What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-20 compared with 2024-03-28 · 139 added, 209 removed, 525 unchanged (40% of the section changed)

3 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 2024 and 2023

Consolidated Statements of Stockholders' (Deficit) Equity for the years ended December 31, 2023 and 2022

Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023

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We have audited the accompanying consolidated balance sheets of SELLAS Life Sciences Group, Inc.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ (deficit) equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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Total assets $ 19,432 $ 6,219

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

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Operating lease liabilities 544 446

Acquired in-process research and development payable — 5,500

Total current liabilities 9,510 13,735

Operating lease liabilities, non-current 457 460

Warrant liability — 4

Total liabilities 9,967 14,195

Commitments and contingencies (Note 6)

Stockholders’ (deficit) equity:

Preferred stock, $ 0.0001 par value;

5,000,000 shares authorized;

Series A convertible preferred stock, 17,500 shares designated;

0 shares issued and outstanding at December 31, 2023 and 2022

Stockholders’ equity (deficit):

Common stock, $ 0.0001 par value;

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Accumulated deficit ( 248,125 ) ( 217,244 )

Total stockholders’ (deficit) equity ( 7,976 ) 4,851

Total liabilities and stockholders’ (deficit) equity $ 6,219 $ 20,943

Total stockholders’ equity (deficit) 9,465 ( 7,976 )

Total liabilities and stockholders’ equity (deficit) $ 19,432 $ 6,219

See accompanying notes to these consolidated financial statements.

3 unchanged sentences

Year Ended December 31,

Licensing revenue $ — $ 1,000

Operating expenses:

Cost of licensing revenue — 100

Research and development $ 19,096 $ 24,007

General and administrative 12,417 13,862

Acquired in-process research and development — 10,000

Total operating expenses 31,513 37,869

2 unchanged sentences

Change in fair value of warrant liability — 4

Change in fair value of contingent consideration — 296

Interest income 632 525

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SELLAS LIFE SCIENCES GROUP, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

(Amounts in thousands, except share amounts)

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Balance at January 1, 2023 21,005,405 $ 2 $ 184,753 $ ( 179,904 ) $ 4,851

Issuance of common stock and common stock warrants, net of issuance costs 4,629,630 — 22,946 — 22,946

Issuance of common stock, common stock warrants, and pre-funded warrants, net of issuance costs 10,320,217 1 22,039 — 22,040

Issuance of common stock, net of issuance costs 92,882 289 — 289

Issuance of common stock upon the exercise of pre-funded warrants 552,300 — — — —

Issuance of common stock upon the exercise of warrants 14,000 — 14 — 14

Issuance of common stock under employee stock purchase plan 91,454 — 107 — 107

Vesting of restricted stock units 85,245 — — — —

Tax withholding on vesting of restricted stock units ( 28,613 ) — ( 31 ) — ( 31 )

Stock-based compensation — — 2,094 — 2,094

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Balance at December 31, 2023 32,132,890 3 209,265 ( 217,244 ) ( 7,976 )

Issuance of common stock and common stock warrants, net of issuance costs 10,320,217 1 22,039 — 22,040

Issuance of common stock, net of issuance costs 92,882 — 289 — 289

Issuance of common stock, common stock warrants, and pre-funded warrants, net of issuance costs 27,500,070 3 46,161 — 46,164

Issuance of common stock upon the exercise of pre-funded warrants 13,378,302 1 — — 1

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Adjustment to reconcile net loss to net cash used in operating activities:

Acquired in-process research and development charge — 10,000

Non-cash stock-based compensation 1,564 2,094

Non-cash lease expense 561 495

Change in fair value of contingent consideration — ( 296 )

Change in fair value of common stock warrants — ( 4 )

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Cash flows from financing activities:

Proceeds from issuance of common stock and common stock warrants, net of issuance costs 21,936 22,946

Proceeds from issuance of common stock, common stock warrants, and pre-funded warrants, net of issuance costs 46,164 21,936

Proceeds from issuance of common stock, net of issuance costs — 289

Proceeds from the exercise of warrants 14 —

Proceeds from the exercise of warrants and pre-funded warrants 560 14

Proceeds from employee stock plan purchases 98 107

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Net cash provided by financing activities 46,758 22,315

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents ( 14,595 ) ( 4,230 )

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents 11,356 ( 14,595 )

Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of year 2,630 17,225

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Supplemental disclosures:

Payable for acquired in-process research and development $ — $ 5,500

Warrant modifications recorded in stockholders' equity (deficit) $ 725 $ —

Increase in operating lease right of use assets and current and non-current operating lease liabilities $ 526 $ 368

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GPS has potential as a monotherapy or in combination with other immunotherapeutic agents to address a broad spectrum of hematologic, or blood, cancers and solid tumor indications.

SELLAS' second product candidate is SLS009 (formerly GFH009), a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which the Company licensed from GenFleet Therapeutics (Shanghai), Inc.

SELLAS' second product candidate is SLS009, a small molecule, highly selective cyclin-dependent kinase 9 ("CDK9") inhibitor, which the Company licensed from GenFleet Therapeutics (Shanghai), Inc.

