SLS Stock Tanks Hard: Retail Traders Blame Warrant Holders, 'Flippers' Cashing Out Before AML Catalyst

• Retail investors said heavy warrant activity may have injected another $20 million-$30 million into Sellas’ cash position, while helping clear the stock’s warrant overhang.
• Some traders also blamed short-term “flippers,” who took profits after SLS’ big rally.
• CEO Angelos Stergiou recently reiterated that each passing month may improve the probability of a successful outcome for the GPS trial.

Shares of Sellas Life Sciences Group (SLS) plunged 16% on Thursday, triggering intense retail debate over whether warrant holders and short-term traders rushed to lock in gains ahead of the company’s highly anticipated Phase Regal acute myeloid leukemia (AML) data readout.

SLS stock snapped three straight sessions of gains on Thursday to end at 7.56. However, shares rose 4% in extended trading and are up 7% so far this week, marking their fourth consecutive week of gains. Over the past year, shares have surged 345%. 

SLS Retail Traders Point To Warrant Exercises

On Stocktwits, retail sentiment for SLS was ‘extremely bullish’ amid a 254% jump in message volumes over the past month.

Several retail investors said that heavy warrant exercising likely drove much of Thursday’s pressure. One trader said that “over 80 million shares traded this week so far and all the warrants were in the money,” adding that the warrant exercises may have brought another $20 million-$30 Million into Sellas’ cash position.

The same user added: “Sellas has about $135 Million cash now with the warrant overhang completely. GPS REGAL phase 3 data coming, nothing is going to stop this rocket from taking off now!”

Another trader speculated: “Most probably lot of warrants used today. We are going to go up fast soon.” A separate trader pointed to high levels of trading, saying: “Volume is around 25 mil. So they used up all the warrants. May be at least 20mil.” They added that “this is the perfect time for any positive announcement for a short squeeze to the north of $25 SP [share price] minimum.”

‘Flippers’ And Short-Term SLS Traders Blamed

Speculation around the sudden fall in the share price comes amid short interest in SLS hitting a record high of 30.7% ahead of the final Regal data readout.

Retail traders also pointed to aggressive profit-taking after SLS’ recent rally. One trader suggested Thursday’s selloff came from a “warrant dump today, and profit taking by the flippers after a big run with no KNOWN news coming until next Wednesday.”

The trader noted that overnight trading “doesn’t act like anything’s been leaked,” while adding that “flippers today buying back in AH’s (after-hours) in case of news.” However, they maintained their bullish stance on the stock, saying: “The science hasn’t changed so there’s nothing nefarious about today’s action.” 

Another retail investor said that traders may be positioning around the final 80th event milestone from Sellas’ Regal study. “Sellas got another $40 Million from warrant exercise and warrant holders covered bigly because they don’t want to get caught with their pants down when 80Th event PR hits the wires.”

On the other hand, some retail traders said that Thursday’s selloff may actually strengthen the stock’s setup heading into the catalyst. “Legitimately more bullish about this stock after today,” one user said. “There is clearly some movement going on behind the scenes between institutional buyers, short sellers, warrant holders etc,” they added. “That can only mean one thing: they all know the end is near.”

Sellas’ Key Near-Term AML Catalyst

The heightened retail speculation comes amid growing investor optimism for Sellas’ Phase 3 Regal study evaluating galinpepimut-S (GPS) in AML patients who entered second remission after salvage therapy. Earlier this month, the company disclosed that the study had reached 78 events as of May 11, leaving only two events remaining before topline data can be released.

Speaking at A.G.P.’s Annual Virtual Healthcare Conference on Wednesday, CEO Angelos Stergiou said survival in the Regal study appeared “unexpectedly long.” He also said: “Every passing month, as I've often said, may increase the probability of a successful study due to a potential GPS effect.”

The company previously said that the Regal study would be considered successful if GPS extended median overall survival to 12.6 months, versus 8.1 months with standard treatment.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: Nio Stock Jumps In Hong Kong: EV Maker Rejects ‘Overaggressive’ Price Cuts Amid Soaring Material Costs