10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________

FORM 10-Q

________________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-33958

SELLAS Life Sciences Group, Inc.

(Exact name of registrant as specified in its charter)

________________________________

Delaware	20-8099512
(State of incorporation)	(I.R.S. Employer Identification No.)

315 Madison Avenue, 4^th Floor, New York, NY 10017

(917) 438-4353

(Address, including zip code, and telephone number, including

area code, of registrant's principal executive offices)

________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter time that the registrant was required to submit and post such files).   Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    o  Yes    x  No

As of April 30, 2018, SELLAS Life Sciences Group, Inc. had outstanding 6,655,155 shares of common stock, $0.0001 par value per

share, exclusive of treasury shares.

SELLAS LIFE SCIENCES GROUP, INC.

FORM 10-Q - Quarterly Report

For the Quarter Ended March 31, 2018

TABLE OF CONTENTS

Part No.	Item No.	Description	Page No.
I		FINANCIAL INFORMATION
	1	Financial Statements	4
		Condensed Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017	4
		Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017	5
		Unaudited Condensed Consolidated Statement of Stockholders' (Deficit) Equity for the three months ended March 31, 2018	6
		Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	7
		Unaudited Notes to Condensed Consolidated Financial Statements	8
	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	3	Quantitative and Qualitative Disclosures About Market Risk	34
	4	Controls and Procedures	35
II		OTHER INFORMATION
	1	Legal Proceedings	36
	1A	Risk Factors	37
	2	Unregistered Sales of Equity Securities and Use of Proceeds	39
	3	Defaults Upon Senior Securities	39
	4	Mine Safety Disclosures	39
	5	Other Information	39
	6	Exhibits	39
Signatures

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Some of the information contained in this quarterly report on Form 10-Q may include forward-looking statements that reflect our current views with respect to our development programs, business strategy, business plan, financial performance and other future events. These statements include forward-looking statements both with respect to us, specifically, and our industry, in general. Such forward-looking statements include the words “expect,” “intend,” “plan,” “believe,” “project,” “estimate,” “may,” “should,” “anticipate,” “will” and similar statements of a future or forward-looking nature identify forward-looking statements.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. There are or will be important factors that could cause actual results to differ materially from those indicated in these statements. These factors include, but are not limited to, those factors set forth in the sections entitled “Risk Factors,” “Legal Proceedings,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this quarterly report on Form 10-Q and in our annual report on Form 10-K for the year ended December 31, 2017 as filed with the Securities and Exchange Commission, or SEC, on April 13, 2018, or the 2017 Annual Report, which you should review carefully. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

3

PART I FINANCIAL INFORMATION

ITEM  1. FINANCIAL STATEMENTS

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

	March 31, 2018			December 31, 2017
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,474		$	2,319
Restricted cash	8,612			10,431
Prepaid expenses and other current assets	986			337
Total current assets	13,072			13,087
In-process research and development	17,600			17,600
Goodwill	1,914			1,914
Deposits and other assets	899			925
Total assets	$	33,485		$	33,526
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Current portion of long-term debt	$	8,526		$	8,377
Accounts payable	11,451			11,691
Accrued expenses and other current liabilities	4,470			3,201
Litigation settlement payable	1,300			1,300
Total current liabilities	25,747			24,569
Deferred tax liability	1,673			1,673
Warrant liability	1,528			1,309
Contingent consideration	4,705			1,294
Long-term debt, net of current portion	1,150			2,611
Total liabilities	34,803			31,456
Commitments and contingencies (Note 8)
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; Series A shares, 17,500 shares designated, 5,987 issued and outstanding at March 31, 2018; no shares issued and outstanding at December 31, 2017	—			—
Common stock, $0.0001 par value; 350,000,000 shares authorized, 6,154,377 shares issued and outstanding at March 31, 2018; 5,766,891 shares issued and outstanding at December 31, 2017	1			1
Additional paid-in capital	60,861			56,254
Accumulated deficit	(62,180		)	(54,185		)
Total stockholders’ (deficit) equity	(1,318		)	2,070
Total liabilities and stockholders’ (deficit) equity	$	33,485		$	33,526

See accompanying notes to condensed consolidated financial statements.

4

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Operating expenses:
Research and development	$	1,804		$	2,184
General and administrative	3,880			2,287
Total operating expenses and operating loss	(5,684		)	(4,471		)
Non-operating income (expense):
Change in fair value of warrant liability	1,881			—
Change in fair value of the contingent consideration	(3,411		)	—
Loss on settlement of liability-classified warrants	(685		)	—
Interest expense, net	(96		)	(130		)
Total non-operating income (expense), net	(2,311		)	(130		)
Net loss	$	(7,995	)	$	(4,601	)
Deemed dividend arising from beneficial conversion feature of convertible preferred stock	(1,968		)	—
Net loss attributable to common stockholders	$	(9,963	)	$	(4,601	)
Per share information:
Net loss per common share attributable to common stockholders, basic and diluted	$	(1.67	)	$	(3.63	)
Weighted-average common shares outstanding, basic and diluted	5,952,193			1,268,489

See accompanying notes to condensed consolidated financial statements.

5

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY

(Amounts in thousands, except share amounts)

(Unaudited)

	Preferred Stock			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Total
	Shares Issued	Amount		Shares Issued	Amount
Balance at December 31, 2017	—	$	—	5,766,891	$	1	$	56,254		$	(54,185	)	$	2,070
Issuance of Series A convertible preferred stock, net of offering costs	5,987	—		—	—		5,328			—			5,328
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock offering	—	—		—	—		(2,587		)	—			(2,587		)
Beneficial conversion feature arising from Series A convertible preferred stock	—	—		—	—		(1,968		)	—			(1,968		)
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	—	—		—	—		1,968			—			1,968
Accretion of convertible preferred stock dividends	—	—		—	—		(72		)	—			(72		)
Issuance of common stock as repayment of principal and interest on long-term debt	—	—		333,143	—		1,631			—			1,631
Issuance of common stock in connection with warrant exchange agreements	—	—		54,343	—		285			—			285
Stock-based compensation for directors and employees	—	—		—	—		22			—			22
Net loss	—	—		—	—		—			(7,995		)	(7,995		)
Balance at March 31, 2018	5,987	$	—	6,154,377	$	1	$	60,861		$	(62,180	)	$	(1,318	)

See accompanying notes to condensed consolidated financial statements.

6

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(7,995	)	$	(4,601	)
Non-cash interest expense	20			—
Non-cash stock-based compensation	22			937
Change in fair value of common stock warrants	(1,881		)	—
Change in fair value of contingent consideration	3,411			—
Loss on settlement of liability-classified warrants	685			—
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(622		)	114
Accounts payable	(240		)	3,585
Accrued expenses and other current liabilities	1,197			(3,838		)
Net cash used in operating activities	(5,403		)	(3,803		)
Cash flows from financing activities:
Net proceeds from issuance of Series A convertible preferred stock and common stock warrants	5,328			—
Principal payments on long-term debt	(589		)	—
Net cash provided by financing activities	4,739			—
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	(664		)	(3,803		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period	12,750			5,962
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period	$	12,086		$	2,159
Supplemental disclosure of cash flow information:
Cash received during the periods for interest	$	34		$	—
Cash paid during the periods for interest	$	110		$	—
Supplemental disclosure of non-cash investing and financing activities:
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	$	1,968		$	—
Repayment of interest and principal on long-term debt through issuance of common stock	$	1,631		$	—
Reclassification of warrant liabilities upon exchange for shares of common stock	$	285		$	—
Long-term debt issued in connection with warrant exchange agreements	$	888		$	—

See accompanying notes to condensed consolidated financial statements.

7

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Description of Business

Overview

SELLAS Life Sciences Group, Inc. ("Company," “we,” “us,” “our,” or “SELLAS”) is a clinical-stage biopharmaceutical company focused on novel cancer immunotherapeutics for a broad range of cancer indications. The Company’s lead product candidate, galinpepimut-S (“GPS”), is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center (“MSK”), that targets the Wilms tumor 1 (“WT1”), protein, which is present in 20 or more cancer types. Based on its mechanism of action as a directly immunizing agent, GPS has the 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.

Merger of Galena Biopharma, Inc. and SELLAS Life Sciences Group Ltd.

As used in this quarterly report on Form 10-Q, the words the “Company,” and “SELLAS” refer to SELLAS Life Sciences Group, Inc. and its consolidated subsidiaries following completion of the business combination with Galena ("Merger"). Such references for the period prior to the completion of the Merger refer to Private SELLAS.

On December 29, 2017, Galena completed the business combination with the privately held Bermuda exempted company, Sellas Life Sciences Group Ltd. (“Private SELLAS”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of August 7, 2017 and amended November 5, 2017 the (“Merger Agreement”), by and among the Company, Sellas Intermediate Holdings I, Inc., Sellas Intermediate Holdings II, Inc., Galena Bermuda Merger Sub, Ltd., and Private SELLAS. As a result of the Merger, the Company’s business is now substantially comprised of the business of Private SELLAS, and although the Company is considered the legal acquiror of Private SELLAS, for accounting purposes, Private SELLAS is considered to have acquired the Company in the Merger. Consequently, the Merger was accounted for as a reverse acquisition in the Company's consolidated financial statements for the year ended December 31, 2017.

Immediately prior to the Merger, Galena effected a 1-for-30 reverse stock split of its outstanding common stock, par value $0.0001 per share. Under the terms of the Merger Agreement, Galena issued shares of its common stock to Private SELLAS’ securityholders at an exchange ratio of 43.9972 shares of its common stock in exchange for each common share of Private SELLAS outstanding immediately prior to the Merger. The Company also assumed all of the restricted stock units (“RSU”) issued and outstanding under the Private SELLAS Stock Incentive Plan #1, and all of the issued and outstanding warrants of Private SELLAS. Accordingly, such RSUs will now be settled in, and such warrants now are exercisable for, shares of the Company’s common stock. Accordingly, immediately after the Merger, there were 5,766,891 shares of the Company’s common stock outstanding, with the former Private SELLAS securityholders owning 67.5% of the Company’s fully diluted common stock, and the Company’s pre-Merger securityholders owning the remaining 32.5%. The number of shares and per share amounts of common stock in the accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements have been restated to give retroactive effect to the common stock conversion ratio and reverse stock split for all periods presented, including common stock options, restricted stock units, and common stock warrants.

Upon completion of the Merger, the Company’s name changed from “Galena Biopharma, Inc.” to “SELLAS Life Sciences Group, Inc.”, the Company’s common stock began trading on The Nasdaq Capital Market under a new ticker symbol “SLS” on January 2, 2018 and the Company’s financial statements became those of Private SELLAS.

8

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

2. Liquidity

The Company has not generated any revenues from product sales and has funded operations primarily from the proceeds of private placements of its equity interests (prior to the Merger) and convertible notes, as well as through the Merger. Substantial additional financing will be required by the Company to continue to fund its research and development activities. No assurance can be given that any such financing will be available when needed or that the Company’s research and development efforts will be successful.

The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with third parties and other strategic alliances and business transactions. On March 7, 2018, the Company entered into a definitive securities purchase agreement to issue shares of its convertible preferred stock (“Series A Convertible Preferred”) and warrants to purchase shares of its common stock in a private placement transaction to a select group of institutional investors. The sale of the Series A Convertible Preferred closed in two tranches and resulted in aggregate gross proceeds to the Company of approximately $10.7 million. The Company closed the first tranche for approximately $6.0 million gross proceeds on March 9, 2018. The Company closed the second tranche of the remaining $4.7 million gross proceeds on May 1, 2018, following the receipt of necessary stockholder approval.

In addition to the proceeds from the Series A Convertible Preferred, during 2018, JGB (Cayman) Newton Ltd (“JGB”), the holder of the Company’s senior secured debenture (the “Senior Secured Debenture”) due November 2018 redeemed $2.8 million of outstanding principal that was satisfied by the Company with 659,529 shares of the Company’s common stock and redeemed $0.6 million of outstanding principal, which the Company satisfied in cash. As a result of the redemptions, the Company was able to transfer $1.9 million out of restricted cash and cash equivalents and into unrestricted cash and cash equivalents to be used to fund the Company’s ongoing operations. The balance of the restricted cash and cash equivalents balance exceeds the principal balance of the Senior Secured Debenture by $1.5 million as of May 15, 2018 and per the terms of the Senior Secured Debenture, as described in Note 7, should have been transferred into unrestricted cash and cash equivalents. As of May 15, 2018, the Company has been unable to transfer the excess of $1.5 million from the restricted account as the holder of the redemption has not approved the transfer required by a securities account control agreement at the Company's financial institution. The outstanding principal balance on the Senior Secured Debenture as of May 15, 2018 is $6.9 million.

The Company currently does not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to: commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently; consider other various strategic alternatives, including a merger or sale of the Company; or cease operations. If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered into such arrangements or if it entered into such arrangements at later stages in the product development process.

The Company has prepared its condensed consolidated financial statements assuming that it will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses since inception and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates, which raises substantial doubt about the Company’s ability to continue as a going concern. Various internal and external factors will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control. The length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The consolidated financial statements do not include any adjustments relating 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.

9

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

As of March 31, 2018, the Company had a cash balance of approximately $3.5 million and a restricted cash balance of $8.6 million. In addition, the Company had outstanding accounts payable and accrued expenses of $17.2 million and indebtedness of $9.7 million as of March 31, 2018, which primarily consists of the Company’s Senior Secured Debenture. The Company received an additional $4.7 million of cash proceeds from the second closing of the sale of the Series A Convertible Preferred and warrants on May 1, 2018. The Company expects its existing cash as of March 31, 2018, together with the proceeds from the second closing of the Series A Convertible Preferred in May 2018, will enable the Company to fund its operating expenses and capital expenditure requirements through August 2018.

3. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying condensed 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 condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, SELLAS Life Sciences Group Ltd., SELLAS Life Sciences Group UK Ltd (“SELLAS UK”), Apthera, Inc. (“Apthera”) and Mills Pharmaceuticals, LLC (“Mills”). All significant intercompany accounts and transactions have been eliminated upon consolidation.

Unaudited Interim Results

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company's annual consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission ("SEC") on April 13, 2018 (the "2017 Annual Report"). The accompanying condensed consolidated financial statements at March 31, 2018 and for the three months ended March 31, 2018, are unaudited, but include all adjustments, consisting of normal recurring entries, that management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2017 have been derived from the audited financial statements as of that date.

Preferred Stock

The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.

10

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Convertible Instruments

The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.

The Company also records, when necessary, deemed dividends for the intrinsic value of the conversion options embedded in preferred stock based upon the difference between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred stock.

Recent Accounting Pronouncements

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash. ASU No. 2016-18 requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. In accordance with ASU No. 2016-18, the Company adopted this standard in the first quarter of 2018.

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

	March 31, 2018		December 31, 2017
Cash and cash equivalents	$	3,474	$	2,319
Restricted cash and cash equivalents	8,612		10,431
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	12,086	$	12,750

In connection with the Company's Senior Secured Debenture, the Company was required to maintain a minimum of the lesser of $18.5 million or the outstanding principal amount of unencumbered cash in a restricted account. Any funds in the restricted account in excess of the outstanding principal balance are transferred to the Company's unrestricted account to fund its ongoing operations. As of March 31, 2018 and December 31, 2017, the Company maintained $8.4 million and $10.2 million, respectively, of cash and cash equivalents in a restricted account. In addition the Company maintained $0.2 million as of March 31, 2018 and December 31, 2017 on hand with the Company's financial institutions as collateral for its corporate credit cards.

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting. ASU No. 2017-09 clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This guidance is to be applied prospectively to awards modified on or after the adoption date and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. In accordance with ASU No. 2017-09, the Company adopted this standard prospectively in the first quarter of 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company's consolidated financial statements.

11

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

4. Acquisition

On December 29, 2017, the Company completed the Merger with Private SELLAS as discussed in Note 1. The Merger was accounted for as a reverse merger under the acquisition method of accounting whereby Private SELLAS was considered to have acquired the Company for financial reporting purposes because, immediately upon completion of the Merger, Private SELLAS stockholders held a majority of the voting interest of the combined company.

The following summary pro forma condensed consolidated financial information reflects the Merger with Galena as if it had occurred on January 1, 2017 for purposes of the statements of operations. This summary pro forma information is not necessarily representative of what the Company’s results of operations would have been had the Merger in fact occurred on January 1, 2017, and is not intended to project the Company’s results of operations for any future period.

Pro forma condensed consolidated financial information for the three months ended March 31, 2017 (in thousands except per share amounts):

Net loss	$	(6,753	)
Basic and diluted net loss per share	$	(1.87	)

Pro forma combined net loss includes an adjustment to reduce historical interest expense of $0.1 million for the three months ended March 31, 2017, due to the conversion of the convertible notes of $5.8 million.

12

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

5. 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 condensed consolidated balance sheets (in thousands):

Description	March 31, 2018		Quoted Prices In     Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	3,172	$	3,172	$	—	$	—
Restricted cash equivalents	8,423		8,423		—		—
Total assets measured and recorded at fair value	$	11,595	$	11,595	$	—	$	—
Liabilities:
Warrants potentially settleable in cash	$	1,528	$	—	$	—	$	1,528
Contingent consideration	4,705		—		—		4,705
Total liabilities measured and recorded at fair value	$	6,233	$	—	$	—	$	6,233

Description	December 31, 2017		Quoted Prices In     Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	1,662	$	1,662	$	—	$	—
Restricted cash equivalents	10,245		10,245		—		—
Total assets measured and recorded at fair value	$	11,907	$	11,907	$	—	$	—
Liabilities:
Warrants potentially settleable in cash	$	1,309	$	—	$	—	$	1,309
Contingent consideration	1,294		—		—		1,294
Total liabilities measured and recorded at fair value	$	2,603	$	—	$	—	$	2,603

The Company did not transfer any financial instruments into or out of Level 3 classification during the three months endedMarch 31, 2018 and 2017. See Note 10 for a reconciliation of the beginning and ending warrant liability for the three months endedMarch 31, 2018. A reconciliation of the beginning and ending contingent consideration liability for the three months endedMarch 31, 2018 is as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent consideration, January 1, 2018	$	1,294
Change in the estimated fair value of the contingent consideration	3,411
Contingent consideration, March 31, 2018	$	4,705

13

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The contingent consideration was assumed by the Company in connection with the Merger and recorded at fair value as of the consummation of the Merger, which approximates fair value as of December 31, 2017. The fair value of the contingent consideration is measured at the end of each reporting period using Level 3 inputs in a probability-weighted, discounted cash-outflow model. The contingent consideration relates to Galena’s acquisition of Apthera, Inc. in 2011 and the future contingent payments of up to $32.0 million based on the achievement of certain development and commercial milestones relating to the Company’s NeuVax^TM product candidate. The contingent consideration is payable at the election of the Company in either cash or shares of common stock, provided that the Company may not issue any shares in satisfaction of any contingent consideration unless it has first obtained approval of its stockholders in accordance with Rule 5635(a) of the Nasdaq Marketplace Rules. The significant unobservable assumptions include the probability of achieving each milestone, the date the Company expects to reach the milestone, and a determination of present value factors used to discount future expected cash outflows. The change in the estimated fair value of the contingent consideration during the three months endedMarch 31, 2018 reflects an adjusted probability and timeline for the potential approval of NeuVax associated with the positive interim data from the prospective, randomized, single-blinded, controlled Phase 2b independent investigator-sponsored clinical trial (IST) of trastuzumab (Herceptin®) +/- nelipepimut-S (NeuVax™)  in HER2 1+/2+ breast cancer patients in the adjuvant setting to prevent recurrences that was announced on April 2, 2018.

