SLS Stock Slides Premarket: Traders Brace For Key Arbitration Ruling In GPS China Payment Dispute

• Traders expect the HKIAC tribunal to formally close proceedings, with a final ruling potentially due between July and September.
• Sellas also alleges 3D Medicines failed to adequately advance GPS in mainland China.
• The company ended March with $107.1 million in cash and raised another $28.7 million from warrant exercises.

Shares of Sellas Life Sciences Group, Inc. (SLS) slipped 3% in premarket trading on Friday as investors turned their attention to a potentially major non-clinical catalyst: an arbitration battle with Chinese partner 3D Medicines that has now reached a key deadline and could move one step closer to a final ruling.

SLS stock had jumped 10% on Thursday to $9.04, with shares set to snap five straight weeks of gains. Meanwhile, 3D Medicines’ stock rose 0.3% in Hong Kong on Friday. 

Sellas-3D Battle Nears Decision

The long-running dispute, based on milestone payments and development obligations related to Sellas' immunotherapy candidate GPS, has reached a key milestone under the Hong Kong International Arbitration Center (HKIAC) rules. With final closing submissions filed on April 21, Friday marks the end of the 45-day window for the tribunal to formally close proceedings. 

Once the case is closed, the tribunal is expected to notify the parties of the anticipated award date, with a final ruling potentially arriving between early July and early September.

The arbitration stems from Sellas' 2020 licensing agreement with 3D Medicines covering Greater China rights to GPS and SLS009 locally. Sellas initiated arbitration in December 2023, arguing that $13 million in milestone payments became due after GPS advanced into Phase 3 testing and alleging that 3D Medicines failed to devote sufficient effort and resources to advancing the program in Greater China, particularly mainland China. 

Sellas also said that side agreements signed in 2022 and 2023 anticipated participation from mainland China patients in the global Regal Phase 3 trial. While 3D Medicines enrolled patients in Taiwan, the expected mainland China enrollment did not occur. 3D Medicines has consistently rejected the allegations, calling the claims "groundless."

All Eyes On SLS Regal Readout

Investors are still focused on Sellas' Phase 3 Regal trial, evaluating GPS in acute myeloid leukemia (AML) patients in second complete remission. The study recently reached 78 of the 80 events required to trigger final analysis, bringing the company closer to a highly anticipated topline data readout. 

CEO Angelos Stergiou recently noted that "80 events have not occurred yet, almost 25 months after enrollment completion, which obviously indicates longer survival than projected," adding that there is "a good chance" Regal could deliver outcomes similar to earlier GPS studies. The company has previously said the trial would be considered successful if GPS extends median overall survival to 12.6 months from 8 months with standard treatment.

Sellas is also nearing these catalysts with a strong balance sheet. According to a regulatory filing from this week, the company held $107.1 million in cash and cash equivalents as of March 31 and received an additional $28.7 million from warrant exercises in April and May. "A strong balance sheet is the engine that drives clinical execution," Stergiou said on LinkedIn.

Beyond Regal, investors are also monitoring SLS009, the company's Phase 2 CDK9 inhibitor for AML. Stergiou recently called the drug's activity in resistant AML patients "quite astonishing" and said topline data are expected later this year.

How Do Retail Traders Feel About SLS?

On Stocktwits, retail sentiment for SLS was ‘bearish’ amid a 50% jump in 24-hour message volumes.

One user noted the HKIAC rules and said, “We should, at the least, be getting a firm date for the 3Dmeds decision tomorrow.”

Another user said, “3d ruling tomorrow --> up to double digits.  80th event announcement within the month--> up to $15-20.  topline data reveal by end of July --> up to $50+.”

SLS stock has surged 465% over the past year. 

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

Read Next: HIMS Stock Slides Overnight: CEO Sees Healthcare Potential In Anthropic's AI Leap As Lilly, WeightWatchers Turn Up The Heat