SELLAS Life Sciences Group, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP, San Jose, CA PCAOB ID: 23 ) 131 Consolidated Balance Sheets as of December 31, 2025 and 2024 132 Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 133 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2025 and 2024 134 Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024 135 Notes to Consolidated Financial Statements 136 130 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of SELLAS Life Sciences Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of SELLAS Life Sciences Group, Inc. (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity 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, 2025 and 2024, 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Baker Tilly US, LLP San Jose, California March 19, 2026 We have served as the Company’s auditor since 2018. 131 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) December 31, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 71,793 $ 13,886 Restricted cash and cash equivalents 100 100 Prepaid expenses and other current assets 3,318 2,341 Total current assets 75,211 16,327 Operating lease right-of-use assets 963 925 Goodwill 1,914 1,914 Deposits and other assets 257 266 Total assets $ 78,345 $ 19,432 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 2,948 $ 3,500 Accrued expenses and other current liabilities 3,525 5,466 Operating lease liabilities 544 544 Total current liabilities 7,017 9,510 Operating lease liabilities, non-current 457 457 Total liabilities 7,474 9,967 Commitments and contingencies (Note 6) Stockholders’ equity: Common stock, $ 0.0001 par value; 350,000,000 shares authorized, 153,103,459 and 73,977,459 shares issued and outstanding at December 31, 2025 and 2024, respectively 15 7 Additional paid-in capital 345,844 257,583 Accumulated deficit ( 274,988 ) ( 248,125 ) Total stockholders’ equity 70,871 9,465 Total liabilities and stockholders’ equity $ 78,345 $ 19,432 See accompanying notes to these consolidated financial statements. 132 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) Year Ended December 31, 2025 2024 Operating expenses: Research and development $ 16,022 $ 19,096 General and administrative 12,252 12,417 Total operating expenses 28,274 31,513 Loss from operations ( 28,274 ) ( 31,513 ) Non-operating income: Interest income 1,411 632 Total non-operating income 1,411 632 Net loss $ ( 26,863 ) $ ( 30,881 ) Per share information: Net loss per common share, basic and diluted $ ( 0.25 ) $ ( 0.50 ) Weighted-average common shares outstanding, basic and diluted 109,051,215 61,202,412 See accompanying notes to these consolidated financial statements. 133 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Amounts in thousands, except share amounts) Common Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity (Deficit) Shares Amount Balance at January 1, 2024 32,132,890 $ 3 $ 209,265 $ ( 217,244 ) $ ( 7,976 ) 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 Issuance of common stock upon the exercise of warrants 745,850 — 559 — 559 Issuance of common stock under employee stock purchase plan 103,853 — 98 — 98 Vesting of restricted stock units 172,199 — — — — Tax withholding on vesting of restricted stock units ( 55,705 ) — ( 64 ) — ( 64 ) Stock-based compensation — — 1,564 — 1,564 Net loss — — — ( 30,881 ) ( 30,881 ) Balance at December 31, 2024 73,977,459 7 257,583 ( 248,125 ) 9,465 Issuance of common stock upon warrant inducements, net of issuance costs 42,048,754 4 51,055 — 51,059 Issuance of common stock, common stock warrants, and pre-funded warrants, net of issuance costs 8,200,000 1 23,050 — 23,051 Issuance of common stock upon the exercise of warrants 16,823,735 2 12,615 — 12,617 Issuance of common stock upon the exercise of pre-funded warrants 11,485,040 1 — — 1 Issuance of common stock under employee stock purchase plan 115,449 — 112 — 112 Vesting of restricted stock units 804,553 — — — — Tax withholding on vesting of restricted stock units ( 351,531 ) — ( 527 ) — ( 527 ) Stock-based compensation — — 1,956 — 1,956 Net loss — — — ( 26,863 ) ( 26,863 ) Balance at December 31, 2025 153,103,459 $ 15 $ 345,844 $ ( 274,988 ) $ 70,871 See accompanying notes to these consolidated financial statements. 134 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year ended December 31, 2025 2024 Cash flows from operating activities: Net loss $ ( 26,863 ) $ ( 30,881 ) Adjustment to reconcile net loss to net cash used in operating activities: Non-cash stock-based compensation 1,956 1,564 Non-cash lease expense 597 561 Changes in operating assets and liabilities: Prepaid expenses and other assets ( 968 ) ( 1,790 ) Accounts payable ( 535 ) ( 2,139 ) Accrued expenses and other current liabilities ( 1,941 ) ( 2,184 ) Operating lease liabilities ( 635 ) ( 533 ) Net cash used in operating activities ( 28,389 ) ( 35,402 ) Cash flows from financing activities: Proceeds from warrant inducements, net of issuance costs 51,042 — Proceeds from issuance of common stock, common stock warrants, and pre-funded warrants, net of issuance costs 23,051 46,164 Proceeds from the exercise of common stock warrants and pre-funded warrants 12,618 560 Proceeds from employee stock plan purchases 112 98 Tax withholding on vesting of restricted stock units ( 527 ) ( 64 ) Net cash provided by financing activities 86,296 46,758 Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents 57,907 11,356 Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of year 13,986 2,630 Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of year $ 71,893 $ 13,986 Supplemental disclosure of cash flow information: Cash received during the year for interest $ 1,411 $ 632 Supplemental disclosures: Fair value of common stock warrants issued in warrant inducements $ 67,412 $ — Warrant modifications recorded in stockholders' equity $ — $ 725 Increase in operating lease right of use assets and current and non-current operating lease liabilities $ 526 $ 526 Offering costs in accounts payable and accrued expenses $ 17 $ — See accompanying notes to these consolidated financial statements. 