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	March 31, 2018		December 31, 2017
Professional fees	$	1,898	$	1,744
Clinical trial costs	960		51
Compensation and related benefits	505		566
Value added tax	426		426
Rebates and returns of former commercial products	416		223
Other	265		191
Accrued expenses and other current liabilities	$	4,470	$	3,201

14

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

7. Debt

	March 31, 2018		December 31, 2017
Debt
Current portion of Senior Secured Debenture	$	7,638	$	8,377
Short-term convertible promissory notes	888		—
Non-current portion of Senior Secured Debenture	1,150		2,611
Total debt	$	9,676	$	10,988

Senior Secured Debenture

On May 10, 2016, the Company's predecessor company, Galena, entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), with JGB pursuant to which Galena sold to the Purchaser, at a 6.375% original issue discount, a $25.5 million Senior Secured Debenture and warrants to purchase up to 3,333 shares of the Company's common stock. Net proceeds to Galena from the sale of the Senior Secured Debenture and warrants, after payment of commissions and legal fees, were approximately $23.4 million. The Senior Secured Debenture remained outstanding for the Company through the consummation of the Merger with Galena on December 29, 2017.

The Senior Secured Debenture matures on November 10, 2018, and accrues interest at 9% per year, payable monthly. In addition, on the maturity date of the Senior Secured Debenture (or such earlier date that the principal amount of the Senior Secured Debenture is paid in full by acceleration or otherwise) a fixed amount, which shall be deemed interest under the Senior Secured Debenture, equal to $0.8 million will be due and payable to the JGB on such date in, at the option of the Company, cash and, subject to the same conditions for the payment of interest, in shares of the Company’s common stock, or a combination of cash and the Company’s common stock.

The Company’s obligations under the Debenture are secured under a security agreement by a senior lien on all of the Company’s assets, including all of the Company’s interests in its consolidated subsidiaries. Private SELLAS is not a party to the security agreement. Under the subsidiary guarantee agreement, each subsidiary guarantees the performance of the Company of the Securities Purchase Agreement, Senior Secured Debenture and related agreements.

The Senior Secured Debenture was amended in August 2016, May 2017, July 2017 and August 2017. After giving effect to the amendments, the Senior Secured Debenture contains the following modified and/or additional terms, among others:

• JGB can, from time to time, during the term of the Senior Secured Debenture, require the Company to prepay in cash all or a portion of the outstanding principal plus accrued and unpaid interest (the “Outstanding Amount”) on written notice to the Company, provided, that such prepayment amount shall not exceed the lesser of $18.5 million and the outstanding principal amount. If JGB elects such prepayment of the Senior Secured Debenture, then the number of shares subject to the warrants issued to the holder will be reduced in proportion to the percentage of principal and accrued interest required to be prepaid by the Company. The Company does not have the right to prepay.

• JGB has the right, which commenced on November 10, 2016, to require the Company to redeem the outstanding principal amount, up to the outstanding principal amount of the Senior Secured Debenture, by written notice to the Company and may deliver an unlimited number of redemption notices during any calendar month.

15

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

• The Company has the option to pay outstanding principal redemptions and monthly interest in shares of common stock, cash, or a combination of shares of common stock and cash. Among the various conditions that must be satisfied (or waived) in order for the Company to be able to elect to satisfy the redemption amounts in shares of common stock are: (a) the VWAP of $10.50 per share on any trading day that a redemption notice is delivered (b) no event of default has occurred and is continuing and (c) the Company’s cash on hand exceeds the outstanding principal amount by at least $10.0 million. In the event that any of these conditions are not met, the Company does not have the option to pay outstanding principal redemptions and monthly interest in cash.

• The stock payment price to satisfy outstanding principal redemptions and monthly interest is the lower of (a) 80% of the VWAP for the trading day immediately prior to the date of the applicable redemption notice (the “Prior Day VWAP”) and (b) 80% of the average of the three lowest VWAPs during the 20 consecutive trading day period immediately preceding the date of the applicable redemption notice (the “Twenty Day VWAP”); provided, however, to the extent that, on any given trading day, the price per share of common stock on such trading day equals or exceeds 115% of the Prior Day VWAP or Twenty Day VWAP, then for the such trading day, and such trading day only, each reference to 80% shall be deemed, for such trading day only, to be 92.5%

•

• The Company was required to maintain a minimum of the lesser of $18.5 million or the outstanding principal amount of unencumbered cash in a restricted account. Any funds in the restricted account in excess of the outstanding principal balance are transferred to the Company's unrestricted account to fund its ongoing operations. As of March 31, 2018 and December 31, 2017, the Company maintained $8.4 million and $10.2 million, respectively, of cash and cash equivalents in a restricted account.

As of March 31, 2018 and December 31, 2017, the outstanding principal balance of the Senior Secured Debenture was $8.0 million and $10.2 million, respectively. In addition to the outstanding principal balance, the Senior Secured Debenture has $0.8 million of additional interest that is included in the current portion of long-term debt as of March 31, 2018 and December 31, 2017. During the three months ended March 31, 2018, JGB redeemed $1.6 million of outstanding principal, which the Company satisfied with 314,228 shares of its common stock and redeemed $0.6 million of outstanding principal which the Company satisfied with cash. Subsequent to March 31, 2018 and prior to May 15, 2018, the date of issuance of the Company's condensed consolidated financial statements for the quarter ended March 31, 2018, JGB redeemed an additional $1.2 million of outstanding principal, which the Company satisfied with 345,301 shares of its common stock and is classified as long-term debt on the Company's condensed consolidated balance sheet as of March 31, 2018 as the amounts were not satisfied with working capital.

As a result of the redemptions during 2018, the Company was able to transfer $1.9 million of restricted cash into unrestricted cash and cash equivalents which is being used to fund the Company’s ongoing operations. The balance of the restricted cash exceeds the principal balance of the Senior Secured Debenture by $1.5 million as of May 15, 2018 and per the terms of the Senior Secured Debenture, as described in Note 7, should be transferred into cash and cash equivalents. As of May 15, 2018, the Company has been unable to transfer the excess $1.5 million from the restricted account as JGB has not approved the transfer required by a securities account control agreement at the Company's financial institution. The outstanding principal balance on the senior secured debenture as of May 15, 2018 is $6.9 million.

Short-term Convertible Promissory Notes

During the three months ended March 31, 2018, the Company entered into convertible promissory notes in the principal amount of $0.9 million in exchange for the surrender and cancellation of warrants to purchase 379,333 shares of its common stock pursuant to the February 2017 offering by Galena. The convertible promissory notes accrue interest at a rate of 5% per annum and the entire principal balance and accrued interest is due and payable in August 2018. The outstanding principal balance and accrued interest is convertible into shares of the Company's common stock at a conversion price equal to $7.00. In April 2018, $0.8 million of outstanding principal and accrued interest was converted 118,644 shares of common stock.

16

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

8. Legal Proceedings, Commitments and Contingencies

Legal Proceedings

From time to time, the Company is 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 condensed 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. In the opinion of management, as of the date hereof, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect the Company’s consolidated results of operations, financial position or cash flows.

The Company’s predecessor company, Galena, was involved in multiple legal proceedings and administrative actions, including stockholder class actions, both state and federal, some of which are ongoing and to which the Company is now subject as a result of the Merger. They are as follows:

On February 13, 2017, a putative stockholder securities class action complaint was filed in the U.S. District Court for the District of New Jersey captioned, Miller v. Galena Biopharma, Inc., et al. On February 15, 2017, a putative stockholder securities class action complaint was filed in the U.S. District Court for the District of New Jersey entitled, Kattuah v. Galena Biopharma, Inc., et al. The actions assert that the defendants failed to disclose that Galena’s promotional practices for Abstral^® (fentanyl sublingual tablets) were allegedly improper and that Galena may be subject to civil and criminal liability, and that these alleged failures rendered Galena’s statements about its business misleading. Two groups of stockholders and one individual stockholder filed three motions to be appointed lead plaintiff on April 14, 2017 and April 17, 2017.

Subsequently, one of the stockholders groups withdrew its motion for lead plaintiff status and the individual stockholder notified the Court that he did not object to the appointment of the remaining stockholder group, GALE investor group, as lead plaintiff. On July 17, 2017, the Court approved the GALE investor group as named lead plaintiff and its counsel as lead and liaison counsel. The Court also consolidated both actions. An amended complaint was filed on October 6, 2017. On December 15, 2017, Galena and the former officers and employees filed a motion to dismiss the amended complaint. The plaintiffs responded to a former officer’s motion to dismiss on February 13, 2018 and responded to Galena's and the other former officers' and employees' motion to dismiss in March 2018. The Company, as successor to Galena, and the former officers and employees filed a reply in April 2018. The Court will take the matter under advisement. It is not known when the Court will issue a ruling in this matter.

On March 16, 2017, a complaint entitled Keller v. Ashton et al., CA No. 2:17-cv-01777 was filed in the U.S. District Court for the District of New Jersey against the Company’s then-existing directors and the Company, as a nominal defendant. The complaint purports to assert derivative claims for breach of fiduciary duty on the Company’s behalf against its directors based on substantially similar facts as alleged in the putative shareholder securities class action complaints mentioned above. The Company’s response to the complaint was due on June 1, 2017; however, on May 21, 2017, the Court entered a stay of the proceedings pending resolution of motions to dismiss in the securities litigations described above.

17

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

On April 27, 2017, a putative stockholder class action was filed in the Court of Chancery of the State of Delaware captioned Patel vs. Galena Biopharma, Inc. et. al, CA No. 2017-0325-JTL seeking relief under Section 225 of the Delaware General Corporation Law (DGCL) and alleging breaches of fiduciary duties by Galena’s former board of directors and former interim chief executive officer regarding proposals to amend Galena’s certificate of incorporation to increase the amount of authorized shares of common stock and effectuate a reverse stock split at the July 2016 and October 2016 stockholder meetings, respectively. On June 2, 2017, an amended verified complaint was filed along with a motion to expedite the proceedings. On June 5, 2017, Galena filed a verified petition under Section 205 of the DGCL and a motion to expedite the proceedings. On June 8, 2017, the Court denied a request by the plaintiff to schedule a preliminary injunction motion and ordered a prompt trial on both the plaintiff and Galena’s claims. On June 20, 2017, the Court consolidated the claims into In re Galena Biopharma, Inc., C. A. No. 2017-0423-JTL. On July 10, 2017, the Court ordered that the trial of the claims be held on August 28, 30 and 31, 2017. On July 24, 2017, Galena entered into a binding settlement term sheet, which the Court enforced on November 30, 2017, over the objection of the plaintiff. On December 8, 2017, the Court set the hearing on the settlement for March 15, 2018. On December 11, 2017, the Court also granted an order validating the ratification votes at the special stockholder meeting held on July 6, 2017 and the certificate of amendments filed by Galena for the increase in authorized shares in 2011, 2013, 2015, and 2016 as well as for the reverse stock split in 2016. On February 22, 2018, the plaintiff filed his brief in support of the settlement as well as his request for attorneys’ fees and an incentive award. On March 1, 2018, the former directors and former interim chief executive officer responded to plaintiff’s brief. On February 28, 2018, the former directors and former interim chief executive officer requested the Court continue the date of the hearing to approve the settlement as the Company was working with the staff of the SEC to obtain the no-action letter required by the binding settlement term sheet. The Plaintiff objected to such continuance. On March 15, 2018, the Court ruled in favor of the Company and continued the settlement hearing for 90 days.

Under the terms of the settlement, the class will receive a settlement payment of $1.3 million, in addition to attorney fees in an amount to be approved by the Court. The settlement payment of $1.3 million consists of $50,000 in cash to be paid by the Company or its insurers and $1,250,000 in unrestricted shares of the Company’s common stock (“Settlement Stock”), which valuation will be based on the volume-weighted average closing price for the 20 trading days immediately preceding the day before the transfer of the Settlement Stock to the settlement fund pursuant to the terms and conditions of the settlement. The Company anticipates that the Settlement Stock will be issued, pursuant to the terms of the Stipulation of Settlement, in a transaction that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(10) of the Securities Act. Any amounts awarded by the Court for attorneys’ fees will be paid in part by the settlement fund and in part by the Company’s insurance carriers. Upon the effectiveness of the proposed settlement, the individual defendants will be released from the claims that were asserted or could have been asserted in the class action by class members participating in the settlement.

On January 23, 2018, a complaint captioned Johnson v Schwartz et al., CA No. 2:18-cv-00903 was filed in the U.S. District Court for the District of New Jersey against Galena’s former directors, officers and employees and the Company as a nominal defendant. The complaint purports to assert derivative claims for breach of fiduciary duty on Galena’s behalf against its former directors, officers and employees based on substantially similar facts as alleged in the putative stockholder securities class action complaints and derivative complaints mentioned above, as well as making demand futility allegations against the current board of directors, who are not named as defendants. It is expected that the Company and the individual defendants will respond to the complaint through an appropriate pleading or motion and, if necessary, seek an order from the Court staying the proceedings pending further developments in the securities litigations described above.

18

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

On or about April 9, 2018, JGB filed a lawsuit in the U.S. District Court for the Southern District of New York captioned JGB (Cayman) Newton, Ltd. v. Sellas Life Sciences Group, Inc., et al., Case 1:18-cv-3095 (DLC), or the JGB Action. The complaint in the JGB Action asserts claims under state law and federal securities law against the Company, the Company's Chief Executive Officer, Angelos M. Stergiou, M.D., ScD H.C, and the its Interim Chief Financial Officer, Aleksey N. Krylov (Mr. Krylov together with the Company and Dr. Stergiou, the Defendants). The complaint in the JGB Action alleges, among other things, that the Company breached a contractual obligation to deliver certain shares of its common stock to JGB and that, in the course of negotiations related to the Senior Secured Debenture agreement, the Defendants failed to disclose to JGB certain information regarding positive clinical trial results that was not then public. On or about May 2, 2018, JGB filed an amended complaint, adding as defendants Jane Wasman, Stephen Ghiglieri, David Scheinberg, M.D., Robert Van Nostrand and John Varian, each of whom is a member of the Company’s Board of Directors (the “Director Defendants”). The amended complaint, in addition to the allegations in the original complaint, alleges, among other things, that the Director Defendants are liable as “control persons” for the purposes of the purported securities laws violations committed by the Company, Dr. Stergiou and Mr. Krylov. According to the amended complaint, JGB seeks to receive an unspecified number of shares of the Company's common stock, a declaratory judgment in respect of the dispute underlying the litigation, damages, and costs and expenses incurred in the JGB action, among other things. The Company disputes the claims in the JGB Action and intends to defend against them vigorously.

9. 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.

Series A Convertible Preferred

On March 7, 2018, the Company entered into a Securities Purchase Agreement with investors, pursuant to which the Company agreed to sell to the investors, in a private placement pursuant to Rule 4(a)(2) and Regulation S under the Securities Act, an aggregate of 10,700 shares of the Company’s newly-created non-voting Series A Convertible Preferred, and warrants to acquire an aggregate 1,383,631 shares of the Company’s common stock, par value $0.0001 per share at an aggregate purchase price of $10.7 million. The Series A Convertible Preferred is initially convertible into 1,844,835 shares of common stock based on an initial conversion price of $5.80 per share.

At the first closing of the Series A Convertible Preferred on March 9, 2018, the Company issued an aggregate 5,987 shares of Series A Convertible Preferred and warrants to acquire 774,186 shares of common stock for aggregate gross proceeds of $6.0 million. The second closing of the remaining 4,713 shares of the Series A Convertible Preferred and warrants to acquire 609,445 shares of its common stock, for aggregate gross proceeds of $4.7 million occurred on May 1, 2018 following receipt of stockholder approval.

On March 8, 2018, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A 20% Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware, which designated up to 17,500 shares of Series A Convertible Preferred. The shares of Series A Convertible Preferred have a stated value equal to $1,000 and bear cumulative dividends, payable in cash or shares of common stock at the Company’s option, at a rate of 20% per annum, payable semiannually in arrears on June 30 and December 31, beginning on the first such date after issuance, and upon conversion if accrued and unpaid at such time. Such dividends cease to accrue upon the consummation of a Qualified Offering. Qualified Offering is defined in the purchase agreement and the Certificate of Designation as a public offering raising aggregate gross proceeds of no less than $20.0 million. In the event of a Qualified Offering, under the Series A Convertible Preferred, investors have the right to acquire the securities sold in such Qualified Offering by converting their shares of Series A Convertible Preferred into the same securities on a $1.00 for $1.00 basis based on the stated value of their shares of Series A Convertible Preferred.

19

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Shares of Series A Convertible Preferred are convertible into common stock at the option of the holder from time to time. Conversion is subject to a beneficial ownership limitation of 4.99% (or 9.99% at the option of the investor).

The initial conversion price is $5.80 per share of common stock, subject to standard adjustments for certain transactions affecting the Company’s securities (such as stock dividends, stock splits, and the like). Until consummation of a Qualified Offering, such conversion price is also subject to anti-dilution price protection in the event of non-exempt equity issuances at a price per share lower than the then applicable conversion price. If the Company has not consummated a Qualified Offering on or before September 9, 2018 (the six month anniversary of the first closing), on each of the six month anniversary of the first and the second closings, the Conversion Price shall be reduced to the lesser of (x) the then applicable Conversion Price, as adjusted, (y) $3.00 (subject to adjustment for forward and reverse stock splits and the like) and (z) the lowest volume weighted average price for any trading day during the five trading days immediately following each such adjustment date.

