SELLAS Life Sciences Falls For Fourth Straight Session — What’s Driving The Sell Off?

• On Thursday, Sellas said that it received approximately $26.5 million in proceeds from the exercise of common stock warrants.
• SELLAS is currently evaluating Galinpepimut-S (GPS) as a potential maintenance therapy in patients with Acute Myeloid Leukemia who have achieved complete remission following second-line salvage therapy.
• The ongoing GPS trial is an overall survival study and final analysis is expected once 80 deaths have occurred.

Shares of SELLAS Life Sciences Group, Inc. (SLS) fell for the fourth straight session on Friday as investors resorted to profit taking amid dilution concerns.

Shares of the company traded 13% lower at $3.34 at the time of writing, after breaching the $5 threshold for the first time in over three years earlier this week.

On Thursday, Sellas said that it received approximately $26.5 million in proceeds from the exercise of common stock warrants. This is in addition to the company’s estimated cash and cash equivalents of $71.8 million as of December-end.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around SLS stayed within the ‘extremely bullish’ territory over the past 24 hours, while message volume stayed at ‘extremely high’ levels.

A Stocktwits user expressed disappointment at the company diluting shares of the company by exercising warrants provided it has “sufficient cash” to carry out ongoing trials. However, they expect the price to be back up by February.

Another, however, said that there is no “legitimate reason” to sell the stock. “...we longs know this is short lived.  VERY short lived.  It will explode upward from this oversold action,” they wrote.

What Drove The Recent Rally?

SELLAS is currently evaluating Galinpepimut-S (GPS) as a potential maintenance therapy in patients with Acute Myeloid Leukemia who have achieved complete remission following second-line salvage therapy. AML is a fast-growing cancer of the blood and bone marrow where immature white blood cells build up, crowding out healthy cells, leading to fatigue, infections, and bleeding.

The ongoing GPS trial is an overall survival study, and final analysis is expected once 80 deaths have occurred. As of December 26, 72 deaths have occurred, the company said last month, highlighting that it had previously expected 80 patient deaths to occur by December end.

“While the 80th event has not yet occurred, and we remain fully blinded, every passing month may increase the probability of a successful study as highlighted by key opinion leaders in our recent R&D event. Conclusive data will follow the unblinding and analyses of the study results,” SELLAS CEO Angelos Stergiou said at the time. The announcement kickstarted a rally that mostly sustained through late December and early January.

Last week, Maxim analyst Jason McCarthy noted that delays in an event-driven trial like SELLAS’ could be suggestive of extended survival benefit from GPS.

Besides GPS, SELLAS has another experimental drug in its pipeline called SLS009 also being developed to target certain cancers.

According to data from Koyfin, all three of the analysts covering SELLAS rate it ‘Buy’ or higher. The stock has an average price target of $6.83, hinting at significant potential upside.

SLS shares have nearly tripled over the past 12 months.

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