950
|
|
|
2
|
|
|
381
|
|
|
—
|
|
|
383
|
|
|||||
Issuance of common stock upon exercise of pre-funded warrants
|
—
|
|
|
—
|
|
|
513,326
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|||||
Issuance of common stock upon vesting of restricted stock units.
|
—
|
|
|
—
|
|
|
230
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,202
|
)
|
|
(4,202
|
)
|
|||||
Balance at September 30, 2019
|
—
|
|
|
$
|
—
|
|
|
4,549,208
|
|
|
$
|
5
|
|
|
$
|
104,360
|
|
|
$
|
(93,728
|
)
|
|
$
|
10,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Nine Months Ended September 30, 2019
|
||||||||||||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity (Deficit)
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||
Balance at December 31, 2018
|
—
|
|
|
$
|
—
|
|
|
440,529
|
|
|
$
|
1
|
|
|
$
|
87,099
|
|
|
$
|
(81,855
|
)
|
|
$
|
5,245
|
|
Issuance of common stock and common stock warrants, net of issuance costs
|
—
|
|
|
—
|
|
|
527,344
|
|
|
—
|
|
|
13,416
|
|
|
—
|
|
|
13,416
|
|
|||||
Issuance of common stock upon exercise of warrants, net of offering costs
|
—
|
|
|
—
|
|
|
2,095,949
|
|
|
2
|
|
|
3,656
|
|
|
—
|
|
|
3,658
|
|
|||||
Issuance of common stock upon exercise of pre-funded warrants
|
—
|
|
|
—
|
|
|
1,485,156
|
|
|
2
|
|
|
6
|
|
|
—
|
|
|
8
|
|
|||||
Impact of anti-dilution protection on liability-classified warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(243
|
)
|
|
—
|
|
|
(243
|
)
|
|||||
Issuance of common stock upon vesting of restricted stock units.
|
—
|
|
|
—
|
|
|
230
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
426
|
|
|
—
|
|
|
426
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,873
|
)
|
|
(11,873
|
)
|
|||||
Balance at September 30, 2019
|
—
|
|
|
$
|
—
|
|
|
4,549,208
|
|
|
$
|
5
|
|
|
$
|
104,360
|
|
|
$
|
(93,728
|
)
|
|
$
|
10,637
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity (Deficit)
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||
Balance at June 30, 2018
|
7,802
|
|
|
$
|
—
|
|
|
147,670
|
|
|
$
|
1
|
|
|
$
|
65,758
|
|
|
$
|
(68,242
|
)
|
|
$
|
(2,483
|
)
|
Issuance of common stock and common stock warrants, net of issuance costs
|
—
|
|
|
—
|
|
|
136,900
|
|
|
—
|
|
|
21,564
|
|
|
—
|
|
|
21,564
|
|
|||||
Issuance of common stock to Series A convertible preferred stockholders under most favored nation provision
|
(7,802
|
)
|
|
—
|
|
|
74,963
|
|
|
—
|
|
|
(8,654
|
)
|
|
—
|
|
|
(8,654
|
)
|
|||||
Deemed dividend arising from the issuance of common stock to Series A convertible preferred stockholders under most favored nation provision
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,654
|
|
|
—
|
|
|
8,654
|
|
|||||
Convertible preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(470
|
)
|
|
—
|
|
|
(470
|
)
|
|||||
Issuance of common stock upon exercise of pre-funded warrants
|
—
|
|
|
—
|
|
|
50,491
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
136
|
|
|
—
|
|
|
136
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(290
|
)
|
|
(290
|
)
|
|||||
Balance at September 30, 2018
|
—
|
|
|
$
|
—
|
|
|
410,024
|
|
|
$
|
1
|
|
|
$
|
86,988
|
|
|
$
|
(68,532
|
)
|
|
$
|
18,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||||
|
Preferred Stock
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity (Deficit)
|
||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|||||||||||||||
Balance at December 31, 2017
|
—
|
|
|
$
|
—
|
|
|
115,337
|
|
|
$
|
1
|
|
|
$
|
56,254
|
|
|
$
|
(54,185
|
)
|
|
$
|
2,070
|
|
Issuance of common stock and common stock warrants, net of issuance costs
|
—
|
|
|
—
|
|
|
136,900
|
|
|
—
|
|
|
21,564
|
|
|
—
|
|
|
21,564
|
|
|||||
Issuance of Series A convertible preferred stock, net of offering costs