The Series A Convertible Preferred generally have no voting rights. However, for so long as any shares of Series A Convertible Preferred are outstanding, the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Convertible Preferred is required to: (a) alter or change adversely the powers, preferences or rights given to the Series A Convertible Preferred or alter or amend the Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined in the Certificate of Designation) senior to, or otherwise pari passu with, the Series A Convertible Preferred (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Convertible Preferred, (d) increase the number of authorized shares of Series A Convertible Preferred, or (e) enter into any agreement with respect to any of the foregoing.

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary that is not a Fundamental Transaction (as defined in the Certificate of Designation), the holders of Series A Convertible Preferred are entitled to receive from the Company's assets the same amount they would have received on an as converted basis, disregarding any conversion limitations. Such amounts are paid on apari passu basis with all holders of common stock.

The Company evaluated the Series A Convertible Preferred in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective conversion price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, to additional paid-in capital, resulting in a discount on the convertible preferred stock. As the Series A Convertible Preferred may be converted immediately, the Company recognized a BCF of $2.0 million as a deemed dividend in the condensed consolidated statements of operations related to the first closing on March 9, 2018. This one-time, non-cash charge impacted net loss attributable to common stockholders and loss per share for the three months ended March 31, 2018.

20

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 for future issuance are reserved for as follows (in thousands):

	March 31, 2018
Warrants outstanding	1,236
Series A Convertible Preferred*	1,045
Stock options outstanding	415
Options reserved for future issuance under the Company’s 2017 Equity Incentive Plan	401
Shares reserved for future issuance under the Employee Stock Purchase Plan	115
Restricted stock units	13
Total reserved for future issuance	3,225

* On an as converted to common stock basis.

10. 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 three months ended March 31, 2018 (in thousands):

Warrant Issuance	Outstanding, December 31, 2017	Granted	Canceled		Outstanding, March 31, 2018	Expiration
Series A Convertible Preferred	—	774	—		774	September 2023
2017 Equilibria	316	—	—		316	December 2022
Galena February 2017	567	—	(501	)	66	February 2022
Galena Other	80	—	—		80	January 2022
	963	774	(501	)	1,236

Warrants to acquire shares of common stock consist of warrants that may be settled in cash, which are liability-classified warrants, and equity-classified warrants. During the three months ended March 31, 2018, a total of 501,000 of the Galena February 2017 liability-classified warrants to purchase shares of common stock were canceled under various warrant exchange agreements. The Company issued 54,613 shares of its common stock in exchange for the surrender and cancellation of warrants to acquire 121,667 shares of its common stock and $0.9 million in convertible promissory notes in exchange for the surrender and cancellation of warrants to acquire 379,333 shares of its common stock, as described in Note 7. The fair value of the common stock and promissory notes exchanged totaled $1.2 million, which exceeded the fair value of the warrant liability of the warrants canceled by $0.7 million and is recorded as loss on settlement of liability-classified warrants in the condensed consolidated statement of operations for the three months ended March 31, 2018.

21

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Warrants Classified as Liabilities

Liability-classified warrants consist of warrants to acquire common stock issued in connection with previous equity financings for the Series A Convertible Preferred, Galena's February 2017 financing, and various other Galena equity financings that were assumed by the Company at the consummation of the Merger. These warrants may be settled in cash and were determined to not be indexed to the Company’s common stock.

The initial exercise price of the warrants to acquire shares of common stock in connection with the Series A Convertible Preferred is $5.80 per share of common stock, subject to standard adjustments for certain transactions affecting the Company’s securities (such as stock dividends, stock splits, and the like). From the original issue date until the one year anniversary of a Qualified Offering, the initial exercise price and number of warrants to acquire shares of common stock are subject to anti-dilution protection in the event of non-exempt equity issuances at a price per share lower than the initial exercise price ("Base Share Price"). simultaneously with the consummation of each non-exempt equity issuance the exercise price shall be reduced to equal the Base Share Price and the number of warrants to acquire shares of common stock issuable shall be increased such that the aggregate exercise price payable, after taking into account the decrease in the exercise price, shall be equal to the aggregate exercise price prior to such adjustment, provided that no adjustment to the number of warrant to purchase shares of common stock issuable shall be made, as a result of (i) a Qualified Offering or (ii) any Dilutive Issuance that occurs after the consummation of a Qualified Offering. Such adjustment shall be made whenever such common stock or common stock equivalents are issued.

The estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the condensed consolidated statement of operations as change in fair value of warrant liability. The fair value of the warrants is estimated using a Black-Scholes pricing model with the following inputs:

As of March 31, 2018
Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Series A Convertible Preferred	774	$	6.59	5.45	80.78	%	2.59	%
Galena February 2017	66	$	33.00	3.88	74.00	%	2.25	%
Galena Other	80	$	888.22	2.94	74.08	%	2.27	%
As of December 31, 2017
Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Galena February 2017	567	$	13.00	4.12	79.29	%	2.09	%
Galena Other	80	$	28.40	3.19	74.05	%	2.09	%

The expected volatility assumptions are based on the Company's implied volatility in combination with the implied volatilities of similar publicly traded entities. The expected life assumption is based on the remaining contractual terms of the warrants. The risk-free rate is based on the zero coupon rates in effect at the time of valuation. The dividend yield used in the pricing model is zero, because the Company has no present intention to pay cash dividends.

22

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The changes in fair value of the warrant liability for the three months ended March 31, 2018 were as follows (in thousands):

Warrant Issuance	Warrant liability, December 31, 2017		Fair value of warrants granted		Fair value of warrants canceled			Change in fair value of warrants			Warrant liability, March 31, 2018
Series A Convertible Preferred	$	—	$	2,587	$	—		$	(1,083	)	$	1,504
Galena February 2017	1,305		—		(487		)	(794		)	24
Galena Other	4		—		—			(4		)	—
	$	1,309	$	2,587	$	(487	)	$	(1,881	)	$	1,528

Warrants Classified as Equity

The Company issued warrants to acquire 316,163 shares of the its common stock at an exercise price of $7.42, maturing five years from issuance, to EQC Private Markets SAC Fund Ltd-EQC Biotech Sely I Fund on December 29, 2017. These warrants are recorded in equity at fair value upon issuance, and not as liabilities, and are not subject to adjustment to fair value in subsequent reporting periods. The fair value of the warrants granted was $5.60 per share using the Black-Scholes pricing model with the fair value assumptions for the grant including a volatility of 90.10%, expected term of five years, risk free rate of 2.20%, and a dividend rate of 0.00.

11. Stock-Based Compensation

Share and per share amounts below have been retroactively adjusted to reflect the exchange ratio and reverse stock split as described in Note 1.

2017 Equity Incentive Plan

On December 29, 2017, the 2017 Equity Incentive Plan was approved, and currently allows for the issuance of up to a maximum of approximately 575,000 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, not including shares subject to awards assumed in connection with certain transactions, including the Merger. Upon the consummation of the Merger, the Company assumed approximately 10,171 shares subject to outstanding common stock options granted under the Company’s 2016 Incentive Plan that will remain exercisable through December 29, 2018 for former Company employees and directors.

The amount of shares reserved for issuance under the 2017 Equity Incentive Plan will automatically increase on January 1 of each year, for a period of not more than ten years, commencing on January 1 of the year following the year in which the effective date occurs and ending on (and including) January 1, 2027, in an amount equal to 4% of the total number of shares of common stock outstanding on December 3 of the preceding calendar year. Notwithstanding the foregoing, the board of directors may act prior to January 1 of a given year to provide that there will be no January 1 increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence. The amount of shares reserved for issuance under the 2017 Equity Incentive Plan was automatically increased to approximately 805,000 on January 1, 2018. As of March 31, 2018, an aggregate of approximately 400,000 shares of common stock were reserved for future grants under the Company’s 2017 Equity Incentive Plan. There were no common stock options granted under the 2017 Equity Incentive Plan for the years ended December 31, 2017.

23

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively (in thousands):

	Three Months Ended March 31,
	2018		2017
Research and development	$	6	$	135
General and administrative	16		802
Total stock-based compensation	$	22	$	937

Options to Purchase Shares of Common Stock

The Company uses the Black-Scholes option-pricing model and the following assumptions were used to determine the fair value of all its stock options granted during the three months ended March 31, 2018:

Risk free interest rate	2.71	%
Volatility	80.05	%
Expected lives (years)	6.21
Expected dividend yield	—	%

The weighted-average grant date fair value of options granted during the three months ended March 31, 2018 was $3.70. There were no stock options granted during the three months ended March 31, 2017.

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 ten 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.

As of March 31, 2018, there was $1.5 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 2.95 years.

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SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The following table summarizes stock option activity of the Company for the three months ended March 31, 2018:

	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2018	10	$	1,240.55		$	—
Granted	405	5.22			—
Outstanding at March 31, 2018	415	$	35.03	9.70	$	—
Options exercisable at March 31, 2018	10	$	1,240.55	0.75	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at March 31, 2018 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on March 31, 2018 of $3.45 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.

RSUs with Time-Based and Performance-Based Conditions

In addition to the RSUs with time-based conditions, the Company granted RSUs subject to both time-based and performance-based vesting conditions to certain of its employees and non-employees pursuant to the 2016 Incentive Plan. These RSUs vest based on both (i) continued service either over a three-year measurement period or at the end of the required service period and (ii) the achievement of a liquidity event. The vesting dates for these RSUs was February 27, 2018. The liquidity event, as defined in the relevant RSU grant agreements, will be satisfied upon the earlier of either: a) change of control or b) a qualified initial public offering. As of March 31, 2018 and December 31, 2017, there were approximately 13,000 RSUs outstanding with a weighted average grant date fair value of $52.94.

The Company recognizes compensation expense related to these RSUs when the liquidity event is deemed probable. As such, no compensation expense was recorded to date as the liquidity event is outside the Company’s control and not deemed probable until it occurs.

12. Subsequent Events

The Company evaluated all events or transactions that occurred after March 31, 2018 up through the date these financial statements were issued. Other than as disclosed elsewhere in the notes to the condensed consolidated financial statements and below, the Company did not have any material subsequent events.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis of financial condition as of March 31, 2018 and results of operations for the three months ended March 31, 2018 and 2017, respectively, should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in the 2017 Annual Report, and our other public reports filed with the SEC.

Merger of Galena Biopharma, Inc. and SELLAS Life Sciences Group Ltd.

On December 29, 2017, we completed the business combination with the privately held Bermuda exempted company, Sellas Life Sciences Group Ltd., or Private SELLAS, in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of August 7, 2017 and amended November 5, 2017, or the Merger Agreement, by and among our company, Sellas Intermediate Holdings I, Inc., Sellas Intermediate Holdings II, Inc., Galena Bermuda Merger Sub, Ltd., and Private SELLAS. We refer to this business combination throughout this quarterly report on Form 10-Q as the Merger. As a result of the Merger, our business is now substantially comprised of the business of Private Sellas, and although we are considered the legal acquirer of Private SELLAS, for accounting purposes, Private SELLAS is considered to have acquired our company in the Merger. Consequently, the Merger was accounted for as a reverse acquisition in our consolidated financial statements for the year ended December 31, 2017.

Immediately prior to the Merger, we effected a 1-for-30 reverse stock split of our outstanding common stock. Under the terms of the Merger Agreement, we issued shares of our common stock to Private SELLAS’ securityholders at an exchange ratio of 43.9972 shares of our common stock in exchange for each common share of Private SELLAS outstanding immediately prior to the Merger. We also assumed all of the restricted stock units, or RSUs issued and outstanding under the Private SELLAS Stock Incentive Plan #1, and all of the issued and outstanding warrants of Private SELLAS. Accordingly, such RSUs will now be settled in, and such warrants now are exercisable for, shares of our common stock. Accordingly, immediately after the Merger, there were 5,766,891 shares of our common stock outstanding, with the former Private SELLAS securityholders owning 67.5% of our fully diluted common stock, and our pre-Merger securityholders owning the remaining 32.5%.

Upon completion of the Merger, we changed our name from “Galena Biopharma, Inc.” to “SELLAS Life Sciences Group, Inc.”, our common stock began trading on The Nasdaq Capital Market under a new ticker symbol “SLS” on January 2, 2018 and our financial statements became those of Private SELLAS.

As used in this quarerly report on Form 10-Q, the words “we,” “us,” “our,” the “Company,” and “SELLAS” refer to SELLAS Life Sciences Group, Inc. and its consolidated subsidiaries following completion of the Merger.

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Overview

We are a clinical-stage biopharmaceutical company focused on novel cancer immunotherapeutics for a broad range of cancer indications. Our lead product candidate, galinpepimut-S, or GPS, is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center, or MSK, that targets the Wilms tumor 1, or WT1, protein, which is present in 20 or more cancer types. Based on its mechanism of action as a directly immunizing agent, GPS has the 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. Phase 2 clinical trials for GPS have been completed and we have planned Phase 3 clinical trials (pending funding availability) for two indications, acute myeloid leukemia, or AML, and malignant pleural mesothelioma, or MPM. GPS is also in development as a potential treatment for multiple myeloma, or MM, and ovarian cancer. We plan to study GPS in up to four additional indications: as a combination therapy in small cell lung cancer, colorectal cancer, and triple-negative breast cancer; and, as a monotherapy in chronic myelogenous leukemia, or CML. We have received Orphan Drug Product designations for GPS from the U.S. Food and Drug Administration, or FDA, for AML, as well as Orphan Medicinal Product designations from the European Medicines Agency, or EMA, for AML, MPM, and MM, and Fast Track designation for AML and MPM from the FDA.

Our pipeline also includes the legacy development programs of our pre-Merger company, including novel cancer immunotherapy programs for NeuVax™ (nelipepimut-S; a vaccine against the E75 peptide derived from the human epidermal growth factor 2 -or HER2- protein), GALE-301 (a vaccine against the E39 peptide derived from the folate binding protein, or FBP) and GALE-302 (a vaccine against the J65 peptide derived from FBP) and GALE-401 (a controlled release version of the approved drug anagrelide). On April 2, 2018, we announced that a pre-specified interim analysis, conducted by an independent Data Safety Monitoring Board, or DSMB, of the efficacy and safety data for a prospective, randomized, single-blinded, controlled Phase 2b independent investigator-sponsored clinical trial of trastuzumab (Herceptin^®) +/- NeuVax in HER2 1+/2+ breast cancer patients in the adjuvant setting to prevent recurrences, demonstrated a clinically meaningful difference in median disease-free survival, or DFS, in favor of the active arm (NeuVax + Herceptin), a primary endpoint of the study. Based on these results, and the DSMB’s recommendation, we plan to expeditiously seek regulatory guidance by the FDA for further development of the combination of NeuVax + Herceptin in Triple Negative Breast Cancer, or TNBC, considering the statistically significant benefit of the combination therapy seen in this population with large unmet medical need. We are currently evaluating various options, including strategic collaborations and other types of product rationalizations for NeuVax, GALE-301, GALE-302, and GALE-401.

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Recent Developments

In March 2018, we entered into a securities purchase agreement with investors pursuant to which we agreed to sell to the investors, in a private placement pursuant to Rule 4(a)(2) and Regulation S under the Securities Act of 1933, as amended, an aggregate of 10,700 shares of our newly-created non-voting Series A Convertible Preferred Stock, or the Series A Convertible Preferred, and warrants to acquire an aggregate of 1,383,631 shares of our common stock at an aggregate purchase price of $10.7 million. The shares of Series A Convertible Preferred are initially convertible into 1,844,835 shares of our common stock based on an initial conversion price of $5.80 per share. The warrants have a term of 5.5 years and an initial exercise price of $6.59 per share.

The conversion price of the Series A Convertible Preferred and the exercise price of the warrants are both subject to adjustment for certain transactions affecting our securities (such as stock dividends, stock splits, and the like). Until consummation of a qualified offering (as such term is defined in the applicable documents), the conversion price and exercise price (for a one-year period after consummation of such qualified offering) are also subject to anti-dilution price protection in the event of non-exempt equity issuances at a price per share lower than the then applicable conversion or exercise price, as the case may be. If we have not consummated a qualified offering on or before September 9, 2018 (the six month anniversary of the first closing), on each of the six month anniversary of the first and the second closings, the conversion price is reduced to the lesser of (x) the then applicable conversion price, (y) $3.00 (subject to adjustment for forward and reverse stock splits and the like) and (z) the lowest volume weighted average price, or VWAP, or for any trading day during the five trading days immediately following each such adjustment date.

At the first closing of the private placement on March 9, 2018, we issued an aggregate of 5,987 shares of Series A Convertible Preferred and warrants to acquire an aggregate of 774,186 shares of our common stock for aggregate gross proceeds of $6.0 million. At the second closing, on May 1, 2018, we issued the remaining 4,713 shares of Series A Convertible Preferred and warrants to acquire an aggregate of 609,445 shares of our common stock, for aggregate gross proceeds of $4.7 million.

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Components of Results of Operations

Research and Development Expense

Research and development expense consists of expenses incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses primarily include expenses incurred under agreements with CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials, manufacturing expenses, outsourced professional scientific development services, employee-related expenses, which include salaries, benefits and stock-based compensation, [payments made under a third-party assignment agreement, under which we acquired intellectual property [??], expenses relating to regulatory activities, including filing fees paid to regulatory agencies, laboratory materials and supplies used to support our research activities; and allocated expenses, utilities and other facility-related costs.

The successful development of our current and future product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from any current or future product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including: the number of clinical sites included in the trials; the length of time required to enroll suitable patients; the number of patients that ultimately participate in the trials; the number of doses patients receive; the duration of patient follow-up; the results of our clinical trials; the expenses associated with manufacturing; the receipt of marketing approvals; and the commercialization of current and future product candidates.

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for any of our current or future product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or target indications or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA, or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. Cancer immunotherapy product commercialization may take several years and millions of dollars in development costs.

Research and development activities are central to our business model. Cancer immunotherapy product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase significantly over the next several years as it increases personnel costs, including stock-based compensation, conducts clinical trials and prepares regulatory filings for our product candidates.