("GenFleet"), for all therapeutic and diagnostic uses in the world outside of mainland China, Hong Kong, Macau and Taiwan ("SLS009 Territory").

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As of December 31, 2024, the Company had cash and cash equivalents of $ 13.9 million.

The Company expects its cash and cash equivalents, together with the net proceeds from a public offering completed on January 8, 2024 (the "January 2024 Offering") and the registered direct offering completed on March 19, 2024 (the "March 2024 Registered Direct Offering"), will not be sufficient to fund its current planned operations for at least the next twelve months from the date of issuance of these financial statements.

The Company expects its cash and cash equivalents, including aggregate net proceeds received from a registered direct offering that closed on January 29, 2025 (the "January 2025 Registered Direct Offering"), will not be sufficient to fund its current planned operations for at least the next twelve months from the date of issuance of these financial statements.

These conditions give rise to a substantial doubt over the Company’s ability to continue as a going concern.

These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

On March 19, 2024, the Company consummated the March 2024 Registered Direct Offering, in which we entered into a Securities Purchase Agreement with two institutional investors pursuant to which the Company

On January 29, 2025, the Company consummated the January 2025 Registered Direct Offering with an institutional investor priced at-the-market under Nasdaq rules, pursuant to which the Company agreed to issue and sell 8,200,000 shares of common stock and 11,485,040 pre-funded warrants exercisable for shares of common

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

agreed to issue and sell 11,000,000 shares of our common stock and 2,029,316 pre-funded warrants exercisable for shares of common stock.

Each share of common stock was sold together at a purchase price of $ 1.535 and each pre-funded warrant was sold at a purchase price of $ 1.5349 .

The gross proceeds to the Company from the March 2024 Registered Direct Offering were approximately $ 20.0 million, before deducting the placement agent's fees and related offering expenses.

stock, together with accompanying warrants to purchase up to 19,685,040 shares of common stock.

Each share of common stock and accompanying common warrant were sold together at a combined offering price of $ 1.27 , and each pre-funded warrant and accompanying common warrant were sold together at a combined offering price of $ 1.2699 .

The common warrants have an exercise price of $ 1.20 per share.

The net proceeds to the Company from the January 2025 Registered Direct Offering were approximately $ 23.1 million, after deducting the placement agents' fees and related offering expenses.

On August 1, 2024, the Company consummated a registered direct offering with an institutional investor priced at a premium to market (the "August 2024 Registered Direct Offering"), pursuant to which the Company agreed to issue and sell 6,370,070 shares of common stock and 9,478,986 pre-funded warrants exercisable for shares of common stock, together with accompanying warrants to purchase 15,849,056 shares of common stock.

Each share of common stock and accompanying common warrant were sold together at a combined offering price of $ 1.325 , and each pre-funded warrant and accompanying common warrant were sold together at a combined offering price of $ 1.3249 .

The common warrants have an exercise price of $ 1.20 per share.

The net proceeds to the Company from the August 2024 Registered Direct Offering were approximately $ 19.5 million, after deducting the placement agent's fees and related offering expenses.

On March 19, 2024, the Company consummated a registered direct offering with two institutional investors priced at-the-market under Nasdaq rules (the "March 2024 Registered Direct Offering"), pursuant to which the Company agreed to issue and sell 11,000,000 shares of its common stock and 2,029,316 pre-funded warrants exercisable for shares of common stock.

Each share of common stock was sold at a purchase price of $ 1.535 and each pre-funded warrant was sold at a purchase price of $ 1.5349 .

The net proceeds to the Company from the March 2024 Registered Direct Offering were approximately $ 18.5 million, after deducting the placement agent's fees and related offering expenses.

In a concurrent private placement, the Company agreed to issue to the two institutional investors exercisable for up to an aggregate of 13,029,316 shares of common stock warrants at an exercise price of $ 1.41 per share.

Subsequent to the closing of the March 2024 Registered Direct Offering, 1,014,658 pre-funded warrants were exercised for shares of common stock.

On January 8, 2024, the Company consummated the January 2024 Offering on a "reasonable best efforts" basis, issuing 10,130,000 shares of common stock and an aggregate of 1,870,000 pre-funded warrants exercisable for shares of common stock, together with accompanying warrants to purchase an aggregate of 12,000,000 shares of common stock.

Subsequent to the closing of the March 2024 Registered Direct Offering, all of the pre-funded warrants issued in the March 2024 Registered Direct Offering have been exercised for shares of common stock.

On January 8, 2024, the Company consummated a public offering on a "reasonable best efforts" basis (the "January 2024 Offering"), issuing 10,130,000 shares of common stock and an aggregate of 1,870,000 pre-funded warrants exercisable for shares of common stock, together with accompanying warrants to purchase an aggregate of 12,000,000 shares of common stock.

Each share of common stock and accompanying common warrant were sold together at a combined offering price of $ 0.75 , and each pre-funded warrant and accompanying common warrant were sold together at a combined offering price of $ 0.7499 .

The aggregate gross proceeds to us from the January 2024 Offering were approximately $ 9.0 million, before deducting placement agents' fees and related offering expenses.