135 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Description of Business SELLAS Life Sciences Group, Inc. is a late-stage clinical biopharmaceutical company focused on novel therapeutics for a broad range of cancer indications. SELLAS’ lead product candidate, galinpepimut-S ("GPS"), is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center ("MSK") and targets the Wilms Tumor 1 ("WT1") protein, which is present in an array of tumor types. 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"). Both GPS and SLS009 have potential as monotherapies or in combination with other immunotherapeutic agents to address a broad spectrum of hematologic, or blood, cancers and solid tumor indications. As used in this Annual Report on Form 10-K, the words the "Company," and "SELLAS" refer to SELLAS Life Sciences Group, Inc. and its consolidated subsidiaries. 2. Liquidity On October 24, 2025, the Company entered into a Warrant Inducement Agreement (the "October 2025 Inducement") with an institutional investor and holder of certain existing warrants to cash exercise (i) warrants to purchase 6,514,658 shares of common stock at an exercise price of $ 1.535 per share, previously issued in March 2024 (the "March 2024 Warrants"), and (ii) warrants to purchase 15,849,056 shares of common stock at an exercise price of $ 1.325 per share, previously issued in August 2024 (the "August 2024 Warrants"). The March 2024 Warrants and the August 2024 Warrants were exercised at their original issuance exercise price plus $ 0.125 per share of common stock in accordance with Nasdaq rules. In consideration of the investor's agreement to exercise the March 2024 Warrants and the August 2024 Warrants, the Company agreed to issue new warrants to the investor to purchase up to 22,363,714 shares of common stock at an exercise price of $ 2.00 per share (the "October 2025 Warrants"), which are exercisable immediately and will expire on the five year anniversary of issuance. The net proceeds to the Company from the October 2025 Inducement were approximately $ 29.1 million, after deducting financial advisory fees and related transaction expenses. On September 10, 2025, the Company entered into a Warrant Inducement Agreement (the “September 2025 Inducement”) with an institutional investor and holder of certain existing warrants to cash exercise warrants to purchase 19,685,040 shares of common stock, previously issued in January 2025 (the "January 2025 Warrants"), at the original issuance exercise price of $ 1.20 per share. In consideration of the investor’s agreement to exercise the January 2025 Warrants, the Company agreed to issue new warrants to the Investor to purchase up to 19,685,040 shares of common stock at an exercise price of $ 1.88 per share (the “September 2025 Warrants”), which are exercisable immediately and will expire on the five and one half anniversary of issuance. The net proceeds to the Company from the September 2025 Inducement were approximately $ 22.0 million, after deducting financial advisory fees and related transaction expenses. 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 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. During the year ended December 31, 2025, the Company received approximately $ 12.6 million in proceeds from the exercise of 16.8 million at an exercise price of $ 0.75 per share. Subsequent to December 31, 2025, the Company received an additional $ 42.6 million in proceeds from the exercise of 26.4 million warrants at a weighted-average exercise price of approximately $ 1.61 per share. 136 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 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. ("3D Medicines"), pursuant to which the Company granted 3D Medicines a sublicensable, royalty-bearing license, under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS product candidates for all therapeutic and other diagnostic uses in mainland China, Hong Kong, Macau and Taiwan ("3DMed Territory"). As of December 31, 2025, 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 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. As of December 31, 2025, the Company had cash and cash equivalents of $ 71.8 million and restricted cash equivalents of $ 0.1 million. In accordance with Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern , the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the consolidated financial statements are available to be issued. The Company expects its cash and cash equivalents, together with the $ 42.6 million in proceeds from warrant exercises received subsequent to December 31, 2025, will be sufficient to fund its current planned operations for at least the next twelve months from the date of issuance of these financial statements, although the Company may pursue additional capital resources through public or private equity or debt financings or by entering into additional license agreements or collaborations with other companies. Management's expectations with respect to its ability to fund current planned operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management's estimates, the Company may need to seek additional strategic or financing opportunities sooner than would otherwise be expected. There is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders. If the Company is unable to obtain additional funding on a timely basis, it may be forced to significantly curtail, delay, or discontinue one or more of its planned research and development programs or be unable to expand its operations or otherwise prepare for the potential regulatory approval and commercialization of its product candidates, assuming positive data. Since inception, the Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $ 275.0 million as of December 31, 2025. During the year ended December 31, 2025, the Company incurred a net loss of $ 26.9 million and used $ 28.4 million of cash in operations. The Company expects to continue to generate operating losses and negative cash flows for the next few years and will need additional funding to support its planned operating activities through profitability. The transition to profitability is dependent upon the successful development, approval, and commercialization of the Company's product candidates and the achievement of a level of revenues adequate to support its cost structure. 3. Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Principles of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. 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, SELLAS Life Sciences Group, Ltd., a privately held 137 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Bermuda exempted company, SLSG Limited, LLC, and Sellas Life Sciences Limited. The functional currency of the Company's non-U.S. operations is the U.S. dollar. Use of Estimates The preparation of these consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates using historical experience and other factors, including the current economic environment. Significant items subject to such estimates are assumptions used for purposes of determining stock-based compensation, carrying value of goodwill, and accounting for research and development activities. Management believes its estimates to be reasonable under the circumstances. Actual results could differ significantly from those estimates. Segment Information 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'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. 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 The Company measures certain financial assets and liabilities at fair value on a recurring basis. 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 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: Level 1—Quoted prices in active markets for identical assets or liabilities. 138 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Level 2—Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. As of December 31, 2025 and 2024, 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. The Company did not transfer any financial instruments into or out of Level 3 classification during the years ended December 31, 2025 and 2024. Concentration of Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash on deposit with financial institutions, the balances of which frequently exceed federally insured limits. If any of the financial institutions with whom we do business were to be placed into receivership, we may be unable to access to the cash we have on deposit with such institutions. Cash and Cash Equivalents The Company considers any highly liquid investments, such as money market funds, with an original maturity of three months or less to be cash and cash equivalents. Restricted Cash and Cash Equivalents Restricted cash consists of certificates of deposit on hand with the Company’s financial institutions as collateral for its corporate credit cards. 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): December 31, 2025 2024 Cash and cash equivalents $ 71,793 $ 13,886 Restricted cash and cash equivalents 100 100 Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 71,893 $ 13,986 As of December 31, 2025 and 2024, the Company maintained $ 0.1 million on hand with the Company's financial institutions as collateral for its corporate credit cards. Goodwill 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. Goodwill is not amortized but is subject to an annual impairment test. The Company has a single reporting unit and all goodwill relates to that reporting unit. The Company performs its annual goodwill impairment test on October 1 of each fiscal year, or more frequently if changes in circumstances or the occurrence of events suggest that an impairment exists. The Company continually evaluates financial performance, economic conditions and other relevant developments in assessing if an interim period impairment test is necessary. 139 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The Company's goodwill balance at December 31, 2025 and 2024 was $ 1.9 million. The Company did no t recognize any impairment of goodwill during the years ended December 31, 2025 and 2024. As of December 31, 2025 and 2024, there were no accumulated impairment losses related to goodwill. Leases The Company accounts for its leasing arrangements under ASU No. 2016-02, Leases (Topic 842) (“Topic 842”). Under Topic 842, all significant lease arrangements are generally recognized at lease commencement. Operating lease right-of-use ("ROU"), assets and lease liabilities are recognized at the commencement date. An ROU asset and corresponding lease liability is not recorded for leases with an initial term of 12 months or less (short term leases) and the Company recognizes lease expense for these leases as incurred over the lease term. ROU assets represent the Company’s right to use an underlying asset during the reasonably certain lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate, based on the information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments related to initial direct cost and prepayments, and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company’s lease agreements contain lease and non-lease components, which are generally accounted for separately. See Note 6 for discussion of the Company’s facility leases. Revenue Recognition The Company records revenue in accordance with ASC Topic 606, Revenue From Contracts with Customers ("Topic 606"). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five-steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; 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. 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. The Company then allocates the transaction price to each distinct performance obligation based on its relative standalone selling price. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. See Note 9 for further discussion of the Company's revenue recognition associated with the 3D Medicines Agreement. 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 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. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its 140 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. For arrangements that include sales-based royalties, including milestone payments upon first commercial sales and milestone payments based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements. Research and Development Expenses Research and development costs are expensed as incurred. Research and development costs that are paid in advance of performance are capitalized as a prepaid expense and recognized as research and development expenses as the services are provided. Clinical study costs, a component of research and development expenses, are accrued over the service periods specified in the contracts and adjusted as necessary based on an ongoing review of the level of effort and costs actually incurred. Research and development expenses consist primarily of development research performed by contract research organizations ("CROs"), personnel costs, including salaries, benefits and stock-based compensation, clinical drug supply, investigator grants, materials and supplies, consulting fees, licenses and fees, preclinical studies, and overhead allocations consisting of various support and facility-related costs. Stock-based Compensation 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. The assumptions used in estimating the fair value of share-based awards represent management’s estimate and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, share-based compensation expense could be materially different for future awards. 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 term of the option. The Company accounts for forfeitures for stock option awards as they occur. Restricted Stock Units with Performance and Service Conditions The Company's Board of Directors has granted restricted stock units ("RSUs") to employees that vest based on performance and service conditions. The fair values of the performance-based RSUs are measured on the date of grant and are based on the Company's closing stock price on such date. Compensation expense is recognized for the number of performance-based RSUs expected to be earned, provided the requisite service period has been rendered, after assessing the probability that certain performance criteria will be met. Cumulative adjustments are recorded each quarter to reflect the estimated outcome of the performance-related conditions until the date results are determined and settled. The Company accounts for forfeitures of performance-based RSUs when they occur. If performance criteria are not met or are not expected to be met, any compensation expense previously recognized to date associated with the performance-based RSUs will be reversed. 141 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Restricted Stock Units with Service Conditions Only The Board of Directors has granted RSUs to certain employees that vest based on continuous service. Time-vested RSUs awarded to employees vest one-fourth per year annually over four years , provided the employee remains employed with the Company. The fair values of the time-vested RSUs are measured on the date of grant and are based on the Company's closing stock price on such date. Compensation expense for time-vested RSUs with service conditions only are recognized straight-line over the applicable service period. The Company accounts for forfeitures of time-vested RSUs when they occur. Previously recognized compensation expense for forfeited RSUs are reversed in the period the time-vested RSUs are forfeited. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax returns, if such a position is more likely than not to be sustained. Potential interest and penalties associated with unrecognized tax positions are recognized in income tax expense. No interest or penalties associated with unrecognized tax positions were recognized in either of the years ended December 31, 2025 or 2024. The Company recognizes liabilities or assets for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the consolidated financial statements in accordance with FASB ASC 740, “ Accounting for Income Taxes” (“ASC 740”). These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. ASC 740 requires that a valuation allowance be established when management determines that it is more likely than not that all or a portion of a deferred asset will not be realized. The Company evaluates the realizability of its net deferred income tax assets and valuation allowances as necessary, at least on an annual basis. During this evaluation, the Company reviews its forecasts of income in conjunction with other positive and negative evidence surrounding the realizability of its deferred income tax assets to determine if a valuation allowance is required. 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 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. The weighted average number of common stock outstanding also includes pre-funded warrants and shares held in abeyance because their exercise requires only nominal consideration for the delivery of the shares. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding, as their impact would be anti-dilutive (in thousands): 142 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued December 31, 2025 2024 Common stock warrants 58,482 55,955 Stock options 2,651 1,837 Restricted stock units 897 472 62,030 58,264 Recent Accounting Standards Adopted In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures , which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by prescribing standard categories and greater disaggregation of information in the effective tax rate reconciliation, disclosure of income taxes paid disaggregated by jurisdiction, and modifies other income tax-related disclosures. ASU No. 2023-09 is effective for fiscal years beginning after December 15, 2024 and allows for adoption either prospectively or retrospectively. Early adoption is permitted. The Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirement prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. See Note 11, Income Taxes . Recent Accounting Pronouncements Not Yet Adopted 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. 