General and Administrative Expense

General and administrative expenses consist principally of salaries and related costs for personnel in executive, administrative, finance and legal functions, including stock-based compensation, travel expenses and recruiting expenses. Other general and administrative expenses include facility related costs, patent filing and prosecution costs, professional fees for business development, legal, auditing and tax services and insurance costs.

We anticipate that our general and administrative expenses will increase as a result of increased payroll, expanded infrastructure and an increase in accounting, consulting, legal and tax-related services associated with maintaining compliance with stock exchange listing and SEC requirements, investor relations costs, and director and officer insurance premiums associated with being a public company. We also anticipate that our general and administrative expenses will increase in support of our clinical trials as we expand and progress our development programs.

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Non-Operating Income (Expense), Net

Non-operating income (expense), net consists of change in fair value of our warrant liability, change in fair value of our contingent consideration, loss on settlement of liability-classified warrants, and interest expense, net. Interest expense, net primarily reflects interest expense incurred on our convertible term notes and other loans held with current and former stockholders, offset by the interest earned from our cash and cash equivalents.

Results of Operations for the Three Months Ended March 31, 2018 and 2017

The following table sets forth our results of operations for the three months ended March 31, 2018 and 2017 (in thousands):

	Three Months Ended March 31,
	2018			2017			Change
Operating expenses:
Research and development	$	1,804		$	2,184		$	(380	)
General and administrative	3,880			2,287			1,593
Total operating loss and loss from operations	(5,684		)	(4,471		)	1,213
Non-operating income (expense)	(2,311		)	(130		)	2,181
Net loss	$	(7,995	)	$	(4,601	)	$	(3,394	)

For the three months ended March 31, 2018, our net loss was $8.0 million compared with net loss of $4.6 million for the three months ended March 31, 2017. The increase of $3.4 million in net loss was primarily attributable to an increase in operating loss of $1.2 million and an increase in non-operating expense of $2.2 million.

Further analysis of the changes and trends in our operating results are discussed below.

Research and Development Expense

Research and development expenses were $1.8 million for the three months ended March 31, 2018 compared to $2.2 million for the three months ended March 31, 2017. The $0.4 million decrease was primarily attributable to a $0.4 million decrease in manufacturing expenses, a $0.2 million decrease in personnel related expenses including $0.1 million in stock-based compensation, and a $0.1 million decrease in regulatory expenses. These decreases were partially offset by a $0.1 million increase in licensing fees associated with our expanded portfolio as a result of the Merger with Galena. Overall, research and development expenses were reduced during the three months ended March 31, 2018 as compared to the prior year period as we explored various liquidity and capital raising options and determined the allocation of resources for our research and development pipeline. We anticipate that our research and development expenses will increase throughout 2018 as we secure additional capital and advance our clinical product candidates.

General and Administrative Expense

General and administrative expenses were $3.9 million for the three months ended March 31, 2018 compared to $2.3 million for the three months ended March 31, 2017. The $1.6 million increase was primarily driven by a $0.7 million increase in legal fees, a $0.6 million increase in accounting and audit fees, and $0.6 million increase in outside services, a $0.3 million increase in personnel related expenses, and a $0.3 million increase in insurance premiums. These increases were partially offset by a $0.8 million decrease in stock-based compensation expense. Overall, general and administrative expenses increased during the three months ended March 31, 2018 compared to the three months ended March 31, 2017, as a result of an increase in accounting, consulting, legal and tax-related services associated with maintaining compliance with stock exchange listing and SEC requirements, investor relations costs, and director and officer insurance premiums associated with being a public company

30

Non-Operating Income (Expense), Net

Non-operating income (expense), net for the three months ended March 31, 2018 and 2017, respectively, was as follows (dollars in thousands):

	Three Months Ended March 31,
	2018			2017			Change
Change in fair value of warrant liability	$	1,881		$	—		$	1,881
Change in fair value of the contingent consideration	(3,411		)	—			(3,411		)
Loss on settlement of liability-classified warrants	(685		)	—			(685		)
Interest expense, net	(96		)	(130		)	34
Total non-operating income (expense), net	$	(2,311	)	$	(130	)	$	(2,181	)

The increase in our net non-operating expense during the three months ended March 31, 2018 compared to the three months ended March 31, 2017 was primarily due to a $3.4 million increase in the contingent consideration liability and a $0.7 million loss on settlement of liability-classified warrants, partially offset by a $1.9 million gain on liability-classified warrants to acquire shares of common stock. The decrease in the estimated fair value of our warrant liability was primarily due to the decrease in our common stock price, which is one of the most impactful inputs to the pricing model we use to estimate the fair value of our warrant liabilities.

The change in the estimated fair value of the contingent consideration during the three months endedMarch 31, 2018 reflects an adjusted probability and time line for the potential approval of NeuVax associated with the positive interim data from the prospective, randomized, single-blinded, controlled Phase 2b independent investigator-sponsored clinical trial of trastuzumab (Herceptin®) +/- nelipepimut-S (NeuVax)  in HER2 1+/2+ breast cancer patients in the adjuvant setting to prevent recurrences that was announced on April 2, 2018.

The $0.7 million loss on settlement of liability-classified warrants relates to warrants to acquires shares of common stock assumed in connection with the acquisition of Galena. During the three months ended March 31, 2018, a total 501,000 of the Galena February 2017 liability-classified warrants to acquire shares of common stock were canceled under various warrant exchange agreements. We issued 54,613 shares of our common in exchange for the surrender and cancellation of warrants to acquire 121,667 shares of our common stock and $0.9 million in convertible promissory notes in exchange for the surrender and cancellation of warrants to acquire 379,333 shares of our common stock, as described in Note 7 to the condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q. The fair value of the consideration exchanged totaling $1.2 million exceeded the fair value of the warrant liability of the warrants canceled by $0.7 million and is recorded as loss on settlement of liability-classified warrants in the condensed consolidated statement of operations for the three months ended March 31, 2018.

Interest expense, net for the three months ended March 31, 2018 and 2017 primarily consists of interest expense incurred on our long-term debt, partially offset by nominal interest earned from our cash and cash equivalents.

The change in fair value of warrant liability, change in fair value of contingent consideration, and loss on settlement of liability-classified warrants are all non-cash in nature.

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Liquidity and Capital Resources

We have not generated any revenue from product sales, and in the three months ended March 31, 2018 and 2017, we did not generate any revenue from collaboration and licensing agreements. Since inception, we have incurred net losses and have used net cash from our operations and have funded substantially all of our operations through proceeds of private placements and convertible notes. On March 7, 2018, we entered in the agreement for the sale of our Series A Convertible Preferred and wararnts, which closed in two tranches and resulted in aggregate gross proceeds to us of $10.7 million ($4.7 million of which was received on May 1, 2018, following receipt of necessary stockholder approval).

In addition, in 2018, JGB redeemed $2.8 million of outstanding principal that was satisfied with 659,529 shares of our common stock and redeemed $0.6 million of outstanding principal, which we satisfied in cash. As a result of the redemptions, we transferred $1.9 million out of restricted cash and cash equivalents and into unrestricted cash and cash equivalents to be used to fund our ongoing operations. The balance of the restricted cash and cash equivalents balance exceeds the principal balance of the senior secured debenture by $1.5 million as of May 15, 2018 and per the terms of the senior secured debenture, as described in Note 7 of the condensed consolidated financial statements included elsewhere in this quarterly report on Form 10-Q, should be transferred into unrestricted cash and cash equivalents. As of May 15, 2018, we have not been able to transfer the excess of $1.5 million from the restricted account as JGB has not approved the transfer required by a securities account control agreement at our financial institution. The outstanding principal balance on the senior secured debenture as of May 15, 2018 is $6.9 million.

As of March 31, 2018, we had an accumulated deficit of $62.2 million, a total stockholders’ deficit of $1.3 million, a cash balance of $3.5 million and restricted cash of $8.6 million. In addition, we had accounts payable and other accrued expenses of $17.2 million and indebtedness of $9.7 million as of March 31, 2018. Our outstanding indebtedness consists of our senior secured debenture with JGB, which is due November 2018, and $0.9 million in promissory notes of which $0.8 million were settled with shares of common stock in April 2018. These matters raise substantial doubt about our ability to continue as a going concern. Our condensed 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. We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of any current or future product candidates in development.

This going concern assumption is based on management’s assessment of the sufficiency of our current and future sources of liquidity considering whether or not it is probable we will be able to meet our obligations as they become due for at least one year from the date of the issuance of our condensed consolidated financial statements, and if not, whether our liquidation is imminent. Our management believes that our cash of $3.5 million as of March 31, 2018, together with the proceeds from the second closing of the sale of our Series A Convertible Preferred of $4.7 million in April 2018 will be sufficient to fund our planned operations through August 2018. We will require substantial additional financing will be needed to fund our operations thereafter and to commercially develop any current or future product candidates.Alternatively, we will be required to scale back our plans and place certain activities on hold. We currently do not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. However, our management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may include, but are not limited to: public and private placements of equity and/or debt, payments from potential strategic research and development, and licensing and/or marketing arrangements with pharmaceutical companies. Additionally, we continue to engage in active discussions with global and regional pharmaceutical companies for licensing and/or co-development rights to our late- and early-stage pipeline candidates. There can be no assurance that these future funding efforts will be successful. If we cannot obtain the necessary funding, we will need to delay, scale back or eliminate some or all of our research and development programs; consider other various strategic alternatives, including a merger or sale; or cease operations. However, at this stage our management does not believe liquidation is imminent.

32

Our future operations are highly dependent on a combination of factors, including (i) the timely and successful completion of additional financing discussed above, (ii) our ability to complete revenue-generating partnerships with pharmaceutical companies, (iii) the success of our research and development, (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies, and, ultimately, (v) regulatory approval and market acceptance of our proposed future products.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2018 and 2017 (amounts in thousands):

	For the Three Months Ended March 31,
	2018			2017
Net cash (used in) provided by:
Operating activities	(5,403		)	(3,803		)
Financing activities	4,739			—
Total decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	$	(664	)	$	(3,803	)

Net Cash Flow from Operating Activities

Net cash used in operating activities of $5.4 million during the three months endedMarch 31, 2018 was primarily attributable to our net loss of $8.0 million. This amount was offset by various net non-cash charges of $2.2 million, which was comprised of $3.4 million increase in our contingent consideration and a $0.7 million loss on settlement of liability-classified warrants, partially offset by a gain of $1.9 million from the decrease in the fair value of liability-classified warrants. The net change in our operating assets and liabilities of $0.3 million is primarily attributable to an increase in our accounts payable and accrued expenses as we extend payables until we receive additional financing to be able to meet our obligations when they become due.

Net cash used in operating activities was $3.8 million for the three months endedMarch 31, 2017, which was primarily attributable to our net loss of $4.6 million. This amount was offset by $0.9 million in non-cash stock-based compensation.

Net Cash Flow from Financing Activities

We generated $4.7 million of net cash from financing activities for the three months endedMarch 31, 2018, which was primarily attributable to $5.3 million in net proceeds from the sale of the first tranche of the Series A Convertible Preferred stock, partially offset by $0.6 million in redemptions of the senior secured debenture satisfied in cash.

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Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet financing arrangements other than operating leases as of March 31, 2018.

Critical Accounting Policies and Estimates

In the 2017 Annual Report, we disclosed our critical accounting policies and estimates upon which our financial statements are derived. There have been no material changes to these policies since December 31, 2017 that are not included in Note 3 of the accompanying condensed consolidated financial statements for the three months endedMarch 31, 2018. Readers are encouraged to read the 2017 Annual Report in conjunction with this quarterly report.

 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on the evaluation of our disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our principal executive officer and our principal financial officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were not effective as a result of the material weakness in our internal control over financial reporting discussed below.

Material Weakness and Remediation Plan

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the audit of our 2017 consolidated financial statements, we were informed by our independent registered public accounting firm that we had a material weakness in our internal control over financial reporting due to our lack of sufficient management and personnel with appropriate expertise in GAAP and SEC rules and regulations with respect to financial reporting during the year ended December 31, 2017. At that time, we had only one designated finance and accounting employee and relied primarily on consultants to provide many accounting, book-keeping and administrative services. This reflects the fact that prior to the Merger, Private SELLAS was a small privately-held company, and that in connection with the Merger, Private SELLAS historical operations, and not that of our Company, represent virtually the entirety of the combined business. In addition, following the Merger, which occurred on December 29, 2017, our accounting and financial systems, as well as personnel, were replaced by those of Private SELLAS,

In order to remedy these material weaknesses, as of March 31, 2018, we hired three additional finance and accounting personnel, including a Chief Financial Officer, to build out our financial reporting team and further develop and document accounting policies and procedures. Additionally, during the first quarter of 2018, we engaged a consulting firm to assist us in evaluating the design of our internal control over financial reporting, including disclosure controls and procedures. Our goal is to remediate this material weakness as soon as practical as part of our plan to implement and mature our system of internal control over financial reporting. We expect to complete our remediation of the material weakness by the time that we are required to perform our annual assessment of internal control over financial reporting as of period ending December 31, 2018.

Changes in Internal Control over Financial Reporting

Other than the remedial activities described above, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Please refer to Note 8 (Legal Proceedings, Commitments and Contingencies) to our condensed consolidated financial statements contained in Part I, Item 1 (Financial Statements) of this quarterly report on Form 10-Q, which is incorporated into this item by reference.

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ITEM 1A. RISK FACTORS

Please refer to our note on forward-looking statements on page 2 of this quarterly report on Form 10-Q, which is incorporated into this item by reference.

The following description of risk factors includes any material changes to, and updates and supplements the description of, risk factors associated with our business previously disclosed in Part I, Item 1A of the 2017 Annual Report under the heading “Risk Factors.” Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below and in the 2017 Annual Report in Part I, Item 1A under the caption “Risk Factors,” any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price.

We are, and in the future may be, subject to legal or governmental proceedings that could adversely affect our financial condition and our business.

Our predecessor company, Galena, was involved in multiple legal and governmental proceedings, including stockholder class actions, both state and federal, some of which are ongoing and to which the combined company continues to be subject. These legal and governmental actions, which we refer to as the Galena Legacy Matters, included allegations relating to federal securities law violations, claims under the False Claims Act and Anti-Kickback Statute, claims regarding breaches of contract, and other stockholder allegations, including claims of breaches of fiduciary duty by our former directors, and fentanyl related litigation. As a result of a cease and desist order issued by the SEC on April 10, 2017 and our related settlement with the SEC (the “SEC Settlement”), we are currently subject to a "bad actor" disqualification and are unable to rely on certain exemptions from registration under the federal securities laws, including Regulation A and Regulation D. In addition, we are an “ineligible issuer” as the term is defined under Rule 405 promulgated under the Securities Act. This could make it more difficult for us to raise necessary financing in the future. If we fail to comply with the terms of the SEC Settlement in the future, it could have significant additional adverse consequences to us. A number of the Galena Legacy Matters relate to Galena’s former commercial activities associated with Abstral, a fentanyl, or synthetic opioid, product. There continues to be significant litigation and governmental activity generally in the fentanyl and opioid area, and this activity is expected to continue and may increase in the future. We cannot assure you we will not become subject to additional significant legal or governmental proceedings relating to Galena’s former Abstral business in the future.

These Galena Legacy Matters have required and continue to require our management and board of directors to devote a significant amount of time and resources to defending such claims and addressing such allegations, rather than focusing on executing on our business plans and operations.  We may, in the future, become subject to additional legal and governmental actions that will also require us to expend time and resources. The settlement of the Galena Legacy Matters has resulted in substantial payments, some of which have not been covered by our insurance policies. We may continue to incur substantial unreimbursed legal fees and other expenses in connection with the Galena Legacy Matters.  These ongoing and other future legal and governmental proceedings may not qualify for coverage under, or may exceed the limit of, our applicable directors and officers liability insurance policies and could have a material adverse effect on our financial condition, liquidity, and results of operations. An unfavorable outcome in any of these matters could damage our business and reputation or result in additional claims or proceedings against us. Moreover, in addition to these ongoing and prior matters, we may be exposed to claims as a result of the Merger, or other legal or governmental actions in the future, which could result in the payment of additional amounts and have a material adverse effect on our financial condition and results of operations. We can make no assurances as to the time or resources that will need to be devoted to the Galena Legacy Matters, or any new or future matters or their outcome, or the impact, if any, that these matters or any resulting legal or governmental proceedings may have on our business or financial condition but any further action in respect of any such matter by a governmental agency could have a material adverse effect on our results of operation and our business and prospects. Please read Item 3 “Legal Proceedings” of the 2017 Annual Report for more information regarding our legal and governmental proceedings.

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We are currently in a dispute with the holder of our senior secured debenture, JGB, pursuant to which JGB has alleged certain violations of the terms of our senior secured debenture, as well as allegations of violations of the federal securities laws.  If JGB were to prevail in this action, it would have a material adverse effect on our business, results of operations and financial condition, could cause us to lose our Nasdaq listing, as well as certain of our assets that have been pledged under our agreements with JGB securing its debenture.

On or about April 9, 2018, JGB filed a lawsuit in the U.S. District Court for the Southern District of New York asserting claims under state law and federal securities law against us, our Chief Executive Officer and our former Interim Chief Financial Officer relating to a debenture agreement between JGB and us. On or about May 2, 2018, JGB filed an amended complaint, adding as defendants Jane Wasman, Stephen Ghiglieri, David Scheinberg, M.D., Robert Van Nostrand and John Varian, each of whom is a member of the Company’s Board of Directors (the “Director Defendants”).The amended complaint alleges, among other things, that we breached a contractual obligation to deliver certain shares of our common stock to JGB and that, in the course of negotiations related to the senior secured debenture agreement, that the defendants failed to disclose to JGB certain information regarding positive clinical trial results that was not then public. The amended complaint also alleges that the Director Defendants are liable as “control persons” for the purposes of the purported securities laws violations committed by the Company, our Chief Executive Officer and our former Interim Chief Financial Officer. According to the complaint, JGB seeks to receive an unspecified number of shares of our common stock, damages, and costs and expenses incurred in the JGB matter, among other things. While JGB’s complaint does not specify the specific amount of damages it is seeking, in its complaint, JGB asserts, among other things, that, had we delivered JGB the amount of shares JGB claims it is entitled to, JGB would have promptly redeemed its remaining interest in the debenture and that JGB could have then sold these shares into the market at the higher market prices for our common stock then prevailing. JGB further asserts that, had it done so, it would have been able to realize sale proceeds of approximately $22 million.