|
10,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,647
|
|
|
—
|
|
|
9,647
|
|
|||||
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock offering
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,039
|
)
|
|
—
|
|
|
(5,039
|
)
|
|||||
Beneficial conversion feature arising from Series A convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,436
|
)
|
|
—
|
|
|
(4,436
|
)
|
|||||
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,436
|
|
|
—
|
|
|
4,436
|
|
|||||
Conversion of Series A Convertible Preferred Stock
|
(2,898
|
)
|
|
—
|
|
|
9,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Impact of anti-dilution protection on liability-classified warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(491
|
)
|
|
—
|
|
|
(491
|
)
|
|||||
Convertible preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(487
|
)
|
|
—
|
|
|
(487
|
)
|
|||||
Issuance of common stock to Series A convertible preferred stockholders under most favored nation provision
|
(7,802
|
)
|
|
—
|
|
|
74,963
|
|
|
—
|
|
|
(8,654
|
)
|
|
—
|
|
|
(8,654
|
)
|
|||||
Deemed dividend arising from the issuance of common stock to Series A convertible preferred stockholders under most favored nation provision
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,654
|
|
|
—
|
|
|
8,654
|
|
|||||
Issuance of common stock as repayment of principal and interest on long-term debt
|
—
|
|
|
—
|
|
|
14,305
|
|
|
—
|
|
|
2,896
|
|
|
—
|
|
|
2,896
|
|
|||||
Issuance of common stock in connection with litigation settlements
|
—
|
|
|
—
|
|
|
4,573
|
|
|
—
|
|
|
1,250
|
|
|
—
|
|
|
1,250
|
|
|||||
Issuance of common stock upon conversion of promissory notes
|
—
|
|
|
—
|
|
|
2,372
|
|
|
—
|
|
|
825
|
|
|
—
|
|
|
825
|
|
|||||
Issuance of common stock in connection with warrant exchange agreements
|
—
|
|
|
—
|
|
|
1,086
|
|
|
—
|
|
|
285
|
|
|
—
|
|
|
285
|
|
|||||
Issuance of common stock upon exercise of warrants
|
—
|
|
|
—
|
|
|
50,495
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
284
|
|
|
—
|
|
|
284
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,347
|
)
|
|
(14,347
|
)
|
|||||
Balance at September 30, 2018
|
—
|
|
|
$
|
—
|
|
|
410,024
|
|
|
$
|
1
|
|
|
$
|
86,988
|
|
|
$
|
(68,532
|
)
|
|
$
|
18,457
|
|
|
For the nine months ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(11,873
|
)
|
|
$
|
(14,347
|
)
|
Adjustment to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Gain on extinguishment of debt
|
—
|
|
|
(766
|
)
|
||
Non-cash interest expense
|
—
|
|
|
134
|
|
||
Deferred taxes
|
—
|
|
|
49
|
|
||
Non-cash stock-based compensation
|
426
|
|
|
284
|
|
||
Fair value of common stock issued in connection with litigation settlements
|
—
|
|
|
1,250
|
|
||
Change in fair value of common stock warrants
|
(1,108
|
)
|
|
(5,340
|
)
|
||
Change in fair value of contingent consideration
|
510
|
|
|
4,025
|
|
||
Loss on settlement of liability-classified warrants
|
—
|
|
|
727
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Other receivable
|
—
|
|
|
(6,600
|
)
|
||
Prepaid expenses and other assets
|
(480
|
)
|
|
(538
|
)
|
||
Litigation settlement insurance recovery
|
—
|
|
|
(474
|
)
|
||
Accounts payable
|
(227
|
)
|
|
(4,453
|
)
|
||
Accrued expenses and other current liabilities
|
(715
|
)
|
|
182
|
|
||
Net cash used in operating activities
|
(13,467
|
)
|
|
(25,867
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net proceeds from issuance of Series A convertible preferred stock and common stock warrants
|
—
|
|
|
9,647
|
|
||
Proceeds from issuance of common stock, net of offering costs
|
13,652
|
|
|
21,564
|
|
||
Net proceeds from exercise of warrants
|
3,598
|
|
|
—
|
|
||
Dividends paid