4. Collaboration and In-License Agreements 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. Milestone payments may be required, for example, upon approval of the product for marketing by a regulatory agency, and the Company may be required to make royalty payments based upon a percentage of net sales of the product. The expenditures required under these arrangements in any period may be material and are likely to fluctuate from period to period. These arrangements may permit the Company to unilaterally terminate development of the product and thereby avoid future contingent payments; however, the Company is unlikely to cease development if the compound successfully achieves clinical testing objectives. Exclusive License Agreement with GenFleet Therapeutics (Shanghai) Inc. 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. 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. 143 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued There were no payments made to GenFleet pursuant to the exclusive license agreement during the years ended December 31, 2025 and 2024. Exclusive License Agreement with Memorial Sloan Kettering Cancer Center ("MSK") On September 4, 2014, the Company entered into a license agreement (the “Original MSK License Agreement”) with MSK under which the Company was granted an exclusive license to develop and commercialize MSK’s WT1 peptide vaccine technology. The Original MSK License Agreement, unless terminated earlier in accordance with the terms of the Original MSK License Agreement, will continue on a country-by-country and licensed product-by-licensed product basis, until the later of: (i) expiration of the last valid claim embracing such licensed product; (ii) expiration of any market exclusivity period granted by law with respect to such licensed product; or (iii) ten ( 10 ) years from the first commercial sale in such country. On May 25, 2017, the Company and MSK entered into an Amended and Restated Exclusive License Agreement (the “MSK A&R License Agreement”). Under the MSK A&R License Agreement, the Company expanded its license under the original MSK License Agreement, as amended, to include a license to commercially develop certain additional WT1 peptides through a program of exploiting certain patents and other rights covering such peptides. The MSK A&R License Agreement, among other changes, added certain milestone payments for each additional patent licensed product as defined in the MSK A&R License Agreement. On October 11, 2017, the Company and MSK entered into a second Amended and Restated Exclusive License Agreement (the “Second MSK A&R License Agreement”). Under the Second MSK A&R License Agreement, the Company and MSK extended certain milestone dates for the Company in exchange for increased milestone payments. The Compan y incurred $ 0.1 million of guaranteed minimum royalty payments under the Second MSK A&R License Agreement during the years ended December 31, 2025 and 2024. Such expenses have been included in research and development costs. 5. Balance Sheet Accounts Prepaid expenses and other current assets consist of the following (in thousands): December 31, 2025 2024 Clinical trial costs $ 2,901 $ 2,172 Professional fees 155 130 Insurance 39 39 Other 223 — Prepaid expenses and other current assets $ 3,318 $ 2,341 Accrued expenses and other current liabilities consist of the following (in thousands): December 31, 2025 2024 Compensation and related benefits $ 1,753 $ 1,777 Clinical trial costs 1,540 3,339 Professional fees 190 308 Other 42 42 Accrued expenses and other current liabilities $ 3,525 $ 5,466 144 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 6. Legal Proceedings, Commitments and Contingencies Legal Proceedings From time to time, the Company may be subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business, which may include employment matters, breach of contract disputes and stockholder litigation. Such actions and proceedings are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, when the Company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. On December 20, 2023, the Company commenced a binding arbitration proceeding against 3D Medicines, administered by the Hong Kong International Arbitration Centre and governed by New York State law in accordance with the dispute resolution provisions in the 3D Medicines Agreement. The arbitration proceeding involves, among other things, the trigger and payment of the relevant milestone payments due to the Company as well as 3D Medicines’ failure to use commercially reasonable best efforts to develop GPS in the 3DMed Territory, and particularly in mainland China. Except for this arbitration proceeding, a s of December 31, 2025, there was no other pending or threatened litigation. Leases 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 and was amended in February 2022 to add additional space. The Company assessed the lease amendment for the additional space and determined it should be accounted for as a separate contract. On October 1, 2025, the Company agreed to extend the expiration date for its office space by one year through September 30, 2027. The Company assessed the amendment for the lease extension and determined it 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, 2025 and 2024 was approximately 13.0 %. As of December 31, 2025, the lease had a remaining term of 1.75 years. Rent expense related to the Company's operating lease was approximately $ 0.6 million for each of the years ended December 31, 2025 and 2024. The Company made cash payments related to operating leases of approximately $ 0.6 million and $ 0.5 million during the years ended December 31, 2025 and 2024, respectively. Future minimum rental payments under the Company's non-cancelable operating lease are as follows as of December 31, 2025 (in thousands): 145 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Total minimum lease payments: 2026 $ 635 2027 477 Total future minimum lease payments 1,112 