As the holder of our senior secured debenture, and beneficiary of certain security arrangements, if JGB were to assert an event of default under the senior secured debenture as a result of this dispute, it could have a material adverse effect on our business if JGB were to be able to successfully enforce the security arrangements and take possession of certain of our assets.  The JGB dispute has required management to devote substantial time and resources, which are not otherwise being spent focusing on executing on our business plans and operations. There may be costs and expenses associated with the JGB dispute that could result in substantial payments, some of which may not be covered by our insurance policies.  We could also be required to pay the expenses of JGB’s legal counsel, which expenses could be significant. Further, since filing the lawsuit, although we have issued shares to JGB pursuant to redemption notices under the senior secured debenture, JGB has not agreed to release cash from the collateral account. If JGB prevails in its interpretation of our contract, we could be required to issue shares of our common stock in excess of amounts permitted to be issued without stockholder approval under the regulations of the Nasdaq Capital Market, which violation could cause our company to be delisted from Nasdaq.  While we intend to vigorously defend ourselves in this matter, there can be no guarantee of the outcome. If we are not successful in defending ourselves against these claims, it would have a material adverse effect on our business, results of operations and financial condition.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. Mine Safety Disclosures

None.

ITEM 5. Other Information

On May 14, 2018, we entered into a registration rights agreement with our stockholder Equilibria Capital Management Limited, and its affiliates, including EQC Private Markets SAC Fund II Ltd-EQC Biotech Sely S Fund, EQC Private Markets SAC Fund Ltd-EQC Biotech Sely I Fund, EQC Private Markets SAC Fund Ltd-EQC Biotech Sely II Fund, EQC Private Markets II SAC Fund Ltd-EQC Biotech Sely III Fund, Varibobi Financial Holdings Ltd., and Daniel Tafur, collectively, the Investors, pursuant to which at any time following the closing of a registered public offering of our securities with gross proceeds of at least $20 million, a Qualified Offering, and the expiration of any lock-up period agreed to in writing by the Investors and the underwriters in a Qualified Offering, the Investor or Investors holding an aggregate of at least a majority in interest of the outstanding registrable securities have the right to make a written request from time to time for us to register all or part of the registrable securities held by such Investors and any other Investor pursuant to a demand registration statement or shelf registration statement under the Securities Act of 1933, as amended. In the event that the Qualified Offering has not been consummated prior to the six month anniversary of the closing under the Securities Purchase Agreement by and among certain parties and us dated as of March 7, 2018, filed as exhibit 10.1 to our Current Report on Form 8-K on March 12, 2018, then the right to request registration under the registration rights agreement commences on September 8, 2018. The registration rights agreement contains certain additional piggyback registration rights and other customary provisions for agreements of this nature, such as representations, warranties, covenants, and indemnification obligations, as applicable. The foregoing description of the registration rights agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such document, a copy of which is filed as Exhibit 10.24 to this quarterly report on Form 10-Q.

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ITEM 6. EXHIBITS

Exhibit #	Description	Form	Exhibit	Filing Date
3.1	Composite Amended and Restated Certificate of Incorporation of the Registrant (formerly, Galena Biopharma, Inc.), amended as of December 27, 2017	10-K	3.1	April 13, 2018
3.2	Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock	8-K	3.1	March 12, 2018
3.3	Amended and Restated By-Laws of the Registrant	8-K	3.3	January 5, 2018
10.1	Warrant Exchange Agreement by and between the Registrant and CVI Investments, Inc., dated February 6, 2018	10-K	10.73	April 13, 2018
10.2	Promissory Note by and between the Registrant and CVI Investments, Inc., dated February 6, 2018	10-K	10.74	April 13, 2018
10.3	Warrant Exchange Agreement by and between the Registrant and Anson Investments Master Fund LP, dated February 7, 2018	10-K	10.75	April 13, 2018
10.4	Warrant Exchange Agreement by and between the Registrant, Sabby Healthcare Master Fund Ltd and Sabby Volatility Warrant Master Fund Ltd, dated February 8, 2018	10-K	10.76	April 13, 2018
10.5	Warrant Exchange Agreement by and between the Registrant and Hudson Bay Master Fund Agreement, dated February 9, 2018	10-K	10.77	April 13, 2018
10.6	Promissory Note by and between the Registrant and Hudson Bay Master Fund Agreement, dated February 9, 2018	10-K	10.78	April 13, 2018
10.7	Warrant Exchange Agreement by and between the Registrant and Alto Opportunity Master Fund, SPC-Segregated Master Portfolio B, dated February 13, 2018	10-K	10.79	April 13, 2018
10.8	Promissory Note by and between the Registrant and Alto Opportunity Master Fund, SPC-Segregated Master Portfolio B, dated February 13, 2018	10-K	10.80	April 13, 2018
10.9	Warrant Exchange Agreement by and between the Registrant and Lincoln Park Capital LLC, dated February 14, 2018	10-K	10.81	April 13, 2018
10.10	Warrant Exchange Agreement by and between the Registrant and Empery Asset Master, Ltd., dated February 21, 2018	10-K	10.82	April 13, 2018
10.11	Warrant Exchange Agreement by and between the Registrant and Empery Tax Efficient, LP, dated February 21, 2018	10-K	10.83	April 13, 2018
10.12	Warrant Exchange Agreement by and between the Registrant and Empery Tax Efficient II, LP, dated February 21, 2018	10-K	10.84	April 13, 2018
10.13	Promissory Note by and between the Registrant and Empery Asset Master, Ltd., dated February 21, 2018	10-K	10.85	April 13, 2018
10.14	Promissory Note by and between the Registrant and Empery Tax Efficient, LP, dated February 21, 2018	10-K	10.86	April 13, 2018
10.15	Promissory Note by and between the Registrant and Empery Tax Efficient II, LP, dated February 21, 2018	10-K	10.87	April 13, 2018
10.16	Securities Purchase Agreement dated March 7, 2018 by and between the Registrant and certain investors	8-K	10.1	March 12, 2018

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10.17	Form of Voting Agreement by and between the Registrant and its named executives, Board of Directors and certain stockholders	8-K	10.2	March 12, 2018
10.18	Form of Lock-Up Agreement by and between the Registrant and its named executives, Board of Directors and certain stockholders	8-K	10.3	March 12, 2018
10.19	Form of Warrant issued pursuant to that certain Securities Purchase Agreement dated March 7, 2018 by and between the Registrant and the certain investors	8-K	4.1	March 12, 2018
10.20	Letter Employment Agreement by and between SELLAS Life Sciences Group, Inc. and Barbara Wood, dated March 14, 2018 †	8-K	10.1	March 19, 2018
10.21	Form of Stock Option Grant Notice and Option Agreement under the 2017 Equity Incentive Plan. †	8-K	10.2	March 19, 2018
10.22	Letter Employment Agreement by and between SELLAS Life Sciences Group, Inc. and Gene Mack, dated April 17, 2018 †	8-K	10.1	April 20, 2018
10.23	Form of Side Letter dated April 30, 2018 to the Securities Purchase Agreement dated March 7, 2018	8-K	10.1	May 2, 2018
10.24	Registration Rights Agreement dated May 14, 2018 by and between the Registrant and certain stockholders *
31.1	Certification of Principal Executive Officer pursuant to Rule13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act, as amended.*
31.2	Certification of Principal Financial Officer pursuant to Rule13a-14(a) and Rule 15d-14(a) of the Securities and Exchange Act, as amended.*
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.*
101.DEF	XBRL Taxonomy Extension Definition Linkbase.*
101.LAB	XBRL Taxonomy Extension Label Linkbase.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.*

*	Filed herewith
**	The certification attached as Exhibit 32.1 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
†	Indicates management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SELLAS Life Sciences Group, Inc.
By:	/s/ Angelos M. Stergiou
	Angelos M. Stergious, MD, ScD h.c.
	President and Chief Executive Officer
	Date: May 15, 2018
By:	/s/ Gene Mack
	Gene Mack
	Chief Financial Officer
	Date: May 15, 2018

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EX-10.24

Exhibit 10.24

This REGISTRATION RIGHTS AGREEMENT (as it may be amended from time to time in accordance with the terms hereof, the “Agreement”), dated as May 14, 2018, is made by and among SELLAS Life Sciences Group, Inc., a Delaware corporation (the “Company”) and Equilibria Capital Management Limited, a Bermuda limited liability company; EQC Private Markets SAC Fund II Ltd-EQC Biotech Sely S Fund, a Bermuda mutual fund company; EQC Private Markets SAC Fund Ltd-EQC Biotech Sely I Fund, a Bermuda mutual fund company; EQC Private Markets SAC Fund Ltd-EQC Biotech Sely II Fund, a Bermuda mutual fund company; EQC Private Markets II SAC Fund Ltd-EQC Biotech Sely III Fund, a Bermuda mutual fund company; and Varibobi Financial Holdings Ltd., a Cyprus limited company and Daniel Tafur, an individual (together with their Permitted Transferees that become party hereto, the “Investors”).

RECITALS

WHEREAS, pursuant to the Agreement and Plan of Merger and Reorganization, dated as of August 7, 2017 and amended November 5, 2017 (the “Merger Agreement”), by and among the Company, Sellas Intermediate Holdings I, Inc., Sellas Intermediate Holdings II, Inc., Galena Bermuda Merger Sub, Ltd., an indirect wholly owned subsidiary of the Company and SELLAS Life Sciences Group Ltd, a Bermuda exempted Company (“Private SELLAS”), the common shares of Private SELLAS were converted into the right to receive shares of the Company in the merger contemplated by the Merger Agreement (the “Merger”). Pursuant to the terms of the Merger Agreement, each common share of Private SELLAS was converted into the right to receive 43.9972 shares of the Company’s Common Stock.  As a result of the Merger, the Investors received shares of the Company’s Common Stock, and immediately prior to the Merger, the Investors were issued a warrant to purchase additional shares of Common Stock; and

WHEREAS, the parties believe that it is in the best interests of the Company and the other parties hereto to set forth their agreement regarding registration rights.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises, covenants and agreements of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

EFFECTIVENESS

Section 1.1     Effectiveness. This Agreement shall become effective upon the execution by the parties hereto.

ARTICLE 2

DEFINITIONS

Section 2.1     Definitions. As used in this Agreement, the following terms shall have the following meanings:

“Adverse Disclosure” means public disclosure of material non-public information that, in the good faith judgment of the board of directors of the Company: (i) would be required to be made in any Registration Statement filed with the SEC by the Company so that such Registration Statement, from and after its effective date, does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) would not be required to be made at such time but for the filing, effectiveness or continued use of such Registration Statement; and (iii) the Company has a bonafide business purpose for not disclosing publicly.

“Affiliate” means, with respect to any specified Person, (a) any Person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person or (b) in the event that the specified Person is a natural Person, a Member of the Immediate Family of such Person; provided that the Company and each of its subsidiaries shall be deemed not to be Affiliates of any Investor. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“Agreement” shall have the meaning set forth in the preamble.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.

“Common Stock” means the common stock of the Company, par value $0.0001 per share.

“Company” shall have the meaning set forth in the preamble.

“Demand Registration” shall have the meaning set forth in Section 3.1.1(a).

“Demand Registration Request” shall have the meaning set forth in Section 3.1.1(a).

“Demand Registration Statement” shall have the meaning set forth in Section 3.1.1(c).

“Demand Suspension” shall have the meaning set forth in Section 3.1.5.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

“FINRA” means the Financial Industry Regulatory Authority.

“Issuer Free Writing Prospectus” means an issuer free writing prospectus, as defined in Rule 433 under the Securities Act, relating to an offer of the Registrable Securities.

“Investor” or “Investors” shall have the meaning set forth in the preamble.

“Loss” shall have the meaning set forth in Section 3.6.1.

“Member of the Immediate Family” means, with respect to any Person who is an individual, (a) each parent, spouse (but not including a former spouse or a spouse from whom such Person is legally separated) or child (including those adopted) of such individual and (b) each trustee, solely in his or her capacity as trustee, for a trust naming only one or more of the Persons listed in sub-clause (a) as beneficiaries.

“Permitted Transferee” means any Affiliate of any Investor.

“Person” means any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.

“Piggyback Notice” shall have the meaning set forth in Section 3.3.1.

“Piggyback Registration” shall have the meaning set forth in Section 3.3.1.

“Prospectus” means (i) the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments and supplements, and all other material incorporated by reference in such prospectus, and (ii) any Issuer Free Writing Prospectus.

“Public Offering” means the offer and sale of Registrable Securities for cash pursuant to an effective Registration Statement under the Securities Act (other than a Registration Statement on Form S-4 or Form S-8 or any successor form).

“Purchase Agreement” shall have the meaning set forth in Section 3.1.1(a).

“Qualified Offering” shall have the meaning set forth in Section 3.1.1(a).

“Registrable Securities” means (i) all shares of Common Stock that are not then subject to forfeiture to the Company, (ii) all shares of Common Stock issuable upon exercise, conversion or exchange of any option, warrant or convertible security not then subject to vesting or forfeiture to the Company and (iii) all shares of Common Stock directly or indirectly issued or then issuable with respect to the securities referred to in clauses (i) or (ii) above by way of a stock dividend or stock split, or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (w) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement, (x) such securities shall have been Transferred pursuant to Rule 144, (y) such holder is able to immediately sell such securities under Rule 144 without any restrictions on transfer (including without application of paragraphs (c), (d), (e), (f) and (h) of Rule 144), as reasonably determined by the Investor, or (z) such securities shall have ceased to be outstanding.

“Registration” means registration under the Securities Act of the offer and sale to the public of any Registrable Securities under a Registration Statement. The terms “register”, “registered” and “registering” shall have correlative meanings.

“Registration Expenses” shall have the meaning set forth in Section 3.5.5.

“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement other than a registration statement (and related Prospectus) filed on Form S-4 or Form S-8 or any successor form thereto.

“Representatives” means, with respect to any Person, any of such Person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such Person.

“Rule 144” means Rule 144 under the Securities Act (or any successor rule).

“SEC” means the Securities and Exchange Commission or any successor agency having jurisdiction under the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated thereunder, all as the same shall be in effect from time to time.

“Selling Stockholder Information” shall have the meaning set forth in Section 3.6.1.

“Shelf Period” shall have the meaning set forth in Section 3.2.3.

“Shelf Registration” shall have the meaning set forth in Section 3.2.1(a).

“Shelf Registration Request” shall have the meaning set forth in Section 3.2.1(a).

“Shelf Registration Statement” shall have the meaning set forth in Section 3.2.1(a).

“Shelf Suspension” shall have the meaning set forth in Section 3.2.3.

“Shelf Takedown Request” shall have the meaning set forth in Section 3.2.4(a).

“Transfer” means, with respect to any Registrable Security, any interest therein, or any other securities or equity interests relating thereto, a direct or indirect transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or other disposition thereof, including the grant of an option or other right, whether directly or indirectly, whether voluntarily, involuntarily, by operation of law, pursuant to judicial process or otherwise. “Transferred” shall have a correlative meaning.

“Underwritten Public Offering” means an underwritten Public Offering, including any bought deal or block sale to a financial institution conducted as an underwritten Public Offering.

“Underwritten Shelf Takedown” means an Underwritten Public Offering pursuant to an effective Shelf Registration Statement.

“WKSI” means any Securities Act registrant that is a well-known seasoned issuer as defined in Rule 405 under the Securities Act at the most recent eligibility determination date specified in paragraph (2) of that definition.

Section 2.2     Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(a)The words “hereof”, “herein”, “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and any subsection and section references are to this Agreement unless otherwise specified.

(b)The term “including” is not limiting and means “including without limitation.”

(c)The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

(d)Whenever the context requires, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms.

ARTICLE 3

REGISTRATION RIGHTS

The Company will perform and comply, and cause each of its subsidiaries to perform and comply, with such of the following provisions as are applicable to it. Each Investor will perform and comply with such of the following provisions as are applicable to such Investor.

Section 3.1     Demand Registration.

Section 3.1.1     Request for Demand Registration.

(e)At any time following the closing by the Company of a registered public offering of its securities with gross proceeds of at least $20 million to the Company (a “Qualified Offering”) and the expiration of any lock-up period agreed to in writing by the Investors and the underwriters in a Qualified Offering, the Investor or Investors holding an aggregate of at least a majority in interest of the outstanding Registrable Securities shall have the right to make a written request from time to time (a “Demand Registration Request”) to the Company for Registration of all or part of the Registrable Securities held by such Investors and any other Investor; provided, however, that in the event that the Qualified Offering has not been consummated prior to the six month anniversary of the closing under the Securities Purchase Agreement among the Company and the parties signatory thereto dated as of March 7, 2018 (the “Purchase Agreement”), the right to make a Demand Registration Request shall commence on September 8, 2018. Any such Registration pursuant to a Demand Registration Request shall hereinafter be referred to as a “Demand Registration”.

(f)Each Demand Registration Request shall specify (x) the kind and aggregate amount of Registrable Securities to be registered, provided that the anticipated net proceeds from the Registrable Securities to be registered by all Investors must be at least $5,000,000, and (y) the intended method or methods of disposition thereof.

(g)Upon receipt of a Demand Registration Request, the Company shall as promptly as practicable file a Registration Statement (a “Demand Registration Statement”) relating to such Demand Registration, and use its commercially reasonable efforts to cause such Demand Registration Statement to be promptly declared effective under the Securities Act.

Section 3.1.2     Limitation on Demand Registrations.

The Company shall not be obligated to take any action to effect any Demand Registration (a) if a Demand Registration was declared effective, the Investors withdrew their request pursuant to Section 3.1.3, or an Underwritten Shelf Takedown requested by the Investors was consummated within the preceding one hundred eighty (180) days, or (b) if the Company has effected two Demand Registrations pursuant to Section 3.1.1.    

Section 3.1.3     Demand Withdrawal. The Investors may withdraw all or any portion of their Registrable Securities included in a Demand Registration from such Demand Registration at any time prior to the effectiveness of the applicable Demand Registration Statement. Upon receipt of a notice to such effect from the Investor or Investors holding an aggregate of at least a majority in interest of the outstanding Registrable Securities with respect to all of their Registrable Securities included in such Demand Registration, the Company shall cease all efforts to secure effectiveness of the applicable Demand Registration Statement.