|
—
|
|
|
(487
|
)
|
||
Principal payments on long-term debt
|
—
|
|
|
(7,525
|
)
|
||
Net cash provided by financing activities
|
17,250
|
|
|
23,199
|
|
||
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
|
3,783
|
|
|
(2,668
|
)
|
||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period
|
5,451
|
|
|
12,750
|
|
||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period
|
$
|
9,234
|
|
|
$
|
10,082
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash received during the periods for interest
|
$
|
87
|
|
|
$
|
166
|
|
Cash paid during the periods for interest
|
$
|
—
|
|
|
$
|
321
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock recorded as issuance cost
|
$
|
—
|
|
|
$
|
5,039
|
|
Repayment of interest and principal on long-term debt through issuance of common stock
|
$
|
—
|
|
|
$
|
3,587
|
|
Reclassification of warrant liabilities upon exchange for shares of common stock
|
$
|
—
|
|
|
$
|
285
|
|
Operating right of use asset and current and non-current liability
|
$
|
550
|
|
|
$
|
—
|
|
Impact of anti-dilution protection on liability-classified warrants
|
$
|
243
|
|
|
$
|
491
|
|
Offering expenses in accounts payable and accrued expenses and other current liabilities
|
$
|
236
|
|
|
$
|
—
|
|
Long-term debt issued in connection with warrant exchange agreements
|
$
|
—
|
|
|
$
|
966
|
|
Reclassification of warrant liabilities upon exercise
|
$
|
68
|
|
|
$
|
—
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
9,119
|
|
|
$
|
5,337
|
|
Restricted cash and cash equivalents
|
115
|
|
|
114
|
|
||
Total cash, cash equivalents, restricted cash, and restricted cash equivalents
|
$
|
9,234
|
|
|
$
|
5,451
|
|
Description
|
September 30, 2019
|
|
Quoted Prices In
Active Markets
(Level 1)
|
|
Significant Other
Observable
Inputs (Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
9,055
|
|
|
$
|
9,055
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets measured and recorded at fair value
|
$
|
9,055
|
|
|
$
|
9,055
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Warrant liability
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80
|
|
Contingent consideration
|
4,836
|
|
|
—
|
|
|
—
|
|
|
4,836
|
|
||||
Total liabilities measured and recorded at fair value
|
$
|
4,916
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,916
|
|
Description
|
December 31, 2018
|
|
Quoted Prices In
Active Markets
(Level 1)
|
|
Significant Other
Observable
Inputs (Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
5,195
|
|
|
$
|
5,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets measured and recorded at fair value
|
$
|
5,195
|
|
|
$
|
5,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Warrant liability
|
$
|
1,013
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,013
|
|
Contingent consideration
|
4,326
|
|
|
—
|
|
|
—
|
|
|
4,326
|
|
||||
Total liabilities measured and recorded at fair value
|
$
|
5,339
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,339
|
|
|
Fair Value
Measurements
Using Significant
Unobservable
Inputs
(Level 3)
|
||
Contingent consideration, December 31, 2018
|
$
|
4,326
|
|
Change in the estimated fair value of the contingent consideration
|
510
|
|
|
Contingent consideration, September 30, 2019
|
$
|
4,836
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Insurance
|
$
|
479
|
|
|
$
|
154
|
|
Clinical development
|
347
|
|
|
48
|
|
||
Professional services
|
107
|
|
|
56
|
|
||
Other
|
44
|
|
|
129
|
|
||
Prepaid expenses and other current assets
|
$
|
977
|
|
|
$
|
387
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Compensation and related benefits
|
$
|
735
|
|
|
$
|
675
|
|
Clinical trial costs
|
441
|
|
|
858
|
|
||
Professional fees