On November 2, 2023, the Company consummated a registered direct offering (the "November 2023 Registered Direct Offering"), pursuant to a Securities Purchase Agreement with a single institutional investor under which the Company agreed to issue and sell, 3,100,000 shares of its common stock and 552,300 pre-funded warrants exercisable for shares of common stock, together with accompanying warrants to purchase an aggregate of 3,652,300 shares of common stock.

Each share of common stock and accompanying warrant were sold together at a combined purchase price of $ 1.0952 and each pre-funded warrant and accompanying warrant were sold together at a combined purchase price of $ 1.0951 .

The net proceeds to the Company from the November 2023 Registered Direct Offering were approximately $ 3.5 million, after deducting placement agents' fees and related offering expenses.

On February 28, 2023, the Company consummated an underwritten public offering (the "February 2023 Offering"), issuing 7,220,217 shares of common stock and accompanying common stock warrants to purchase an aggregate of 7,220,217 shares of common stock.

The shares of common stock and accompanying common stock warrants were sold at a combined price of $ 2.77 per share and accompanying common stock warrant.

Each common stock warrant sold with the shares of common stock represents the right to purchase one share of the Company’s common stock at an exercise price of $ 2.77 per share.

The common stock warrants are exercisable immediately and will expire on February 28, 2028, five years from the date of issuance.

The net proceeds to the Company from the February 2023 Offering were approximately $ 18.5 million, after deducting underwriting discounts and commissions and estimated offering expenses, and excluding the exercise of any warrants.

On April 16, 2021, the Company entered into a Controlled Equity Offering SM Sales Agreement (the "Sales Agreement"), with Cantor Fitzgerald & Co.

(the "Agent").

From time to time during the term of the Sales Agreement, the Company could offer and sell shares of common stock having an aggregate offering price up to a total of $ 50.0 million in gross proceeds.

The Agent was entitled to collect a fee equal to 3 % of the gross sales price of all shares of common stock sold.

Shares of common stock sold under the Sales Agreement were offered and sold pursuant to the Company's registration statement on Form S-3, which was filed with the U.S.

Securities and Exchange Commission ("SEC") on April 16, 2021 and declared effective on April 29, 2021.

During the year ended December 31, 2023, the Company sold 92,882 shares of common stock pursuant to the Sales Agreement at an average price of $ 3.21 per share for aggregate net proceeds of approximately $ 0.3 million.

On January 2, 2024, the Company mutually agreed with the Agent to terminate the Sales Agreement.

The net proceeds to the Company from the January 2024 Offering were approximately $ 8.2 million, after deducting the placement agent's fees and related offering expenses.

Subsequent to the closing of the January 2024 Offering, all of the pre-funded warrants issued in the January 2024 Offering have been exercised for shares of common stock.

In December 2020, the Company, together with its wholly-owned subsidiary, SLSG Limited, LLC, entered into an Exclusive License Agreement (the “3D Medicines Agreement”) with 3D Medicines Inc.

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As of December 31, 2024, the Company has received an aggregate of $ 10.5 million in upfront payments and certain technology transfer and regulatory milestones.

There is a total of $ 191.5 million in potential future development, regulatory, and sales milestones, not

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

including future royalties, remains under the 3D Medicines Agreement, which milestones are all variable in nature and not under the Company's control.

There is a total of $ 191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, that remains under the 3D Medicines Agreement, which milestones are all variable in nature and not under the Company's control.

In December 2023, the Company commenced a binding arbitration proceeding against 3D Medicines, which involves, among other things, the trigger and payment of certain milestone payments due to the Company.

See Note 6, Legal Proceedings.

The Company will require substantial additional financing to commercially develop any current or future product candidates.

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The Company currently does not have any commitments to obtain additional funds.

The Company's management continues to evaluate different strategies to obtain the required funding for future operations.

The Company's management continues to evaluate different strategies to obtain the

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required funding for future operations.

These strategies may include public and private placements of equity and/or debt securities, as well as payments from potential strategic research and development collaborations or licensing and/or marketing arrangements with pharmaceutical companies.

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All significant intercompany accounts and transactions have been eliminated upon consolidation.

Unless the context otherwise indicates, reference in these notes to the "Company" refer to SELLAS Life Sciences Group, Inc., and its wholly owned subsidiaries, Private SELLAS, SLSG Limited, LLC, Sellas Life Sciences Limited, and Apthera, Inc.

The functional currency of the Company's non-U.S.

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Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company views its operations and manages its business in one segment.

The Company's chief operating decision maker ("CODM") is the President & Chief Executive Officer.

The Company views its operations and manages its business as one operating segment, which includes all activities related to the development of novel therapeutics for a broad range of cancer indications.

The determination of a single reportable segment is consistent with the consolidated financial information provided to the CODM.

The CODM does not evaluate discrete financial information for each of the Company's clinical product candidates, and views and manages the Company's clinical programs as one consolidated segment for which all operations are centralized.

Segment profit or loss is measured as the Company's net loss as reported on the consolidated statement of operations.

As the Company does not currently generate revenues, the CODM evaluates Company performance through the achievement of clinical development goals.