Section 3.1.4     Effective Registration. The Company shall use commercially reasonable efforts to cause the Demand Registration Statement to become effective and remain effective for not less than one hundred eighty (180) days (or such shorter period as will terminate when all Registrable Securities covered by such Demand Registration Statement have been sold or withdrawn), or, if such Demand Registration Statement relates to an Underwritten Public Offering, such longer period as in the opinion of counsel for the underwriter or underwriters a Prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer.

Section 3.1.5     Delay in Filing; Suspension of Registration. If the filing, initial effectiveness or continued use of a Demand Registration Statement at any time would require the Company to make an Adverse Disclosure, the Company may, upon giving prompt written notice of such action to the Investors, delay the filing or initial effectiveness of, or suspend use of, the Demand Registration Statement (a “Demand Suspension”); provided, however, that the Company shall not be permitted to exercise a Demand Suspension more than once during any twelve (12)-month period for a period not to exceed sixty (60) days. In the case of a Demand Suspension, the Investors shall suspend use of the applicable Prospectus in connection with any sale or purchase, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Company shall immediately notify the Investors in writing upon the termination of any Demand Suspension, amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Investors

such numbers of copies of the Prospectus as so amended or supplemented as the Investors may reasonably request. The Company shall, if necessary, supplement or amend the Demand Registration Statement, if required by the registration form used by the Company for the Demand Registration or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may reasonably be requested by the Investor.

Section 3.2    Shelf Registration.

Section 3.2.1     Request for Shelf Registration.

(h)At any time following the closing by the Company of a Qualified Offering and the expiration of any lock-up period agreed to in writing by the Investors and the underwriters in a Qualified Offering, upon the written request of the Investor or Investors holding an aggregate of at least a majority in interest of the outstanding shares of Registrable Securities from time to time (a “Shelf Registration Request”), the Company shall promptly file with the SEC a shelf Registration Statement pursuant to Rule 415 under the Securities Act (“Shelf Registration Statement”) relating to the offer and sale of Registrable Securities held by the Investors and any other Investors from time to time in accordance with the methods of distribution elected by the Investors, and the Company shall use its commercially reasonable efforts to cause such Shelf Registration Statement to promptly become effective under the Securities Act; provided, however, that in the event that the Qualified Offering has not been consummated prior to the six month anniversary of the closing under the Purchase Agreement, the right to make a Shelf Registration Request shall commence on September 8, 2018. Any such Registration pursuant to a Shelf Registration Request shall hereinafter be referred to as a “Shelf Registration.”

(i)If on the date of the Shelf Registration Request the Company is not a WKSI, then the Shelf Registration Request shall specify the aggregate amount of Registrable Securities to be registered. The Company shall provide to the Investors the information necessary to determine the Company’s status as a WKSI upon request.

Section 3.2.2     Continued Effectiveness. The Company shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously effective under the Securities Act in order to permit the Prospectus forming part of the Shelf Registration Statement to be usable by an Investor until the earlier of: (i) the date as of which all Registrable Securities have been sold pursuant to the Shelf Registration Statement or another Registration Statement filed under the Securities Act (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder); and (ii) the date as of which an Investor no longer holds Registrable Securities (such period of effectiveness, the “Shelf Period”). Subject to Section 3.2.4, the Company shall be deemed not to have used its commercially reasonable efforts to keep the Shelf Registration Statement effective during the Shelf Period if the Company voluntarily takes any action or omits to take any action that would result in an Investor not being able to offer and sell any Registrable Securities pursuant to such Shelf Registration Statement during the Shelf Period, unless such action or omission is required by applicable law.

Section 3.2.3    Suspension of Registration. If the continued use of such Shelf Registration Statement at any time would require the Company to make an Adverse Disclosure, the Company may, upon giving prompt written notice of such action to the Investors, suspend use of the Shelf Registration Statement (a “Shelf Suspension”); provided, however, that the Company shall not be permitted to exercise a Shelf Suspension more than one time during any twelve (12)-month period for a period not to exceed sixty (60) days. In the case of a Shelf Suspension, the Investors agree to suspend use of the applicable Prospectus in connection with any sale or purchase of, or offer to sell or purchase, Registrable Securities, upon receipt of the notice referred to above. The Company shall immediately notify the Investors in writing upon the termination of any Shelf Suspension, amend or supplement the Prospectus, if necessary, so it does not contain any untrue statement or omission and furnish to the Investors such numbers of copies of the Prospectus as so amended or supplemented as the Investors may reasonably request. The Company shall, if necessary, supplement or amend the Shelf Registration Statement, if required by the registration form used by the Company for the Shelf Registration Statement or by the instructions applicable to such registration form or by the Securities Act or the rules or regulations promulgated thereunder or as may reasonably be requested by the Investors.

Section 3.2.4     Shelf Takedown.

(j)At any time the Company has an effective Shelf Registration Statement with respect to the Investors’ Registrable Securities, by notice to the Company specifying the intended method or methods of disposition thereof, the Investor or Investors holding an aggregate of at least a majority in interest of the outstanding Registrable Securities may make a written request (a “Shelf Takedown Request”) to the Company to effect a Public Offering, including an Underwritten Shelf Takedown, of all or a portion of the Investors’ and any other Investors Registrable Securities that may be registered under such Shelf Registration Statement, and as soon as practicable the Company shall amend or supplement the Shelf Registration Statement as necessary for such purpose.

(k)All determinations as to whether to complete any Underwritten Shelf Takedown and as to the timing, manner, price and other terms of any Underwritten Shelf Takedown contemplated by this Section 3.2.5 shall be determined by the Investors.

(l)The Company shall not be obligated to take any action to effect any Underwritten Shelf Takedown if (x) the anticipated net proceeds from the Registrable Securities to be sold are not at least $5,000,000, or (y) a Demand Registration was declared effective or an Underwritten Shelf Takedown requested by the Investors was consummated within the preceding one hundred eighty (180) days.

Section 3.3     Piggyback Registration.

Section 3.3.1     Participation. If the Company at any time following the closing by the Company of a Qualified Offering and the expiration of any lock-up period agreed to in writing by the Investors and the underwriters in a Qualified Offering, proposes to file a Registration Statement under the Securities Act or to conduct a Public Offering with respect to any offering of its equity securities for its own account or for the account of any other Persons (other than (i) a Registration under Sections 3.1 or 3.2, (ii) a Registration on Form S-4 or Form S-8 or any successor form to such forms or (iii) a Registration of securities solely relating to an offering and sale to employees or directors of the Company or its subsidiaries pursuant to any employee stock plan or other employee benefit plan arrangement), then, as soon as practicable (but in no event less than ten (10) Business Days prior to the proposed date of filing of such Registration Statement or, in the case of a Public Offering under a Shelf Registration Statement, the anticipated pricing or trade date), the Company shall give written notice (a “Piggyback Notice”) of such proposed filing or Public Offering to the Investors, and such Piggyback Notice shall offer the Investors the opportunity to register under such Registration Statement, or to sell in such Public Offering, such number of Registrable Securities as the Investors may request in writing (a “Piggyback Registration”); provided, however, that in the event that the Qualified Offering has not been consummated prior to the six month anniversary of the closing under the Purchase Agreement, the Company’s obligation to provide a Piggyback Notice and the Investors’ right to request a Piggyback Registration shall commence on September 8, 2018. Subject to Section 3.3.2, the Company shall include in such Registration Statement or in such Public Offering as applicable, all such Registrable Securities that are requested to be included therein within seven (7) Business Days after the receipt from the Investor of any such notice; provided, however, that if at any time after giving written notice of its intention to register or sell any securities and prior to the effective date of the Registration Statement filed in connection with such Registration, or the pricing or trade date of a Public Offering under a Shelf Registration Statement, the Company determines for any reason not to register or sell or to delay the Registration or sale of such securities, the Company shall give written notice of such determination to the Investors and, thereupon, (i) in the case of a determination not to register or sell, shall be relieved of its obligation to register or sell any Registrable Securities in connection with such Registration or Public Offering (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights of any Investor to request that such Registration or sale be effected as a Demand Registration under Section 3.1 or an Underwritten Shelf Takedown under Section 3.2, as the case may be, and (ii) in the case of a determination to delay Registration or sale, in the absence of a request for a Demand Registration or an Underwritten Shelf Takedown, as the case may be, shall be permitted to delay registering or selling any Registrable Securities, for the same period as the delay in registering or selling such other securities. The Investors shall have the right to withdraw all or part of their request for inclusion of its Registrable Securities in a Piggyback Registration by giving written notice to the Company of its request to withdraw.

Section 3.3.2     Priority of Piggyback Registration. If the managing underwriter or underwriters of any proposed offering of Registrable Securities included in a Piggyback Registration informs the Company and the Investors in writing that, in its or their opinion, the aggregate number of securities that the Investors and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be (i) first, one hundred percent (100%) of the securities that the Company proposes to sell, and (ii) second, and only if all the securities referred to in clause (i) have been included, the number of the Investors’ Registrable Securities that, in the opinion of such managing underwriter or underwriters, can be sold without having such adverse effect and (iii) third, and only if all of the Registrable Securities referred to in clause (ii) have been included in such Registration, any other securities eligible for inclusion in such Registration.

Section 3.3.3     No Effect on Other Registrations. No Registration of Registrable Securities effected pursuant to a request under this Section 3.3 shall be deemed to have been effected pursuant to Sections 3.1 and 3.2 or shall relieve the Company of its obligations under Sections 3.1 and 3.2.

Section 3.3.4     Lock-Up Agreements. In connection with each Registration or sale of Registrable Securities pursuant to Section 3.1, 3.2 or 3.3 conducted as an Underwritten Public Offering, the Company agrees to cause

its directors and executive officers, if requested by the underwriters in any such Underwritten Public Offering, to become bound by and to execute and deliver a customary lock-up agreement with the underwriter(s) of such Underwritten Public Offering restricting such directors and officers and their respective affiliated funds from (a) transferring, directly or indirectly, any equity securities of the Company held by such director, officer or affiliated fund or (b) entering into any swap or other arrangement that transfers to another any of the economic consequences of ownership of such securities during the period commencing on the date of the final Prospectus relating to the Underwritten Public Offering and ending on the date specified by the underwriters (such period not to exceed one hundred eighty (180) days plus such additional period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on the publication or other distribution of research reports and analyst recommendations and opinions, if applicable).

Section 3.4     Registration Procedures.

Section 3.4.1     Requirements. In connection with the Company’s obligations under Sections 3.1 - 3.4, the Company shall use its commercially reasonable efforts to effect such Registration and to permit the sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable, and in connection therewith the Company shall:

(m)As promptly as practicable prepare the required Registration Statement, including all exhibits and financial statements required under the Securities Act to be filed therewith and Prospectus, and, before filing a Registration Statement or Prospectus or any amendments or supplements thereto, (x) furnish to the underwriters, if any, and to the Investors, copies of all documents prepared to be filed, which documents shall be subject to the review of such underwriters and the Investors and their respective counsel, (y) make such changes in such documents concerning an Investor prior to the filing thereof as such Investor, or its counsel, may reasonably request and (z) except in the case of a Registration under Section 3.3 not file any Registration Statement or Prospectus or amendments or supplements thereto to which the Investors, in such capacity, or the underwriters, if any, shall reasonably object;

(n)prepare and file with the SEC such amendments and post-effective amendments to such Registration Statement and supplements to the Prospectus as may be (x) reasonably requested by the Investors with Registrable Securities covered by such Registration Statement, (y) reasonably requested by any Investor (to the extent such request relates to information relating to such Investor), or (z) necessary to keep such Registration Statement effective for the period of time required by this Agreement, and comply with provisions of the applicable securities laws with respect to the sale or other disposition of all securities covered by such Registration Statement during such period in accordance with the intended method or methods of disposition by the sellers thereof set forth in such Registration Statement;

(o)notify the Investors and the managing underwriter or underwriters, if any, and (if requested) confirm such notice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by the Company (a) when the applicable Registration Statement or any amendment thereto has been filed or becomes effective, and when the applicable Prospectus or any amendment or supplement thereto has been filed, (b) of any written comments by the SEC, or any request by the SEC or other federal or state governmental authority for amendments or supplements to such Registration Statement or such Prospectus, or for additional information (whether before or after the effective date of the Registration Statement) or any other correspondence with the SEC relating to, or which may affect, the Registration, (c) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or any order by the SEC or any other regulatory authority preventing or suspending the use of any preliminary or final Prospectus or the initiation or threatening of any proceedings for such purposes, (d) if, at any time, the representations and warranties of the Company in any applicable underwriting agreement cease to be true and correct in all material respects and (e) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(p)promptly notify the Investors and the managing underwriter or underwriters, if any, when the Company becomes aware of the happening of any event as a result of which the applicable Registration Statement or the Prospectus included in such Registration Statement (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of such Prospectus or any preliminary Prospectus, in light of the circumstances under which they were made) not misleading, when any Issuer Free Writing Prospectus includes information that may conflict with the information contained in the Registration Statement, or, if for any other reason it shall be necessary during such time period to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, as promptly as reasonably practicable thereafter, prepare and file with the SEC, and furnish without charge to the Investors and the managing underwriter or underwriters, if any, an amendment or supplement to such Registration Statement or Prospectus, which shall correct such misstatement or omission or effect such compliance;

(q)to the extent the Company is eligible under the relevant provisions of Rule 430B under the Securities Act, if the Company files any Shelf Registration Statement, the Company shall include in such Shelf Registration Statement such disclosures as may be required by Rule 430B under the Securities Act (referring to the unnamed selling security holders in a generic manner) in order to ensure that any Investor may be added to such Shelf Registration Statement at a later time through the filing of a Prospectus supplement rather than a post-effective amendment;

(r)use its commercially reasonable efforts to prevent, or obtain the withdrawal of, any stop order or other order or notice preventing or suspending the use of any preliminary or final Prospectus;

(s)promptly incorporate in a Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment such information as the managing underwriter or underwriters and Investors agree should be included therein relating to the plan of distribution with respect to such Registrable Securities; and make all required filings of such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement, Issuer Free Writing Prospectus or post-effective amendment;

(t)furnish to the Investors and each underwriter, if any, without charge, as many conformed copies as the Investors or such underwriter may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment or supplement thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference);

(u)deliver to the Investors and each underwriter, if any, without charge, as many copies of the applicable Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto and such other documents as the Investors or such underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by the Investors or underwriter (it being understood that the Company shall consent to the use of such Prospectus or any amendment or supplement thereto by the Investors and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto);

(v)on or prior to the date on which the applicable Registration Statement becomes effective, use its commercially reasonable efforts to register or qualify, and cooperate with the Investors, the managing underwriter or underwriters, if any, and their respective counsel, in connection with the Registration or qualification of such Registrable Securities for offer and sale under the securities or “Blue Sky” laws of each state and other jurisdiction as the Investors holding a majority of the Registrable Securities included in any such Registration Statement, the managing underwriter or underwriters, if any, or their respective counsel reasonably request in writing and do any and all other acts or things reasonably necessary or advisable to keep such Registration or qualification in effect for such period as required by Section 3.1 or Section 3.2, as applicable, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to taxation or general service of process in any such jurisdiction where it is not then so subject;

(w)cooperate with the Investors and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters may request prior to any sale of Registrable Securities to the underwriters;

(x)use its commercially reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities;

(y)make such representations and warranties to the Investors, and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in public offerings similar to the offering then being undertaken;

(z)enter into such customary agreements (including underwriting and indemnification agreements) and take all such other actions as the Investors or the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the Registration and disposition of such Registrable Securities;

(aa)obtain for delivery to the Investors and to the underwriter or underwriters, if any, an opinion or opinions from counsel for the Company dated the most recent effective date of the Registration Statement or, in the event of an Underwritten Public Offering, the date of the closing under the underwriting agreement, in customary form, scope and substance, which opinions shall be reasonably satisfactory to the Investors or underwriters, as the case may be, and their respective counsel;

(ab)in the case of an Underwritten Public Offering, obtain for delivery to the Company and the managing underwriter or underwriters, with copies to the Investors included in such Registration or sale, a comfort letter from the Company’s independent certified public accountants or independent auditors (and, if necessary, any other independent certified public accountants or independent auditors of any subsidiary of the Company or any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement) in customary form and covering such matters of the type customarily covered by comfort letters as the managing underwriter or underwriters reasonably request, dated the date of execution of the underwriting agreement and brought down to the closing under the underwriting agreement;

(ac)cooperate with each Investor selling Registrable Securities and each underwriter, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

(ad)use its commercially reasonable efforts to comply with all applicable securities laws and, if a Registration Statement was filed, make available to its security holders, as soon as reasonably practicable, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder;

(ae)provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement;

(af)use its commercially reasonable efforts to cause all Registrable Securities covered by the applicable Registration Statement to be listed on each securities exchange on which any of the Company’s equity securities are then listed or quoted and on each inter-dealer quotation system on which any of the Company’s equity securities are then quoted;

(ag)make available upon reasonable notice at reasonable times and for reasonable periods for inspection by a representative appointed by the Investors, by any underwriter participating in any disposition to be effected pursuant to such Registration Statement and by any attorney, auditor or other agent retained by the Investors or any such underwriter, all pertinent financial and other records and pertinent corporate documents and properties of the Company, and cause all of the Company’s officers, directors and employees and the independent public auditors who have certified its financial statements to make themselves available to discuss the business of the Company and to supply all information reasonably requested by any such Person in connection with such Registration Statement;

(ah)in the case of an Underwritten Public Offering, cause the senior executive officers of the Company to participate in the customary “road show” presentations that may be reasonably requested by the managing underwriter or underwriters in any such offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;

(ai)take no direct or indirect action prohibited by Regulation M under the Exchange Act;

(aj)take all reasonable action to ensure that any Issuer Free Writing Prospectus utilized in connection with any Registration complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related Prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

(ak)take all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities in accordance with the terms of this Agreement.

Section 3.4.2     Company Information Requests. The Company may require the Investors to furnish to the Company such information regarding the distribution of such securities and such other information relating to the Investors and their ownership of Registrable Securities as the Company may from time to time reasonably request in writing and the Company may exclude from such Registration or sale the Registrable Securities of each Investor who unreasonably fails to furnish such information within a reasonable time after receiving such request. Each Investor shall furnish such information to the Company and to cooperate with the Company as reasonably necessary to enable the Company to comply with the provisions of this Agreement.

Section 3.5     Underwritten Offerings.