Less: imputed interest ( 111 ) Operating lease liabilities $ 1,001 7. Stockholders’ Equity Preferred Stock The Company has authorized up to 5,000,000 shares of preferred stock, $ 0.0001 par value per share, for issuance. There were no preferred shares outstanding as of December 31, 2025 and 2024. Common Stock The Company has authorized up to 350,000,000 shares of common stock, $ 0.0001 par value per share, for issuance. Shares of common stock reserved for future issuance are as follows (in thousands): December 31, 2025 Warrants outstanding 58,482 Stock options outstanding 2,651 Restricted stock units outstanding 897 Shares reserved for future issuance under the 2023 Amended and Restated Equity Incentive Plan 1,370 Shares reserved for future issuance under the Employee Stock Purchase Plans 764 Total shares of common stock reserved for future issuance 64,164 8. Warrants to Acquire Shares of Common Stock The following is a summary of the Company's warrants to acquire shares of common stock activity for the year ended December 31, 2025 (in thousands, except per share data): 146 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Warrant Issuance Outstanding, December 31, 2024 Granted Exercised Canceled/Expired Outstanding, December 31, 2025 Exercise Price Per Share Expiration Warrants classified as equity: October 2025 Inducement — 22,364 — — 22,364 $ 2.0000 October 2030 September 2025 Inducement — 19,685 — — 19,685 $ 1.8800 March 2031 January 2025 Registered Direct Offering — 19,685 ( 19,685 ) — — $ 1.2000 January 2030 January 2025 Pre-Funded Warrants — 11,485 ( 11,485 ) — — $ 0.0001 n/a August 2024 Registered Direct Offering 15,849 — ( 15,849 ) — — $ 1.2000 August 2029 March 2024 Registered Direct Offering 13,029 — ( 6,515 ) — 6,514 $ 1.4100 September 2029 January 2024 Offering 11,467 — ( 4,170 ) — 7,297 $ 0.7500 January 2029 Other 15,610 — ( 12,654 ) ( 334 ) 2,622 $ 2.1086 April 2027 - January 2029 55,955 73,219 ( 70,358 ) ( 334 ) 58,482 Subsequent to December 31, 2025, 26.4 million warrants were exercised at a weighted-average exercise price of approximately $ 1.61 per share for aggregate proceeds of approximately $ 42.6 million. 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 Entity’s own Equity (“ASC 815-40”). The conditions within ASC 815-40 are not subject to a probability assessment. The warrants to acquire shares of common stock do not fall under the liability criteria within ASC 480, Distinguishing Liabilities from Equity , as they are not puttable and do not represent an instrument that has a redeemable underlying security. 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. The Company accounted for the September 2025 Inducement as an exercise of the January 2025 Warrants in exchange for the issuance of the September 2025 Warrants, which is a free-standing financial instrument recorded in stockholders' equity. Since the September 2025 Warrants were issued to incentivize the exercise of the January 2025 Warrants, incremental fair value of approximately $ 14.7 million as a result of the inducement was accounted for as a non-cash equity issuance cost recognized in stockholders' equity. The incremental value was obtained from the revaluation of the January 2025 Warrants pre and post inducement exchange using a Black-Scholes option pricing model. However, there is no net impact to the consolidated statements of stockholders' equity because the warrants are equity classified. The fair value of the September 2025 Warrants was estimated at approximately $ 30.4 million using a Black-Scholes option pricing model which takes into account the exercise price, the estimated remaining term of the warrants of five and one half years, the historical volatility of the Company's common stock commensurate with the expected term estimated at 114.20 %, a risk-free interest rate of 3.67 % based on the U.S. Treasury yield commensurate with the expected term, and no future dividends based on the Company's history and expectations. The Company accounted for the October 2025 Inducement as an exercise of the March 2024 Warrants and August 2024 Warrants in exchange for the issuance of the October 2025 Warrants, which is a free-standing financial instrument recorded in stockholders' equity. Since the October 2025 Warrants were issued to incentivize the exercise of the March 2024 Warrants and August 2024, incremental fair value of approximately $ 16.1 million as 147 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued a result of the inducement was accounted for as a non-cash equity issuance cost recognized in stockholders' equity. The incremental value was obtained from the revaluation of the March 2024 Warrants and August 2024 Warrants pre and post inducement exchange using a Black-Scholes option pricing model. However, there is no net impact to the consolidated statements of stockholders' equity because the warrants are equity classified. The fair value of the October 2025 Warrants was estimated at approximately $ 37.0 million using a Black-Scholes option pricing model which takes into account the exercise price including the $ 0.125 per share in additional consideration in accordance with Nasdaq rules, the estimated remaining term of the warrants of five years , the historical volatility of the Company's common stock commensurate with the expected term estimated at 117.24 %, a risk-free interest rate of 3.60 % based on the U.S. Treasury yield commensurate with the expected term, and no future dividends based on the Company's history and expectations. 