The CODM also monitors the Company's cash and cash equivalents as reported on the consolidated balance sheet, net cash used in operations as reported on the consolidated statement of cash flows, and segment expense information in order to make operational decisions, allocate resources, and plan for future activities.

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Segment expenses consist of the Company's functional expenses, research and development expenses and general and administrative expenses, as reported in the consolidated statement of operations.

Other segment items included in the measure of segment net loss include non-operating income, which primarily relates to interest income.

The measure of total segment assets is reported on the consolidated balance sheet as total assets.

The accounting policies of the Company's single reportable segment are the same as those for the consolidated financial statements described in this Note 3.

Fair Value of Financial Instruments

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Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

determined based on assumptions that market participants would use in pricing an asset or a liability.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

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As of December 31, 2024 and 2023, the carrying amounts of the Company’s financial instruments, including cash equivalents and accounts payable, approximate fair value due to the short-term nature of those instruments and were categorized as Level 1.

As of December 31, 2022, the carrying amounts of the Company’s liability-classified warrants were recorded at their estimated fair value.

The fair value of the warrants utilize certain unobservable inputs that fall within Level 3 of the fair value hierarchy.

See Note 5 for additional information on the fair value of certain financial assets and liabilities.

The Company did not transfer any financial instruments into or out of Level 3 classification during the years ended December 31, 2024 and 2023.

Concentration of Credit Risk

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The following table provides a reconciliation of the components of cash, cash equivalents, restricted cash, and restricted cash equivalents reported in the Company's consolidated balance sheets to the total amount presented in the consolidated statements of cash flows (in thousands):

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Cash and cash equivalents $ 13,886 $ 2,530

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As of December 31, 2024 and 2023, the Company maintained $ 0.1 million on hand with the Company's financial institutions as collateral for its corporate credit cards.

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Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed.

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and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

The Company only applies the five step model to contracts when it is probable that the entity will collect the

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consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct.

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Development, Regulatory and Sales Milestones and Other Payments

At the inception of each arrangement that includes regulatory or development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount

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to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

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To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

Acquired In-Process Research and Development

Costs incurred in obtaining technology licenses are immediately recognized as acquired in-process research and development expense, provided the technology licensed has no alternative future use as the technology and know-how acquired are not currently commercially viable.

Payments related to contingent consideration such as development milestones, commercial milestones and royalties (Note 7) will be recognized when the contingency is probable and reasonably estimable in accordance with ASC 450, Contingencies .

Research and Development Expenses

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Stock-based Compensation

The Company measures employee and non-employee director share-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards.

Estimating the fair value of share-based awards requires the input of subjective assumptions, including the expected life of the options and stock price volatility.

The Company accounts for forfeitures for stock option awards as they occur.

The Company measures employee and non-employee director share-based awards at their estimated grant-date fair value and records compensation expense on a straight-line basis over the requisite service period, which is typically the vesting term of the awards.

Estimating the fair value of share-based awards requires the input of subjective assumptions, including the expected term of the options and stock price volatility.

The Company uses the Black-Scholes option pricing model to value its stock option awards.

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As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards.

The expected life of the stock options is estimated using the “simplified method,” as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.

The simplified method is the midpoint between the vesting period and the contractual term of the option.

The stock price volatility assumption is based on

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the historical volatility of the Company's publicly traded common stock.

The expected term of the stock options is estimated using the “simplified method,” as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.

The simplified method is the midpoint between the vesting term and the contractual term of the option.

The stock price volatility assumption is based on the historical volatility of the Company's publicly traded common stock.

The risk-free rate is based on the U.S.

Treasury yield curve commensurate with the expected life of the option.

Treasury yield curve commensurate with the expected term of the option.

The Company accounts for forfeitures for stock option awards as they occur.

Restricted Stock Units with Performance and Service Conditions

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Adjustments to the valuation allowance will increase or decrease the Company’s income tax provision or benefit.

The recognition and measurement of benefits related to the Company’s tax positions requires significant judgment, as uncertainties often exist with respect to new laws, new interpretations of existing laws, and rulings by taxing authorities.

Differences between actual results and the Company’s assumptions or changes in the Company’s assumptions in future periods are recorded in the period they become known.

Net Loss Per Share

The recognition and measurement of benefits related to the Company’s tax positions requires

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significant judgment, as uncertainties often exist with respect to new laws, new interpretations of existing laws, and rulings by taxing authorities.

Differences between actual results and the Company’s assumptions or changes in the Company’s assumptions in future periods are recorded in the period they become known.

Net Loss Per Share

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period.

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Restricted stock units 472 338

Recent Accounting Pronouncements Not Yet Adopted

58,264 17,799

Recent Accounting Standards Adopted

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others.

Improvements to Reportable Segment Disclosures, which requires public entities to disclose significant segment expenses regularly provided to the chief operating decision-maker.

Public entities with a single reporting segment have to provide all disclosures required by ASC 280, including the significant segment expense disclosures.

2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the amendments should be applied retrospectively.

The Company is currently evaluating the impact of the ASU on the consolidated financial statement disclosures but does not expect a material impact upon adoption.