Section 3.5.1     Shelf and Demand Registrations. If requested by the underwriters for any Underwritten Public Offering, pursuant to a Registration or sale under Sections 3.1 or 3.2, the Company shall enter into an underwriting agreement with such underwriters, such agreement to be reasonably satisfactory in substance and form to each of the Company, the Investors and the underwriters, and to contain such representations and warranties by the Company and

such other terms as are generally prevailing in agreements of that type, including indemnities no less favorable to the recipient thereof than those provided in Section 3.6 of this Agreement. Each Investor shall cooperate with the Company in the negotiation of the underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof, and each Investor shall complete and execute all questionnaires, powers of attorney and other documents reasonably requested by the underwriters and required under the terms of such underwriting arrangements. No Investor shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Investor, such Investor’s title to the Registrable Securities, such Investor’s intended method of distribution and any other representations to be made by such Investor as are generally prevailing in agreements of that type, and the aggregate amount of the liability of any Investor under such agreement shall not exceed such Investor’s proceeds from the sale of their Registrable Securities in the offering, net of underwriting discounts and commissions but before expenses.

Section 3.5.2     Piggyback Registrations. If the Company proposes to register or sell any of its securities under the Securities Act as contemplated by Section 3.3 and such securities are to be distributed through one or more underwriters, the Company shall, if requested by the Investors pursuant to Section 3.3 and, subject to the provisions of Section 3.3.2, use its commercially reasonable efforts to arrange for such underwriters to include on the same terms and conditions that apply to the other sellers in such Registration or sale all the Registrable Securities to be offered and sold by such Investors among the securities of the Company to be distributed by such underwriters in such Registration or sale. The Investors shall be party to the underwriting agreement between the Company and such underwriters and shall complete and execute all questionnaires, powers of attorney and other documents reasonably requested by the underwriters and required under the terms of such underwriting arrangements. No Investor shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements regarding such Investor, such Investor’s title to the Registrable Securities, such Investor’s intended method of distribution and any other representations to be made by a Investor as are generally prevailing in agreements of that type, and the aggregate amount of the liability of any Investor shall not exceed such Investor’s proceeds from the sale of its Registrable Securities in the offering, net of underwriting discounts and commissions but before expenses.

Section 3.5.3     Selection of Underwriters; Selection of Counsel. In the case of an Underwritten Public Offering under Sections 3.1 or 3.2, the managing underwriter or underwriters to administer the offering shall be determined by the Investor or Investors holding an aggregate of at least a majority in interest of the outstanding Registrable Securities included in such registration, provided that such underwriter or underwriters shall be reasonably acceptable to the Company. In the case of an Underwritten Public Offering under Section 3.3, the managing underwriter or underwriters to administer the offering shall be determined by the Company, provided that such underwriter or underwriters shall be reasonably acceptable to such Investors.

Section 3.5.4     No Inconsistent Agreements; Additional Rights. Neither the Company nor any of its subsidiaries shall hereafter enter into, and neither the Company nor any of its subsidiaries is currently a party to, any agreement with respect to its securities that is inconsistent with the rights granted to the Investors by this Agreement. Without approval of the Investor or Investors holding an aggregate of at least a majority in interest of the outstanding shares of Registrable Securities, neither the Company nor any of its subsidiaries shall enter into any agreement granting registration or similar rights to any Person, and the Company hereby represents and warrants that, as of the date hereof, no registration or similar rights have been granted to any other Person other than pursuant to this Agreement and other than in connection with the Purchase Agreement.

Section 3.5.5     Registration Expenses. All expenses incident to the Company’s performance of or compliance with this Agreement shall be paid by the Company, including (i) all registration and filing fees, and any other fees and expenses associated with filings required to be made with the SEC or FINRA, (ii) all fees and expenses in connection with compliance with any securities or “Blue Sky” laws (including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, duplicating, word processing, messenger, telephone, facsimile and delivery expenses (including expenses of printing certificates for the Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing Prospectuses), (iv) all fees and disbursements of counsel for the Company and of all independent certified public accountants or independent auditors of the Company and any subsidiaries of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance), (v) Securities Act liability insurance or similar insurance if the Company so desires or the underwriters so require in accordance with then-customary underwriting practice, (vi) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or quotation of the Registrable Securities on any inter-dealer quotation system, (viii) all reasonable fees and disbursements of one legal counsel for the Investors, (ix) any reasonable fees and disbursements of underwriters customarily paid by issuers or sellers of securities, (x) all fees and expenses of any special experts or other

Persons retained by the Company in connection with any Registration or sale, (xi) all of the Company’s internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties) and (xii) all expenses related to the “road show” for any Underwritten Public Offering, including the reasonable out-of-pocket expenses of the Investors and underwriters, if so requested. All such expenses are referred to herein as “Registration Expenses”. The Company shall not be required to pay any fees and disbursements to underwriters not customarily paid by the issuers of securities in an offering similar to the applicable offering, including underwriting discounts and commissions and transfer taxes, if any, attributable to the sale of Registrable Securities.

Section 3.6    Indemnification.

Section 3.6.1     Indemnification by the Company. The Company shall indemnify and hold harmless, to the full extent permitted by law, the Investors, each shareholder, member, limited or general partner of any Investor, each shareholder, member, limited or general partner of each such shareholder, member, limited or general partner, each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of the Securities Act or the Exchange Act) such Persons and each of their respective Representatives from and against any and all losses, penalties, judgments, suits, costs, claims, damages, liabilities and expenses, joint or several (including reasonable costs of investigation and legal expenses as incurred and any indemnity and contribution payments made to underwriters ) (each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities are registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any other disclosure document produced by or on behalf of the Company or any of its subsidiaries including any report and other document filed under the Exchange Act, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading or (iii) any violation or alleged violation by the Company or any of its subsidiaries of any federal, state, foreign or common law rule or regulation applicable to the Company or any of its subsidiaries and relating to action or inaction in connection with any such registration, disclosure document or other document or report; provided, that the Investors shall not be entitled to indemnification pursuant to this Section 3.9.1 in respect of any untrue statement or omission contained in any information relating to any Investor furnished in writing by such Investor to the Company specifically for inclusion in a Registration Statement and used by the Company in conformity therewith (such information “Selling Stockholder Information”). This indemnity shall be in addition to any liability the Company may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Investors or any indemnified party and shall survive the Transfer of such securities by any Investor and regardless of any indemnity agreed to in the underwriting agreement that is less favorable to the Investors. The Company shall also indemnify underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above (with appropriate modification) with respect to the indemnification of the indemnified parties.

Section 3.6.2    Indemnification by the Investors. Each Investor shall (severally and not jointly) indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act or the Exchange Act) from and against any Losses resulting from (i) any untrue statement of a material fact in any Registration Statement under which such Registrable Securities were registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent, but only to the extent, that such untrue statement or omission is contained in such Investor’s Selling Stockholder Information. In no event shall the liability of any Investor hereunder be greater in amount than the dollar amount of the proceeds from the sale of such Investors’ Registrable Securities in the offering giving rise to such indemnification obligation, net of underwriting discounts and commissions but before expenses, less any amounts paid by such Investor pursuant to Section 3.6.4 and any amounts paid by such Investor as a result of liabilities incurred under the underwriting agreement, if any, related to such sale.

Section 3.6.3     Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that any delay or failure to so notify the indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the extent, if at all, that it forfeits substantive legal rights by reason of such delay or failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any Person entitled to indemnification hereunder shall have the right to select

and employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such Person unless (i) the indemnifying party has agreed in writing to pay such fees or expenses, (ii) the indemnifying party shall have failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Person entitled to indemnification hereunder and employ counsel reasonably satisfactory to such Person, (iii) the indemnified party has reasonably concluded (based upon advice of its counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or (iv) in the reasonable judgment of any such Person (based upon advice of its counsel) a conflict of interest may exist between such Person and the indemnifying party with respect to such claims (in which case, if the Person notifies the indemnifying party in writing that such Person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such Person). If the indemnifying party assumes the defense, the indemnifying party shall not have the right to settle such action without the consent of the indemnified party. No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of an unconditional release from all liability in respect to such claim or litigation without the prior written consent of such indemnified party, which shall not be unreasonably withheld. If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its prior written consent, but such consent shall not be unreasonably withheld. It is understood that the indemnifying party or parties shall not, except as specifically set forth in this Section 3.6.3, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements or other charges of more than one separate firm admitted to practice in such jurisdiction at any one time unless (x) the employment of more than one counsel has been authorized in writing by the indemnifying party or parties, (y) an indemnified party has reasonably concluded (based on the advice of counsel) that there may be legal defenses available to it that are different from or in addition to those available to the other indemnified parties or (z) a conflict or potential conflict exists or may exist (based upon advice of counsel to an indemnified party) between such indemnified party and the other indemnified parties, in each of which cases the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.

Section 3.6.4     Contribution. If for any reason the indemnification provided for in Section 3.6.1 and Section 3.6.2 is unavailable to an indemnified party or insufficient in respect of any Losses referred to therein (other than as a result of exceptions or limitations on indemnification contained in Section 3.6.1 and Section 3.6.2), then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party or parties on the other hand in connection with the acts, statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. In connection with any Registration Statement filed with the SEC by the Company, the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if contribution pursuant to this Section 3.6.4 were determined by prorata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 3.6.4. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an indemnified party as a result of the Losses referred to in Sections 3.6.1 and 3.6.2 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 3.6.4, in connection with any Registration Statement filed by the Company, no Investor shall not be required to contribute any amount in excess of the dollar amount of the proceeds from the sale of its Registrable Securities in the offering giving rise to such indemnification obligation, net of underwriting discounts and commissions but before expenses, less any amounts paid by such Investor pursuant to Section 3.9.2 and any amounts paid by such Investor as a result of liabilities incurred under the underwriting agreement, if any, related to such sale. If indemnification is available under this Section 3.9, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Sections 3.6.1 and 3.6.2 hereof without regard to the provisions of this Section 3.6.4. The remedies provided for in this Section 3.6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

Section 3.7     Rules 144 and 144A and Regulation S. The Company shall use its commercially reasonable efforts to file on a timely basis the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of any Investor, make publicly available such necessary information for so long as necessary to permit sales that would otherwise

be permitted by this Agreement pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act, as such rules may be amended from time to time or any similar rule or regulation hereafter adopted by the SEC), and it will take such further action as any Investor may reasonably request, all to the extent required from time to time to enable the Investors to sell Registrable Securities without Registration under the Securities Act in transactions that would otherwise be permitted by this Agreement and within the limitation of the exemptions provided by (i) Rule 144, Rule 144A or Regulation S under the Securities Act, as such rules may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Investor, the Company will deliver to the Investors a written statement as to whether it has complied with such requirements and, if not, the specifics thereof.

Section 3.8     Existing Registration Statements. Notwithstanding anything herein to the contrary and subject to applicable law and regulation, the Company may satisfy any obligation hereunder to file a Registration Statement or to have a Registration Statement become effective by a specified date by designating, by notice to each Investor, a Registration Statement that previously has been filed with the SEC or become effective, as the case may be, as the relevant Registration Statement for purposes of satisfying such obligation, and all references to any such obligation shall be construed accordingly; provided that such previously filed Registration Statement may be, and is, amended or, subject to applicable securities laws, supplemented to add the number of Registrable Securities, and, to the extent necessary, to identify the Investors as selling stockholders demanding the filing of a Registration Statement pursuant to the terms of this Agreement. To the extent this Agreement refers to the filing or effectiveness of other Registration Statements, by or at a specified time and the Company has, in lieu of then filing such Registration Statements or having such Registration Statements become effective, designated a previously filed or effective Registration Statement as the relevant Registration Statement for such purposes, in accordance with the preceding sentence, such references shall be construed to refer to such designated Registration Statement, as amended or supplemented in the manner contemplated by the immediately preceding sentence.

ARTICLE 4

MISCELLANEOUS

Section 4.1     Authority: Effect. Each party hereto represents and warrants to and agrees with each other party that the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized on behalf of such party and do not violate any agreement or other instrument applicable to such party or by which its assets are bound. This Agreement does not, and shall not be construed to, give rise to the creation of a partnership among any of the parties hereto, or to constitute any of such parties members of a joint venture or other association. The Company and its subsidiaries shall be jointly and severally liable for all obligations of each such party pursuant to this Agreement.

Section 4.2     Notices. Any notices, requests, demands and other communications required or permitted in this Agreement shall be effective if in writing and (i) delivered personally, (ii) sent by facsimile or e-mail, or (iii) sent by overnight courier, in each case, addressed as follows:

If to theCompany to:

SELLAS Life Sciences Group, Inc.

315 Madison Avenue, 4th Floor,

New York, NY 10017

Attention: General Counsel

Telephone: (646) 979-3728

Email: bwood@sellaslife.com

If to an Investor, to:

Equilibria Capital Management Limited

One Bermudiana Road,

Hamilton, Bermuda HM08

Attn: Daniel Tafur, Chief Financial Officer

Email: daniel.tafur@eqcapm.com

Office: (441) 295-2233

with a copy (which shall not constitute notice) to:

Reed Smith LLP

599 Lexington Avenue

Attention: Danielle Carbone

Email: dcarbone@reedsmith.com

Office: (212) 549-0229

Facsimile: (212) 521-5450

Notice to the holder of record of any Registrable Securities shall be deemed to be notice to the holder of such securities for all purposes hereof.

Unless otherwise specified herein, such notices or other communications shall be deemed effective (i) on the date received, if personally delivered, (ii) on the date received if delivered by facsimile or e-mail on a Business Day, or if not delivered on a Business Day, on the first Business Day thereafter and (iii) two (2) Business Days after being sent by overnight courier. Each of the parties hereto shall be entitled to specify a different address by giving notice as aforesaid to each of the other parties hereto.

Section 4.3     Termination and Effect of Termination. This Agreement shall terminate upon the date on which the Investors no longer holds any Registrable Securities, except for the provisions of Sections 3.6 and 3.7, which shall survive any such termination. No termination under this Agreement shall relieve any Person of liability for breach or Registration Expenses incurred prior to termination. In the event this Agreement is terminated, each Person entitled to indemnification rights pursuant to Section 3.6 hereof shall retain such indemnification rights with respect to any matter that (i) may be an indemnified liability thereunder and (ii) occurred prior to such termination.

Section 4.4    Permitted Transferees. The rights of the Investors hereunder may be assigned (but only with all related obligations as set forth below) in connection with a Transfer of Registrable Securities to a Permitted Transferee of the Investor. Without prejudice to any other or similar conditions imposed hereunder with respect to any such Transfer, no assignment permitted under the terms of this Section 4.4 will be effective unless the Permitted Transferee to which the assignment is being made, if not an Investor, has delivered to the Company a written acknowledgment and agreement in form and substance reasonably satisfactory to the Company that the Permitted Transferee will be bound by, and will be a party to, this Agreement. A Permitted Transferee to whom rights are transferred pursuant to this Section 4.4 may not again transfer those rights to any other Permitted Transferee, other than as provided in this Section 4.4.

Section 4.5     Remedies. The parties to this Agreement shall have all remedies available at law, in equity or otherwise in the event of any breach or violation of this Agreement or any default hereunder. The parties acknowledge and agree that in the event of any breach of this Agreement, in addition to any other remedies that may be available, each of the parties hereto shall be entitled to specific performance of the obligations of the other parties hereto and, in addition, to such other equitable remedies (including preliminary or temporary relief) as may be appropriate in the circumstances. No delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any such delay, omission nor waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.

Section 4.6     Amendments. This Agreement may not be orally amended, modified, extended or terminated, nor shall any oral waiver of any of its terms be effective. This Agreement may be amended, modified, extended or terminated, and the provisions hereof may be waived, only by an agreement in writing signed by the Company and the Investors holding a majority of the then outstanding Registrable Securities. Each such amendment, modification, extension or termination shall be binding upon each party hereto.

Section 4.7     Governing Law. This Agreement and all claims arising out of or based upon this Agreement or relating to the subject matter hereof shall be governed by and construed in accordance with the domestic substantive laws of the State of New York without giving effect to any choice or conflict of laws provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.

Section 4.8    Consent to Jurisdiction. Each party to this Agreement, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York for the purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, and agrees not to allow any of its subsidiaries to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such proceeding brought in one of the above-named courts is improper, or that this Agreement or the subject matter hereof or thereof may not be enforced in or by such court and (iii) hereby agrees not to commence or maintain any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry,

proceeding or investigation arising out of or based upon this Agreement or relating to the subject matter hereof or thereof other than before one of the above-named courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action, claim, cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of the above-named courts whether on the grounds of inconvenient forum or otherwise. Notwithstanding the foregoing, to the extent that any party hereto is or becomes a party in any litigation in connection with which it may assert indemnification rights set forth in this Agreement, the court in which such litigation is being heard shall be deemed to be included in clause (i) above. Notwithstanding the foregoing, any party to this Agreement may commence and maintain an action to enforce a judgment of any of the above-named courts in any court of competent jurisdiction. Each party hereto hereby consents to service of process in any such proceeding in any manner permitted by New York law, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 4.2 hereof is reasonably calculated to give actual notice.

Section 4.9     WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION 4.9 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 4.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

Section 4.10     Merger; Binding Effect, Etc. This Agreement constitutes the entire agreement of the parties with respect to its subject matter, supersedes all prior or contemporaneous oral or written agreements or discussions with respect to such subject matter, and shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective heirs, representatives, successors and permitted assigns. Except as otherwise expressly provided herein, neither the Investors nor any other party hereto may assign any of its respective rights or delegate any of its respective obligations under this Agreement without the prior written consent of the other parties hereto, and any attempted assignment or delegation in violation of the foregoing shall be null and void.

Section 4.11     Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one instrument.

Section 4.12     Severability. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision shall be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law. The provisions hereof are severable, and in the event any provision hereof should be held invalid or unenforceable in any respect, it shall not invalidate, render unenforceable or otherwise affect any other provision hereof.

Section 4.13     No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, the Company and the Investors covenant, agree and acknowledge that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any current or future director, officer, employee, general or limited partner or member of any Investor or of any Affiliate or assignee thereof, as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Investor or any current or future member of any Investor or any current or future director, officer, employee, partner or member of any Investor or of any Affiliate or assignee thereof, as such, for any obligation of any Investor under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

[Signature pages follow]

IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the date first above written.