|
328
|
|
|
540
|
|
||
Rebates and returns of former commercial products
|
—
|
|
|
138
|
|
||
Other
|
—
|
|
|
8
|
|
||
Accrued expenses and other current liabilities
|
$
|
1,504
|
|
|
$
|
2,219
|
|
|
|
September 30, 2019
|
||
Year ending December 31, 2019 (remaining three months)
|
|
$
|
96
|
|
Year ending December 31, 2020
|
|
224
|
|
|
Total minimum lease payments
|
|
320
|
|
|
Less: imputed interest
|
|
(14
|
)
|
|
Operating lease liabilities
|
|
$
|
306
|
|
|
|
December 31, 2018
|
||
2019
|
|
$
|
377
|
|
2020
|
|
224
|
|
|
Total minimum lease payments
|
|
$
|
601
|
|
|
September 30, 2019
|
|
Warrants outstanding
|
302
|
|
Stock options outstanding
|
23
|
|
Options reserved for future issuance under the Company’s 2019 Equity Incentive Plan
|
201
|
|
Shares reserved for future issuance under the Employee Stock Purchase Plan
|
5
|
|
Total common stock reserved for future issuance
|
531
|
|
Warrant Issuance
|
Outstanding, December 31, 2018
|
|
Granted
|
|
Exercised
|
|
Canceled/Expired
|
|
Outstanding, September 30, 2019
|
|
Expiration
|
|||||
June 2019 Offering
|
—
|
|
|
2,000
|
|
|
(1,998
|
)
|
|
—
|
|
|
2
|
|
|
June 2024
|
Pre-funded June 2019 Offering
|
—
|
|
|
1,473
|
|
|
(1,473
|
)
|
|
—
|
|
|
—
|
|
|
June 2024
|
March 2019 Exercise Agreement
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
March 2024
|
July 2018 Offering
|
305
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
208
|
|
|
July 2023
|
Pre-funded July 2018 Offering
|
13
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
July 2023
|
Series A Convertible Preferred
|
28
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
19
|
|
|
September 2023
|
2017 Equilibria
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
December 2022
|
Galena February 2017
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
February 2022
|
Galena Other
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
January 2022
|
|
356
|
|
|
3,536
|
|
|
(3,590
|
)
|
|
—
|
|
|
302
|
|
|
|
As of September 30, 2019
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||
Warrant Issuance
|
Outstanding (in thousands)
|
|
Strike price (per share)
|
|
Expected term (years)
|
|
Volatility %
|
|
Risk-free rate %
|
|||||
Series A Convertible Preferred
|
19
|
|
|
$
|
7.50
|
|
|
4.01
|
|
105.47
|
%
|
|
1.56
|
%
|
Galena February 2017
|
1
|
|
|
$
|
1,650.00
|
|
|
2.38
|
|
107.21
|
%
|
|
1.56
|
%
|
Galena Other
|
3
|
|
|
$
|
41,494.00
|
|
|
1.68
|
|
107.21
|
%
|
|
1.56
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||
As of December 31, 2018
|
||||||||||||||
Warrant Issuance
|
Outstanding (in thousands)
|
|
Strike price (per share)
|
|
Expected term (years)
|
|
Volatility %
|
|
Risk-free rate %
|
|||||
Series A Convertible Preferred
|
28
|
|
|
$
|
7.50
|
|
|
4.76
|
|
88.80
|
%
|
|
2.50
|
%
|
Galena February 2017
|
1
|
|
|
$
|
1,650.00
|
|
|
3.12
|
|
94.12
|
%
|
|
2.46
|
%
|
Galena Other
|
3
|
|
|
$
|
41,494.00
|
|
|
2.43
|
|
94.73
|
%
|
|
2.46
|
%
|
Warrant Issuance
|
Warrant liability, December 31, 2018
|
|
Fair value of warrants granted
|
|
Fair value of warrants exercised
|
|
Adjustment to exercise price of warrants
|
|
Change in fair value of warrants
|
|
Warrant liability, September 30, 2019
|
||||||||||||
Series A Convertible Preferred
|
$
|
1,010
|
|
|
$
|
—
|
|
|
$
|
(68
|
)
|
|
$
|
243
|
|
|
$
|
(1,108
|
)
|
|
$
|
77
|
|
Galena February 2017
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
|
$
|
1,013
|
|
|
$
|
—
|
|
|
$
|
(68
|
)
|
|
$
|
243
|
|
|
$
|
(1,108
|
)
|
|
$
|
80
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Research and development
|
$
|
(1
|
)
|
|
$
|
21
|
|
|
$
|
(4
|
)
|
|
$
|
55
|
|
General and administrative
|
116
|
|
|
115
|