This ASU became effective for the Company on January 1, 2024 and did not have a material impact on the consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No.

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The Company is currently evaluating the impact of the ASU on the income tax disclosures within the consolidated financial statements but does not expect a material impact upon adoption.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires disclosure of disaggregated information about certain income statement expense line items in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 will be effective for the annual reporting periods in fiscal years beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on the consolidated financial statements.

Collaboration and In-License Agreements

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As part of its business, the Company enters into in-licensing agreements with third parties that often require milestone and royalty payments based on the progress of the licensed asset through development and commercial stages.

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On March 31, 2022, the Company entered into an exclusive license agreement with GenFleet pursuant to which GenFleet granted to the Company a sublicensable royalty-bearing license under certain of its intellectual property, to develop, manufacture, and commercialize SLS009 for the treatment, diagnosis or prevention of disease in humans and animals in the SLS009 Territory.

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In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $ 10.0 million, all of which has been paid as of December 31, 2023, (ii) development and regulatory milestone payments for up to three indications totaling up to $ 48.0 million in the aggregate, and (iii) sales milestone payments totaling up to $ 92.0 million in the aggregate upon the achievement of certain net sales thresholds in a given calendar year.

In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $ 10.0 million, (ii) potential development and regulatory milestone payments for up to three indications totaling up to $ 48.0 million in the aggregate, and (iii) potential sales milestone payments totaling up to $ 92.0 million in the aggregate upon the achievement of certain net sales thresholds in a given calendar year.

The Company also agreed to pay GenFleet single-digit tiered royalties based upon a percentage of annual net sales, with the royalty rate escalating based on the level of annual net sales of SLS009 in the SLS009 Territory ranging from the low to high single digits.

During the year ended December 31, 2022, the Company expensed $ 10.0 million related to the acquired technology as in-process research and development based on the assessment that the technology has no alternative future use as the technology and know-how acquired are not currently commercially viable.

During the years ended December 31, 2023 and 2022, the Company made cash payments of $ 5.5 million and $ 4.5 million, respectively, pursuant to the exclusive license agreement.

During the year ended December 31, 2024, there were no payments made to GenFleet pursuant to the exclusive license agreement.

During the year ended December 31, 2023, the Company made cash payments of $ 5.5 million under the exclusive license agreement as part of the upfront and technology transfer fee.

Exclusive License Agreement with Memorial Sloan Kettering Cancer Center ("MSK")

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Such expenses have been included in research and development costs.

The Compan y incurred $ 0.1 million of sublicensing fees payable included in cost of licensing revenue under the Second MSK A&R License Agreement in connection with the 3D Medicines Agreement during the year ended December 31, 2022.

There were no sublicensing fees incurred during the year ended December 31, 2023.

Fair Value Measurements

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets (in thousands):

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Description December 31, 2023 Quoted Prices In

Active Markets

(Level 1) Significant Other

Inputs (Level 2) Unobservable

Cash equivalents $ 2,314 $ 2,314 $ — $ —

Restricted cash equivalents 100 100 — —

Total assets measured and recorded at fair value $ 2,414 $ 2,414 $ — $ —

Warrant liability $ — $ — $ — $ —

Total liabilities measured and recorded at fair value $ — $ — $ — $ —

Description December 31, 2022 Quoted Prices In

Active Markets

(Level 1) Significant Other

Inputs (Level 2) Unobservable

Cash equivalents $ 16,609 $ 16,609 $ — $ —

Restricted cash equivalents 100 100 — —

Total assets measured and recorded at fair value $ 16,709 $ 16,709 $ — $ —

Warrant liability $ 4 $ — $ — $ 4

Total liabilities measured and recorded at fair value $ 4 $ — $ — $ 4

The Company did not transfer any financial instruments into or out of Level 3 classification during the years ended December 31, 2023 and 2022.

See Note 9 for a reconciliation of the changes in the fair value of the warrant liability for the years ended December 31, 2023 and 2022.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Balance Sheet Accounts

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Clinical trial costs $ 2,172 $ 399

Insurance 87 219

Professional fees 130 56

Insurance 39 87

Prepaid expenses and other current assets $ 2,341 $ 542

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Except for this arbitration proceeding, a s of December 31, 2024, there was no other pending or threatened litigation.

Contingent Consideration related to Development, Regulatory and Commercial Milestone Payments

The Company acquires assets still in development and enters into research and development arrangements with third parties that often require milestone and royalty payments based on the progress of the asset through development stages.

Milestone payments may be required, for example, upon approval of the product for marketing by a regulatory agency.

In certain agreements, the Company is required to make royalty payments based upon a percentage of the sales.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

These arrangements may be material individually, and in the unlikely event that milestones for multiple products covered by these arrangements were reached in the same period, the aggregate charge to expense could be material to the results of operations.

In addition, these arrangements often give the Company the discretion to unilaterally terminate development of the product, which would allow the Company to avoid making the contingent payments;

however, the Company is unlikely to cease development if the compound successfully achieves clinical testing objectives.

See Note 4 for additional information on the Company’s commitments under collaboration and license agreements.