9. Licensing Revenue Exclusive License Agreement with 3D Medicines, Inc. In December 2020, the Company entered into the 3D Medicines Agreement pursuant to which the Company granted 3D Medicines a sublicensable royalty-bearing license under certain intellectual property owned or controlled by the Company, to develop, manufacture and have manufactured, and commercialize GPS and heptavalent GPS (referred to as GPS Plus) product candidates ("GPS Licensed Products") for all therapeutic and other diagnostic uses in the 3DMed Territory. In partial consideration for the rights granted by the Company, 3D Medicines agreed to pay the Company (i) a one-time upfront cash payment of $ 7.5 million, and (ii) milestone payments totaling up to $ 194.5 million in the aggregate upon the achievement of certain technology transfer, development and regulatory milestones, as well as sales milestones based on certain net sales thresholds of GPS Licensed Products in the 3DMed Territory in a given calendar year. 3D Medicines also agreed to pay tiered royalties based upon a percentage of annual net sales of GPS Licensed Products in the 3DMed Territory ranging from the high single digits to the low double digits. Revenue Recognition 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, 2025, which milestones are variable in nature and not under the Company's control. At the end of each reporting period, the Company reevaluates the probability of achievement of the future development, regulatory, and sales milestones subject to constraint and, if necessary, will adjust its estimate of the overall transaction price. Any such adjustments will be recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. For the sales-based royalties, the Company will recognize revenue when the related sales occur. To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements. 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 . There was no licensing revenue recognized during the years ended December 31, 2025 and 2024, and there was no cost of licensing revenue recognized during the years ended December 31, 2025 and 2024. 10. Stock-Based Compensation 2017 Equity Incentive Plan On December 29, 2017, the 2017 Equity Incentive Plan was approved by the stockholders of the Company, and currently allows for issuance of up to approximately 17,000 shares of common stock underlying stock options granted prior to September 10, 2019. The 2017 Equity Incentive Plan was terminated upon the approval of the 2019 Incentive Plan subject to outstanding stock options granted under the 2017 Equity Incentive Plan that remain exercisable through maturity for the Company's employees and directors. 148 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued 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. 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. The 2023 Amended and Restated Equity Incentive Plan 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. As of December 31, 2025, approximately 1,370,000 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, 2025 and 2024, respectively (in thousands): Years Ended December 31, 2025 2024 Research and development $ 434 $ 346 General and administrative 1,522 1,218 Total stock-based compensation $ 1,956 $ 1,564 Options to Purchase Shares of Common Stock The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock-based awards and the following assumptions were used for stock options granted during the years ended December 31, 2025 and 2024, respectively: Years Ended December 31, 2025 2024 Risk free interest rate 4.25 % 4.01 % Volatility 122.43 % 130.41 % Expected term (years) 6.17 6.19 Expected dividend yield — % — % The weighted-average grant date fair value of options granted during the years ended December 31, 2025 and 2024 was $ 0.85 and $ 0.48 , respectively. 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. The expected life assumptions for employee grants were based upon the simplified method, which averages the contractual term of the Company’s options of 10 years with the average vesting term of four years for an average of six years . The expected life assumptions for non-employees were based upon the contractual term of the option. The dividend yield assumption is zero because the Company has never paid cash dividends and presently has no intention to do so. The risk-free interest rate used for each grant was also based upon prevailing short-term interest rates. The Company accounts for forfeitures as they occur, therefore, outstanding stock options equal vested and expected to vest stock options. As of December 31, 2025, there was approximately $ 1.0 million of unrecognized compensation cost related to outstanding stock options that is expected to be recognized as a component of the Company’s operating expenses over a weighted-average period of 2.1 years. 149 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued The following table summarizes stock option activity of the Company for the years ended December 31, 2025 and 2024, respectively: Total Number of Shares (in thousands) Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at January 1, 2024 1,607 $ 5.92 Granted 671 0.53 Canceled ( 441 ) 4.97 Outstanding at December 31, 2024 1,837 4.18 Granted 817 0.95 Canceled ( 3 ) 0.72 Outstanding at December 31, 2025 2,651 $ 3.19 7.43 $ 4,837 Vested and exercisable at December 31, 2025 1,406 $ 5.02 6.42 $ 1,536 The aggregate intrinsic values of outstanding and exercisable stock options at December 31, 2025 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on December 31, 2025 of $ 3.77 per share. The aggregate intrinsic value equals the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying stock options. Time-Vested RSUs and RSUs with Performance Conditions The Company granted RSUs pursuant to the Company's 2023 Amended and Restated Equity Incentive Plan that will settle in shares of common stock. As of December 31, 2025, there was approximately $ 1.0 million of unrecognized compensation cost related to outstanding RSUs that is expected to be recognized as a component of the Company’s operating expenses over a weighted-average period of 2.1 years. The following table summarizes RSU activity of the Company for the years ended December 31, 2025 and 2024, respectively: Total Number of Shares (in thousands) Weighted Average Grant Date Fair Value Per Share Unvested at January 1, 2024 338 $ 2.99 Granted 429 $ 0.52 Vested ( 172 ) $ 1.86 Canceled ( 123 ) $ 1.84 Unvested at December 31, 2024 472 $ 1.46 Granted 1,241 $ 0.96 Vested ( 805 ) $ 1.10 Canceled ( 11 ) $ 0.88 Unvested at December 31, 2025 897 $ 1.09 The total fair value of RSUs vested was approximately $ 1.2 million and $ 0.2 million during the years ended December 31, 2025 and 2024, respectively. Amended and Restated 2021 Employee Stock Purchase Plan 150 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued On April 22, 2021, the Board of Directors adopted the 2021 Employee Stock Purchase Plan ("2021 ESPP") which was approved by the Company's stockholders on June 8, 2021. 