|
|
430
|
|
|
229
|
|
||||
Total stock-based compensation
|
$
|
115
|
|
|
$
|
136
|
|
|
$
|
426
|
|
|
$
|
284
|
|
|
Nine Months Ended September 30,
|
||||
|
2019
|
|
2018
|
||
Risk free interest rate
|
2.49
|
%
|
|
2.73
|
%
|
Volatility
|
96.57
|
%
|
|
80.83
|
%
|
Expected lives (years)
|
6.20
|
|
|
6.20
|
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
Total
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted Average Remaining Contractual Term (in years)
|
|
Aggregate
Intrinsic
Value
(In Thousands)
|
|||||
Outstanding at December 31, 2018
|
7,650
|
|
|
$
|
261.09
|
|
|
9.01
|
|
$
|
—
|
|
Granted
|
18,800
|
|
|
69.00
|
|
|
|
|
$
|
—
|
|
|
Canceled
|
(3,264
|
)
|
|
191.05
|
|
|
|
|
$
|
—
|
|
|
Outstanding at September 30, 2019
|
23,186
|
|
|
$
|
115.19
|
|
|
9.22
|
|
$
|
—
|
|
Options exercisable at September 30, 2019
|
2,486
|
|
|
$
|
261.22
|
|
|
8.51
|
|
$
|
—
|
|
•
|
expenses incurred under agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;
|
•
|
manufacturing 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 number of clinical sites included in the trials;
|
•
|
the length of time required to enroll suitable patients;
|
•
|
the number 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;
|
•
|
the receipt of marketing approvals; and
|
•
|
the commercialization of current and future product candidates.
|
(dollars in thousands)
|
Three Months Ended September 30,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
$
|
1,799
|
|
|
$
|
1,720
|
|
|
$
|
79
|
|
General and administrative
|
2,385
|
|
|
1,341
|
|
|
1,044
|
|
|||
Total operating expenses and operating loss
|
(4,184
|
)
|
|
(3,061
|
)
|
|
(1,123
|
)
|
|||
Non-operating income, net
|
(18
|
)
|
|
2,771
|
|
|
(2,789
|
)
|
|||
Loss before income taxes
|
(4,202
|
)
|
|
(290
|
)
|
|
(3,912
|
)
|
|||
Income tax expense
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
$
|
(4,202
|
)
|
|
$
|
(290
|
)
|
|
$
|
(3,912
|
)
|
(dollars in thousands)
|
Nine Months Ended September 30,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
$
|
5,039
|
|
|
$
|
5,116
|
|
|
$
|
(77
|
)
|
General and administrative
|
7,523
|
|
|
10,130
|
|
|
(2,607
|
)
|
|||
Total operating expenses and operating loss
|
(12,562
|
)
|
|
(15,246
|
)
|
|
2,684
|
|
|||
Non-operating income (expense), net
|
689
|
|
|
1,062
|
|
|
(373
|
)
|
|||
Loss before income taxes
|
(11,873
|
)
|
|
(14,184
|
)
|
|
2,311
|
|
|||
Income tax expense
|
—
|
|
|
163
|
|
|
(163
|
)
|
|||
Net loss
|
$
|
(11,873
|
)
|
|
$
|
(14,347
|
)
|
|
$
|
2,474
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
Change in fair value of warrant liability
|
$
|
(49
|
)
|
|
$
|
2,241
|
|
|
$
|
(2,290
|
)
|
|
$
|
1,108
|
|
|
$
|
5,340
|
|
|
$
|
(4,232
|
)
|
Change in fair value of contingent consideration
|
(28
|
)
|
|
(162
|
)
|
|
134
|
|
|
(510
|
)
|
|
(4,025
|
)
|
|
3,515
|
|
||||||
Loss on settlement of liability-classified warrants
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(727
|
)
|
|
727
|
|
||||||
Gain on extinguishment of debt
|
—
|
|
|
766
|
|
|
(766
|
)
|
|
—
|
|
|
766
|
|
|
(766
|
)
|
||||||
Interest income (expense), net
|
59
|
|
|
(74
|
)
|
|
133
|
|
|
91
|
|
|
(292
|
)
|
|
383
|
|
||||||
Total non-operating income (expense), net
|
$
|
(18
|
)
|
|
$
|
2,771
|
|
|
$
|
(2,789
|
)
|
|
$
|
689
|
|
|
$
|
1,062
|
|
|
$
|
(373
|
)
|
|
NIne Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Net cash (used in) provided by:
|
|
|
|
||||
Operating activities
|
$
|
(13,467
|
)
|
|
$
|
(25,867
|
)
|
Financing activities
|
17,250
|
|
|
23,199
|
|
||
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents
|
$
|
3,783
|
|
|
$
|
(2,668
|
)
|
(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.