The Company has a non-cancelable operating lease for certain executive, administrative, and general business office space for its headquarters in New York, New York, which commenced on June 5, 2020, was amended in February 2022 to add additional space, and had an initial lease term through December 30, 2024.

The Company assessed the lease amendment for the additional space and determined it should be accounted for as a separate contract.

On December 11, 2023, the Company agreed to extend the expiration date for its office space through September 30, 2025.

The Company assessed the amendment for the lease extension and determined it should be accounted for as a modification.

Accordingly, on the effective modification date, the Company remeasured its operating lease liabilities and corresponding operating lease right-of-use assets at the present value of the remaining lease payments.

The weighted average discount rate used to account for the Company's operating lease under ASC 842, Leases, as of December 31, 2023 is approximately 13.0 %.

As of December 31, 2023, the leases have a remaining term of 1.75 years.

Rent expense related to the Company's operating lease was approximately $ 0.5 million for each of the years ended December 31, 2023 and 2022.

On October 3, 2024, the Company agreed to extend the expiration date for its office space by one year through September 30, 2026.

The Company assessed the amendment for the lease extension and determined it

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

should be accounted for as a modification of the existing operating leases.

Accordingly, on the effective modification date, the Company recognized an increase to its operating lease liabilities and corresponding operating lease right-of-use assets of approximately $ 0.5 million for the remeasurement at present value of the remaining lease payments using a discount rate of 13.0 %.

The weighted average discount rate used to account for the Company's operating lease under ASC 842, Leases, as of December 31, 2024 and 2023 was approximately 13.0 %.

As of December 31, 2024 and 2023, the leases had a remaining term of 1.75 years.

Rent expense related to the Company's operating lease was approximately $ 0.6 million and $ 0.5 million for the years ended December 31, 2024 and 2023, respectively.

The Company made cash payments related to operating leases of approximately $ 0.5 million during each of the years ended December 31, 2024 and 2023.

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Operating lease liabilities $ 1,001

Stockholders’ (Deficit) Equity

Stockholders’ Equity (Deficit)

Preferred Stock

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Shares of common stock reserved for future issuance are as follows (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

December 31, 2024

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The following is a summary of the Company's warrants to acquire shares of common stock activity for the year ended December 31, 2024 (in thousands, except per share data):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Warrant Issuance Outstanding, December 31, 2023 Granted Exercised Canceled/Expired Outstanding, December 31, 2024 Exercise Price Per Share Expiration

Warrants classified as equity:

November 2023 Registered Direct — 3,652 — — 3,652 $ 0.9702 November 2028

November 2023 Registered Direct Pre-Funded Warrants — 552 ( 552 ) — — $ 0.0001 November 2028

August 2024 Registered Direct Offering — 15,849 — — 15,849 $ 1.2000 August 2029

March 2024 Registered Direct Offering — 13,029 — — 13,029 $ 1.4100 September 2029

January 2024 Offering — 12,000 ( 533 ) — 11,467 $ 0.7500 January 2029

November 2023 Registered Direct 3,652 — — — 3,652 $ 0.7500 January 2029

February 2023 Offering 7,206 — ( 212 ) — 6,994 $ 0.7500 February 2028

April 2022 Offering 4,630 — — — 4,630 $ 3.2291 April 2027 - November 2028

January 2020 Offering 309 — — — 309 $ 3.9300 July 2025

July 2020 PIPE Offering 25 — — — 25 $ 3.3000 August 2025

Other 164 — — ( 132 ) 32 $ 7.5000 March 2024 - June 2024

5,128 11,424 ( 566 ) ( 132 ) 15,854

Warrants classified as liability:

13 — — ( 13 ) — $ 7.5000

April 2022 Offering 766 — — — 766 $ 5.4000 April 2027

April 2022 Offering Modified Warrants 3,864 — — — 3,864 $ 0.7500 January 2029

Pre-Funded Warrants — 13,378 ( 13,378 ) — — $ 0.0001 n/a

Other 366 — — ( 32 ) 334 $ 3.8827 July 2025 - August 2025

15,854 54,256 ( 14,123 ) ( 32 ) 55,955

Subsequent to December 31, 2024, the Company received $ 0.5 million from the exercise of 669,233 warrants to acquire shares of common stock at an exercise price of $ 0.75 per share, and 8,000,000 pre-funded warrants issued in the January 2025 Offering were exercised into shares of common stock.

In connection with the closing of the January 2024 Offering at a combined offering price of $ 0.75 , the Company agreed to (i) reduce the exercise price of an aggregate of 3,863,851 warrants that were issued to certain purchasers in an underwritten public offering that closed on April 5, 2022 (the "April 2022 Offering") to $ 0.75 , (ii) reduce the exercise price of an aggregate of 3,652,300 warrants that were issued in the November 2023 Registered Direct Offering to $ 0.75 , and (iii) extend the termination date of the April 2022 Offering warrants and the November 2023 Registered Direct Offering warrants to January 8, 2029.

Concurrent with the closing of the January 2024 Offering, the exercise price of an aggregate of 7,220,217 warrants were also reduced to an exercise price of $ 0.75 per share.

Warrants to acquire shares of common stock primarily consist of equity-classified warrants.