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. On June 17, 2025, an amendment to the 2021 ESPP was approved by the stockholders of the Company, which amended and restated the 2021 ESPP (as amended and restated, the "Amended and Restated 2021 ESPP") to increase the number of shares of common stock available for sale under the 2021 ESPP by 800,000 . During the years ended December 31, 2025 and 2024, 115,449 and 103,853 shares of common stock, respectively, were purchased by employees under the 2021 ESPP for proceeds of approximately $ 0.1 million. There are approximately 764,000 shares of common stock reserved for issuance under the 2021 ESPP as of December 31, 2025. 11. Income Taxes The components of the Company's loss before income taxes are as follows (in thousands): As of December 31, 2025 2024 U.S. $ ( 9,569 ) $ ( 9,535 ) Non - U.S. ( 17,294 ) ( 21,346 ) $ ( 26,863 ) $ ( 30,881 ) The components of the Company's net deferred tax assets (liabilities) are as follows (in thousands): As of December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 16,730 $ 14,116 Licensing deduction deferral 2,763 3,286 Capitalized Section 174 research and development 2,185 2,502 Stock-based compensation 797 622 Lease liability 216 216 Other 355 324 Gross deferred tax assets 23,046 21,066 Valuation allowance ( 22,838 ) ( 20,866 ) Net deferred tax assets $ 208 $ 200 Deferred tax liabilities: Right of use asset ( 208 ) ( 200 ) Gross deferred tax liabilities ( 208 ) ( 200 ) Net deferred tax liabilities $ — $ — A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before taxes after the adoption of ASU 2023-09 is as follows: 151 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued Year Ended December 31, 2025 $ % U.S. federal statutory income tax rate ( 5,641 ) 21.0 % Valuation allowance 1,917 ( 7.1 ) % Nontaxable or nondeductible items 140 ( 0.5 ) % Other ( 47 ) 0.2 % Foreign rate differential - Bermuda 3,631 ( 13.5 ) % Effective income tax rate — — A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before taxes for years prior to the adoption of ASU 2023-09 is as follows: Year Ended December 31, 2024 % U.S. federal statutory income tax rate 21.0 % State and local taxes, net of federal benefit 0.4 % Foreign rate differential ( 14.5 ) % Valuation allowance ( 6.6 ) % Permanent differences ( 0.5 ) % Other 0.2 % Effective income tax rate — % There was no income taxes paid, or refunds received, during the years ended December 31, 2025 and 2024. There was no income tax benefit or expense for the years ended December 31, 2025 and 2024. 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 $ 2.0 million for the year ended December 31, 2025, which was primarily driven by increases in net operating loss ("NOL") carryforwards and partially offset by decreases related to licensing deduction deferrals and capitalized research and development. At December 31, 2025, the Company had domestic federal and state net operating loss carryforwards of approximately $ 77.7 million and $ 5.0 million, respectively, available to reduce future taxable income, which expire beginning in 2027. Under the provisions of the Internal Revenue Code, the NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, respectively, as well as similar state tax provisions. This could limit the amount of tax attributes that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception, which may have resulted in a 152 Table of Contents SELLAS LIFE SCIENCES GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future. Utilization of the net operating loss and tax credits carryforwards may be limited by “ownership change” rules, as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. This annual limitation may result in the expiration of the net operating losses and credits before utilization. The Company files income tax returns in the United States and various state jurisdictions. As of December 31, 2025, all of the Company's federal and state tax returns are open to examination due to net operating loss and research and development credit carryforwards. The Company does not recognize tax benefits that are not more-likely-than-not to be supported based upon the technical merits of the tax position taken. 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. As of December 31, 2025, the Company has no unrecognized tax benefits or accrued interest or penalties associated with uncertain tax positions. The Company does not believe that it is reasonably possible that its unrecognized tax benefits would significantly change in the following 12 months. 12. Employee Benefit Plan The Company sponsors a 401(k) Plan. Employees become eligible for participation upon the start of employment. Participants may elect to have a portion of their salary deferred and contributed to the 401(k) Plan up to the limit allowed under the Internal Revenue Code. The Company makes a matching contribution to the plan for each participant who has elected to make tax-deferred contributions for the plan year. The Company made matching contributions which amounted to approximately $ 117,000 and $ 124,000 for the years ended December 31, 2025 and 2024, respectively. These amounts were charged to the consolidated statements of operations. The employer contributions vest immediately. 13. Subsequent Events The Company evaluated all events or transactions that occurred after December 31, 2025 up through the date these consolidated financial statements were issued. Other than as disclosed elsewhere in the notes to the consolidated financial statements, the Company did not have any material subsequent events. 153 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None.