|
*
|
Filed herewith
|
**
|
The certification attached as Exhibit 32.1 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 it 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.
|
|
SELLAS Life Sciences Group, Inc.
|
||
|
|
|
|
|
By:
|
|
/s/ Angelos M. Stergiou
|
|
|
|
|
|
|
|
Angelos M. Stergiou, MD, ScD h.c.
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Date: November 14, 2019
|
|
|
|
|
|
|
|
|
1.
|
DEFINITIONS.
|
2.
|
PURPOSES OF THE PLAN.
|
3.
|
SHARES SUBJECT TO THE PLAN.
|
4.
|
ADMINISTRATION OF THE PLAN.
|
5.
|
ELIGIBILITY FOR PARTICIPATION.
|
6.
|
TERMS AND CONDITIONS OF OPTIONS.
|
(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,
|
(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.
|
(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.
|
8.
|
TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.
|
9.
|
PERFORMANCE-BASED AWARDS.
|
10.
|
EXERCISE OF OPTIONS AND ISSUE OF SHARES.
|
11.
|
PAYMENT IN CONNECTION WITH THE ISSUANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES.
|
12.
|
RIGHTS AS A SHAREHOLDER.
|
13.
|
ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.
|
14.
|
EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY.
|
15.
|
EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.
|
16.
|
EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.
|
17.
|
EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
|
18.
|
EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS AND STOCK-BASED AWARDS.
|
19.
|
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE, DEATH OR DISABILITY.
|
20.
|
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR CAUSE.
|
21.
|
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION OF SERVICE FOR DISABILITY.
|
22.
|
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
|
23.
|
PURCHASE FOR INVESTMENT.
|
24.
|
DISSOLUTION OR LIQUIDATION OF THE COMPANY.
|
25.
|
ADJUSTMENTS.
|
26.
|
ISSUANCES OF SECURITIES.
|
27.
|
FRACTIONAL SHARES.
|
28.
|
WITHHOLDING.
|
29.
|
NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
|
30.
|
TERMINATION OF THE PLAN.
|
31.
|
AMENDMENT OF THE PLAN AND AGREEMENTS.
|
32.
|
EMPLOYMENT OR OTHER RELATIONSHIP.
|
33.
|
SECTION 409A.
|
34.
|
INDEMNITY.
|
35.
|
CLAWBACK.
|
36.
|
GOVERNING LAW.
|
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
|
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.
|
|
/s/ Angelos M. Stergiou
|
|
|
|
Angelos M. Stergiou, MD, ScD h.c.
|
|
President and Chief Executive Officer
(Principal Executive Officer and Principal Financial Officer)
|
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
|
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.
|
|
/s/ Angelos M. Stergiou
|
|
|
|
Angelos M. Stergiou, MD, ScD h.c.
|
|
President and Chief Executive Officer
(Principal Executive Officer and Principal Financial Officer)
|
|
By:
|
|
/s/ Angelos M. Stergiou
|
|
|
|
|
|
|
|
Angelos M. Stergiou, MD, ScD h.c.
|
|
|
|
President and Chief Executive Officer
(Principal Executive Officer and Principal Financial Officer)
|
|
|
|
|
|
|
|
Date: November 14, 2019
|