In addition, warrants to acquire shares of common stock that may require the Company to settle in cash are liability-classified warrants.

Concurrent with the closing of the January 2024 Offering, the exercise price of an aggregate of 7,206,217 warrants which had been issued in an underwritten public offering that closed on February 28, 2023 (the "February 2023 Offering") were also reduced to an exercise price of $ 0.75 per share.

The Company accounted for these amendments as a cost to issue equity with the incremental fair value of approximately $ 0.7 million recognized as an offset to the proceeds received.

Fair value of the equity-classified warrants immediately before and after the modification was estimated using a Black-Scholes option pricing model, and the change in fair value was primarily driven by the change in exercise price.

The Black-Scholes option pricing model also takes into account the historical volatility of the Company's common stock, the estimated remaining term of the warrants, and a risk-free interest rate based on the U.S.

Treasury yield commensurate with the expected term.

The Company's outstanding warrants to acquire shares of common stock consist of equity-classified warrants.

Warrants Classified as Equity

Equity-classified warrants consist of warrants to acquire common stock issued in connection with previous equity financings.

During its evaluation of equity classification for warrants to acquire shares of common stock, the Company considered the conditions as prescribed within ASC 815-40, Derivatives and Hedging, Contracts in an

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Entity’s own Equity (“ASC 815-40”).

The conditions within ASC 815-40 are not subject to a probability assessment.

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The warrants to acquire shares of common stock do meet the definition of a derivative instrument under ASC 815, but are eligible for the scope exception as they are indexed to the Company’s own stock and would be classified in permanent equity if freestanding.

On February 28, 2023, in connection with closing of the February 2023 Offering, the Company entered into amendments to an aggregate of 3,438,851 warrants, which had been previously issued by the Company in the April 2022 Offering, to reduce the exercise price of such warrants from $ 5.40 to $ 3.62 , the average closing price of the Company’s common stock, as reported on the Nasdaq Capital Market, for the five trading days immediately preceding the pricing of the February 2023 Offering.

The Company accounted for the amendment as a cost to issue equity with the incremental fair value of approximately $ 0.3 million recognized as an offset to the proceeds received.

However, there was no net impact to the consolidated statements of stockholders' (deficit) equity because the warrants are equity classified.

On November 2, 2023, in connection with the closing of the November 2023 Registered Direct Offering, the Company entered into an amendment to reduce the exercise price of warrants to purchase up to 887,000 shares of the Company’s common stock which were issued in the April 2022 Offering and held by the purchaser in the November 2023 Registered Direct Offering to $ 0.9702 , and amended the termination date of such warrants to November 2, 2028.

Concurrent with the closing of the November 2023 Registered Direct Offering, an aggregate of 7,220,217 warrants issued in the February 2023 Offering were reduced to $ 0.9702 per share.

The Company accounted for the change in exercise price as a cost to issue equity with the incremental fair value of approximately $ 0.4 million recognized as an offset to the proceeds received.

However, there was no net impact to the consolidated statements of stockholders' (deficit) equity because the warrants are equity classified.

Warrants Classified as Liabilities

The liability-classified warrants consist of warrants to acquire common stock issued in connection with previous equity financings.

These warrants may be settled in cash and were determined to not be indexed to the Company’s common stock.

The Company's outstanding liability-classified warrants expired during the year ended December 31, 2023.

The estimated fair value of outstanding warrants accounted for as liabilities was determined at each balance sheet date through expiration.

Any decrease or increase in the estimated fair value of the warrant liability as of each balance sheet date was recorded in the consolidated statement of operations as a change in fair value of warrant liability.

The fair value of the warrants accounted for as liabilities is estimated using a Black-Scholes pricing model with the following inputs:

As of December 31,

Risk free interest rate n/a 4.75 %

Volatility n/a 120.60 %

Expected term (years) n/a 0.75

Expected dividend yield n/a — %

Strike price n/a $ 7.50

The changes in fair value of the warrant liability for the year ended December 31, 2023 and 2022 were as follows (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Warrant Liability

Warrant liability, January 1, 2022 $ 40

Change in fair value of warrants ( 36 )

Warrant liability, December 31, 2022 4

Change in fair value of warrants ( 4 )

Warrant liability, December 31, 2023 $ —

License Revenue with 3D Medicines, Inc.

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Revenue Recognition

At inception, the Company evaluated the 3D Medicines Agreement under ASC 606 and recognized an initial transaction price of $ 9.5 million, which included the $ 7.5 million upfront fee as well as $ 2.0 million in development milestones that were assessed to be probable of being achieved, while the remaining milestones were variable consideration subject to constraint at inception.

In the first quarter of 2022, an additional $ 1.0 million in licensing revenue was recognized upon approval by China’s National Medical Products Administration (“NMPA”) for a small Phase 1 clinical trial investigating safety of GPS in China.

There is $ 191.5 million in potential future development, regulatory, and sales milestones, not including future royalties, remaining under the 3D Medicines Agreement as of December 31, 2024, which milestones are variable in nature and not under the Company's control.

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To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

There was no licensing revenue recognized during the year ended December 31, 2023.

Licensing revenue of $ 1.0 million recognized during the year ended December 31, 2022 related to the IND approval by the NMPA.

There was no cost of licensing revenue recognized during the year ended December 31, 2023.

Cost of licensing revenue of $ 0.1 million was recognized during the year ended December 31, 2022 for sublicensing fees incurred under the Second MSK A&R License Agreement in connection with the 3D Medicines Agreement.

See Note 6, Legal Proceedings .

There was no licensing revenue recognized during the years ended December 31, 2024 and 2023, and there was no cost of licensing revenue recognized during the years ended December 31, 2024 and 2023.

Stock-Based Compensation

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

2017 Equity Incentive Plan

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2023 Amended and Restated Equity Incentive Plan

On September 10, 2019, the 2019 Equity Incentive Plan ("2019 Equity Plan") was approved by the stockholders of the Company, which currently allows for issuance of up to approximately 6,036,000 shares of common stock in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate.

The number of shares reserved for issuance under the 2019 Equity Plan automatically increased on January 1 of each year, for a period of four years , which commenced on January 1, 2020 and ended on (and including) January 1, 2023, by an amount equal to the lesser of (i) 5 % of the total number of shares of common stock outstanding at the end of the prior fiscal year;

and (ii) an amount determined by the Board of Directors or authorized committee.

On September 10, 2019, the 2019 Equity Incentive Plan ("2019 Equity Plan") was approved by the stockholders of the Company in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate.

On June 20, 2023, an amendment to the 2019 Equity Plan was approved by the stockholders of the Company, which amended and restated the 2019 Equity Plan (as amended and restated, the "2023 Amended and Restated Equity Incentive Plan") to increase the number of shares of common stock authorized for issuance under the 2019 Equity Plan by 3,000,000 shares.

As of December 31, 2023, approximately 3,951,000 shares of common stock were reserved for future grants under the 2019 Equity Incentive Plan.

The 2023 Amended and Restated Equity Incentive Plan currently allows for issuance of up to approximately 6,036,000 shares of common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of December 31, 2024, approximately 3,414,000 shares of common stock were reserved for future grants under the 2023 Amended and Restated Equity Incentive Plan.

The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively (in thousands):

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Volatility 130.41 % 127.77 %

Expected lives (years) 6.20 6.18

Expected term (years) 6.19 6.20

Expected dividend yield — % — %

The weighted-average grant date fair value of options granted during the years ended December 31, 2024 and 2023 was $ 0.48 and $ 2.88 , respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company’s expected common stock price volatility assumption is based upon the Company's own implied volatility in combination with the implied volatility of a basket of comparable companies.

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The following table summarizes stock option activity of the Company for the years ended December 31, 2024 and 2023, respectively:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Shares (in thousands) Weighted

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The following table summarizes RSU activity of the Company for the years ended December 31, 2024 and 2023, respectively:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Total Number of Shares

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The 2021 ESPP allows employees to contribute up to 20 % of their cash earnings, subject to a maximum of $25,000 per year under Internal Revenue Service rules, to be used to purchase shares of the Company's common stock on semi-annual purchase dates.

The 2021 ESPP allows eligible employees to purchase shares of common stock at a price per share equal to 85 % of the lower of the fair market value of the common stock at the beginning or end of each six-month offering period during the term of the 2021 ESPP.

The 2021 ESPP allows eligible employees to purchase shares of common stock at a price per share equal to 85 % of the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

lower of the fair market value of the common stock at the beginning or end of each six-month offering period during the term of the 2021 ESPP.

During the years ended December 31, 2024 and 2023, 103,853 and 91,454 shares of common stock, respectively, were purchased by employees under the 2021 ESPP for proceeds of approximately $ 0.1 million.

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$ ( 30,881 ) $ ( 37,340 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The components of net deferred tax assets are as follows (in thousands):

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Net deferred tax liability $ — $ —

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The provision for income taxes differs from the provision computed by applying the federal statutory rate to net loss before income taxes as follows:

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There was no income tax benefit or expense for the years ended December 31, 2024 and 2023.

In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized in the near term.

In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The valuation allowance increased by approximately $ 2.5 million for the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

year ended December 31, 2023, which was primarily driven by net operating loss ("NOL") carryforwards, capitalized research and development and stock-based compensation, which were partially offset by a decrease related to licensing deduction deferrals.

The valuation allowance increased by approximately $ 2.1 million for the year ended December 31, 2024, which was primarily driven by increases in net operating loss ("NOL") carryforwards and capitalized research and development, which were partially offset by a decrease related to licensing deduction deferrals.

At December 31, 2024, the Company had domestic federal and state net operating loss carryforwards of approximately $ 65.6 million and $ 4.2 million, respectively, available to reduce future taxable income, which expire beginning in 2027.

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In assessing its unrecognized tax benefits, the Company has analyzed its tax return filing positions in all of the federal, state and foreign filing jurisdictions where it is required to file income tax returns, as well as all open years in those jurisdictions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

As of December 31, 2024, the Company has no unrecognized tax benefits or accrued interest or penalties associated with uncertain tax positions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data