Company:

SELLAS Life Sciences Group, Inc.

By:	/s/ Angelos M. Stergiou
Name:	Angelos M. Stergious, MD, ScD h.c.
Title:	President and Chief Executive Officer

[Signature Page to Registration Rights Agreement]

IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the date first above written.

Investors:

EQUILIBRIA CAPITAL MANAGEMENT LIMITED
By:	/s/ Daniel Tafur
Name:	Daniel Tafur
Title:	Chief Investment Officer
EQC PRIVATE MARKETS SAC FUND LTD EQC
BIOTECH SELY S FUND
By:	/s/ Daniel Tafur
Name:	Daniel Tafur
Title:	Director
EQC PRIVATE MARKETS SAC FUND LTD EQC
BIOTECH SELY I FUND
By:	/s/ Daniel Tafur
Name:	Daniel Tafur
Title:	Director
EQC PRIVATE MARKETS SAC FUND LTD EQC
BIOTECH SELY II FUND
By:	/s/ Daniel Tafur
Name:	Daniel Tafur
Title:	Director
EQC PRIVATE MARKETS SAC FUND LTD EQC
BIOTECH SELY III FUND
By:	/s/ Daniel Tafur
Name:	Daniel Tafur
Title:	Director
VARIBOBI FINANCIAL HOLDINGS LTD
By:	/s/ Fabio Lobez
Name:	Fabio Lopez
Title:	Sole Owner

Daniel Tafur

_/s/ Daniel Tafur__________

[Signature Page to Registration Rights Agreement]

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Angelos M. Stergiou, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SELLAS Life Sciences Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2018

/s/ Angelos M. Stergiou

Angelos M. Stergious, MD, ScD h.c.

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gene Mack, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SELLAS Life Sciences Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: May 15, 2018

/s/ Gene Mack

Gene Mack

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report of SELLAS Life Sciences Group, Inc., (the “Company”) on Form 10-Q for the period ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officers of the Company certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the Company’s financial condition and result of operations.

By:	/s/ Angelos M. Stergiou
	Angelos M. Stergious, MD, ScD h.c.
	President and Chief Executive Officer
	Date: May 15, 2018
By:	/s/ Gene Mack
	Gene Mack
	Chief Financial Officer
	Date: May 15, 2018

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document Document And Entity Information [Abstract]
Entity Registrant Name	SELLAS Life Sciences Group, Inc.
Trading Symbol	SLS
Entity Central Index Key	0001390478
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		6,655,155

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 3,474	$ 2,319
Restricted cash	8,612	10,431
Prepaid expenses and other current assets	986	337
Total current assets	13,072	13,087
In-process research and development	17,600	17,600
Goodwill	1,914	1,914
Deposits and other assets	899	925
Total assets	33,485	33,526
Current liabilities:
Current portion of long-term debt	8,526	8,377
Accounts payable	11,451	11,691
Accrued expenses and other current liabilities	4,470	3,201
Litigation settlement payable	1,300	1,300
Total current liabilities	25,747	24,569
Deferred tax liability	1,673	1,673
Warrant liability	1,528	1,309
Contingent consideration	4,705	1,294
Long-term debt, net of current portion	1,150	2,611
Total liabilities	34,803	31,456
Commitments and contingencies (Note 8)
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; Series A shares, 17,500 shares designated, 5,987 issued and outstanding at March 31, 2018; no shares issued and outstanding at December 31, 2017	0	0
Common stock, $0.0001 par value; 350,000,000 shares authorized, 6,154,377 shares issued and outstanding at March 31, 2018; 5,766,891 shares issued and outstanding at December 31, 2017	1	1
Additional paid-in capital	60,861	56,254
Accumulated deficit	(62,180)	(54,185)
Total stockholders’ (deficit) equity	(1,318)	2,070
Total liabilities and stockholders’ (deficit) equity	$ 33,485	$ 33,526

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Preferred stock, par value (usd per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	5,987	0
Preferred stock, shares outstanding (in shares)	5,987	0
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	350,000,000	350,000,000
Common stock, shares issued (in shares)	6,154,377	5,766,891
Common stock, shares outstanding (in shares)	6,154,377	5,766,891
Series A Preferred Stock
Preferred stock, shares authorized (in shares)	17,500

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating expenses:
Research and development	$ 1,804	$ 2,184
General and administrative	3,880	2,287
Total operating expenses and operating loss	(5,684)	(4,471)
Non-operating income (expense):
Change in fair value of warrant liability	1,881	0
Change in fair value of the contingent consideration	(3,411)	0
Loss on settlement of liability-classified warrants	(685)	0
Interest expense, net	(96)	(130)
Total non-operating income (expense), net	(2,311)	(130)
Net loss	(7,995)	(4,601)
Deemed dividend arising from beneficial conversion feature of convertible preferred stock	(1,968)	0
Net loss attributable to common stockholders	$ (9,963)	$ (4,601)
Per share information:
Net loss per common share attributable to common stockholders, basic and diluted (in dollars per share)	$ (1.67)	$ (3.63)
Weighted-average common shares outstanding, basic and diluted (in shares)	5,952,193	1,268,489

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CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2017		0	5,766,891
Beginning balance at Dec. 31, 2017	$ 2,070	$ 0	$ 1	$ 56,254	$ (54,185)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Series A convertible preferred stock, net of offering costs (in shares)		5,987
Issuance of Series A convertible preferred stock, net of offering costs	5,328			5,328
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock offering	(2,587)			(2,587)
Beneficial conversion feature arising from Series A convertible preferred stock	(1,968)			(1,968)
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	1,968			1,968
Accretion of convertible preferred stock dividends	(72)			(72)
Issuance of common stock as repayment of principal and interest on long-term debt (in shares)			333,143
Issuance of common stock as repayment of principal and interest on long-term debt	1,631			1,631
Warrant exchange agreements, issuance of common stock (in shares)			54,343
Issuance of common stock in connection with warrant exchange agreements	285			285
Stock-based compensation for directors and employees	22			22
Net loss	(7,995)				(7,995)
Ending balance (in shares) at Mar. 31, 2018		5,987	6,154,377
Ending balance at Mar. 31, 2018	$ (1,318)	$ 0	$ 1	$ 60,861	$ (62,180)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net loss	$ (7,995)	$ (4,601)
Non-cash interest expense	20	0
Non-cash stock-based compensation	22	937
Change in fair value of common stock warrants	(1,881)	0
Change in fair value of contingent consideration	3,411	0
Loss on settlement of liability-classified warrants	685	0
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(622)	114
Accounts payable	(240)	3,585
Accrued expenses and other current liabilities	1,197	(3,838)
Net cash used in operating activities	(5,403)	(3,803)
Cash flows from financing activities:
Net proceeds from issuance of Series A convertible preferred stock and common stock warrants	5,328	0
Principal payments on long-term debt	(589)	0
Net cash provided by financing activities	4,739	0
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	(664)	(3,803)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period	12,750	5,962
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period	12,086	2,159
Supplemental disclosure of cash flow information:
Cash received during the periods for interest	34	0
Cash paid during the periods for interest	110	0
Supplemental disclosure of non-cash investing and financing activities:
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	1,968	0
Repayment of interest and principal on long-term debt through issuance of common stock	1,631	0
Reclassification of warrant liabilities upon exchange for shares of common stock	285	0
Long-term debt issued in connection with warrant exchange agreements	$ 888	$ 0

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Organization and Description of Business

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Organization and Description of Business

Organization and Description of Business

Overview

SELLAS Life Sciences Group, Inc. ("Company," “we,” “us,” “our,” or “SELLAS”) is a clinical-stage biopharmaceutical company focused on novel cancer immunotherapeutics for a broad range of cancer indications. The Company’s lead product candidate, galinpepimut-S (“GPS”), is a cancer immunotherapeutic agent licensed from Memorial Sloan Kettering Cancer Center (“MSK”), that targets the Wilms tumor 1 (“WT1”), protein, which is present in 20 or more cancer types. Based on its mechanism of action as a directly immunizing agent, GPS has the 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.

Merger of Galena Biopharma, Inc. and SELLAS Life Sciences Group Ltd.

As used in this quarterly report on Form 10-Q, the words the “Company,” and “SELLAS” refer to SELLAS Life Sciences Group, Inc. and its consolidated subsidiaries following completion of the business combination with Galena ("Merger"). Such references for the period prior to the completion of the Merger refer to Private SELLAS.

On December 29, 2017, Galena completed the business combination with the privately held Bermuda exempted company, Sellas Life Sciences Group Ltd. (“Private SELLAS”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of August 7, 2017 and amended November 5, 2017 the (“Merger Agreement”), by and among the Company, Sellas Intermediate Holdings I, Inc., Sellas Intermediate Holdings II, Inc., Galena Bermuda Merger Sub, Ltd., and Private SELLAS. As a result of the Merger, the Company’s business is now substantially comprised of the business of Private SELLAS, and although the Company is considered the legal acquiror of Private SELLAS, for accounting purposes, Private SELLAS is considered to have acquired the Company in the Merger. Consequently, the Merger was accounted for as a reverse acquisition in the Company's consolidated financial statements for the year ended December 31, 2017.

Immediately prior to the Merger, Galena effected a 1-for-30 reverse stock split of its outstanding common stock, par value $0.0001 per share. Under the terms of the Merger Agreement, Galena issued shares of its common stock to Private SELLAS’ securityholders at an exchange ratio of 43.9972 shares of its common stock in exchange for each common share of Private SELLAS outstanding immediately prior to the Merger. The Company also assumed all of the restricted stock units (“RSU”) issued and outstanding under the Private SELLAS Stock Incentive Plan #1, and all of the issued and outstanding warrants of Private SELLAS. Accordingly, such RSUs will now be settled in, and such warrants now are exercisable for, shares of the Company’s common stock. Accordingly, immediately after the Merger, there were 5,766,891 shares of the Company’s common stock outstanding, with the former Private SELLAS securityholders owning 67.5% of the Company’s fully diluted common stock, and the Company’s pre-Merger securityholders owning the remaining 32.5%. The number of shares and per share amounts of common stock in the accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements have been restated to give retroactive effect to the common stock conversion ratio and reverse stock split for all periods presented, including common stock options, restricted stock units, and common stock warrants.

Upon completion of the Merger, the Company’s name changed from “Galena Biopharma, Inc.” to “SELLAS Life Sciences Group, Inc.”, the Company’s common stock began trading on The Nasdaq Capital Market under a new ticker symbol “SLS” on January 2, 2018 and the Company’s financial statements became those of Private SELLAS.

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Liquidity

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Liquidity

Liquidity

The Company has not generated any revenues from product sales and has funded operations primarily from the proceeds of private placements of its equity interests (prior to the Merger) and convertible notes, as well as through the Merger. Substantial additional financing will be required by the Company to continue to fund its research and development activities. No assurance can be given that any such financing will be available when needed or that the Company’s research and development efforts will be successful.

The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with third parties and other strategic alliances and business transactions. On March 7, 2018, the Company entered into a definitive securities purchase agreement to issue shares of its convertible preferred stock (“Series A Convertible Preferred”) and warrants to purchase shares of its common stock in a private placement transaction to a select group of institutional investors. The sale of the Series A Convertible Preferred closed in two tranches and resulted in aggregate gross proceeds to the Company of approximately $10.7 million. The Company closed the first tranche for approximately $6.0 million gross proceeds on March 9, 2018. The Company closed the second tranche of the remaining $4.7 million gross proceeds on May 1, 2018, following the receipt of necessary stockholder approval.

In addition to the proceeds from the Series A Convertible Preferred, during 2018, JGB (Cayman) Newton Ltd (“JGB”), the holder of the Company’s senior secured debenture (the “Senior Secured Debenture”) due November 2018 redeemed $2.8 million of outstanding principal that was satisfied by the Company with 659,529 shares of the Company’s common stock and redeemed $0.6 million of outstanding principal, which the Company satisfied in cash. As a result of the redemptions, the Company was able to transfer $1.9 million out of restricted cash and cash equivalents and into unrestricted cash and cash equivalents to be used to fund the Company’s ongoing operations. The balance of the restricted cash and cash equivalents balance exceeds the principal balance of the Senior Secured Debenture by $1.5 million as of May 15, 2018 and per the terms of the Senior Secured Debenture, as described in Note 7, should have been transferred into unrestricted cash and cash equivalents. As of May 15, 2018, the Company has been unable to transfer the excess of $1.5 million from the restricted account as the holder of the redemption has not approved the transfer required by a securities account control agreement at the Company's financial institution. The outstanding principal balance on the Senior Secured Debenture as of May 15, 2018 is $6.9 million.

The Company currently does not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to: commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently; consider other various strategic alternatives, including a merger or sale of the Company; or cease operations. If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered into such arrangements or if it entered into such arrangements at later stages in the product development process.

The Company has prepared its condensed consolidated financial statements assuming that it will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses since inception and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates, which raises substantial doubt about the Company’s ability to continue as a going concern. Various internal and external factors will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control. The length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The consolidated financial statements do not include any adjustments relating 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.

As of March 31, 2018, the Company had a cash balance of approximately $3.5 million and a restricted cash balance of $8.6 million. In addition, the Company had outstanding accounts payable and accrued expenses of $17.2 million and indebtedness of $9.7 million as of March 31, 2018, which primarily consists of the Company’s Senior Secured Debenture. The Company received an additional $4.7 million of cash proceeds from the second closing of the sale of the Series A Convertible Preferred and warrants on May 1, 2018. The Company expects its existing cash as of March 31, 2018, together with the proceeds from the second closing of the Series A Convertible Preferred in May 2018, will enable the Company to fund its operating expenses and capital expenditure requirements through August 2018.

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Basis Of Presentation and Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying condensed 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 condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, SELLAS Life Sciences Group Ltd., SELLAS Life Sciences Group UK Ltd (“SELLAS UK”), Apthera, Inc. (“Apthera”) and Mills Pharmaceuticals, LLC (“Mills”). All significant intercompany accounts and transactions have been eliminated upon consolidation.

Unaudited Interim Results

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company's annual consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission ("SEC") on April 13, 2018 (the "2017 Annual Report"). The accompanying condensed consolidated financial statements at March 31, 2018 and for the three months ended March 31, 2018, are unaudited, but include all adjustments, consisting of normal recurring entries, that management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2017 have been derived from the audited financial statements as of that date.

Preferred Stock

The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.

Convertible Instruments

The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.

The Company also records, when necessary, deemed dividends for the intrinsic value of the conversion options embedded in preferred stock based upon the difference between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred stock.

Recent Accounting Pronouncements

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash. ASU No. 2016-18 requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. In accordance with ASU No. 2016-18, the Company adopted this standard in the first quarter of 2018.

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

	March 31, 2018		December 31, 2017
Cash and cash equivalents	$	3,474	$	2,319
Restricted cash and cash equivalents	8,612		10,431
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	12,086	$	12,750

In connection with the Company's Senior Secured Debenture, the Company was required to maintain a minimum of the lesser of $18.5 million or the outstanding principal amount of unencumbered cash in a restricted account. Any funds in the restricted account in excess of the outstanding principal balance are transferred to the Company's unrestricted account to fund its ongoing operations. As of March 31, 2018 and December 31, 2017, the Company maintained $8.4 million and $10.2 million, respectively, of cash and cash equivalents in a restricted account. In addition the Company maintained $0.2 million as of March 31, 2018 and December 31, 2017 on hand with the Company's financial institutions as collateral for its corporate credit cards.

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting. ASU No. 2017-09 clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This guidance is to be applied prospectively to awards modified on or after the adoption date and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. In accordance with ASU No. 2017-09, the Company adopted this standard prospectively in the first quarter of 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company's consolidated financial statements.

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Acquisition

3 Months Ended

Mar. 31, 2018

Business Combinations [Abstract]

Acquisition

Acquisition

On December 29, 2017, the Company completed the Merger with Private SELLAS as discussed in Note 1. The Merger was accounted for as a reverse merger under the acquisition method of accounting whereby Private SELLAS was considered to have acquired the Company for financial reporting purposes because, immediately upon completion of the Merger, Private SELLAS stockholders held a majority of the voting interest of the combined company.

The following summary pro forma condensed consolidated financial information reflects the Merger with Galena as if it had occurred on January 1, 2017 for purposes of the statements of operations. This summary pro forma information is not necessarily representative of what the Company’s results of operations would have been had the Merger in fact occurred on January 1, 2017, and is not intended to project the Company’s results of operations for any future period.

Pro forma condensed consolidated financial information for the three months ended March 31, 2017 (in thousands except per share amounts):

Net loss	$	(6,753	)
Basic and diluted net loss per share	$	(1.87	)

Pro forma combined net loss includes an adjustment to reduce historical interest expense of $0.1 million for the three months ended March 31, 2017, due to the conversion of the convertible notes of $5.8 million.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

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 condensed consolidated balance sheets (in thousands):

Description	March 31, 2018		Quoted Prices In     Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	3,172	$	3,172	$	—	$	—
Restricted cash equivalents	8,423		8,423		—		—
Total assets measured and recorded at fair value	$	11,595	$	11,595	$	—	$	—
Liabilities:
Warrants potentially settleable in cash	$	1,528	$	—	$	—	$	1,528
Contingent consideration	4,705		—		—		4,705
Total liabilities measured and recorded at fair value	$	6,233	$	—	$	—	$	6,233

Description	December 31, 2017		Quoted Prices In     Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	1,662	$	1,662	$	—	$	—
Restricted cash equivalents	10,245		10,245		—		—
Total assets measured and recorded at fair value	$	11,907	$	11,907	$	—	$	—
Liabilities:
Warrants potentially settleable in cash	$	1,309	$	—	$	—	$	1,309
Contingent consideration	1,294		—		—		1,294
Total liabilities measured and recorded at fair value	$	2,603	$	—	$	—	$	2,603

The Company did not transfer any financial instruments into or out of Level 3 classification during the three months endedMarch 31, 2018 and 2017. See Note 10 for a reconciliation of the beginning and ending warrant liability for the three months endedMarch 31, 2018. A reconciliation of the beginning and ending contingent consideration liability for the three months endedMarch 31, 2018 is as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent consideration, January 1, 2018	$	1,294
Change in the estimated fair value of the contingent consideration	3,411
Contingent consideration, March 31, 2018	$	4,705

The contingent consideration was assumed by the Company in connection with the Merger and recorded at fair value as of the consummation of the Merger, which approximates fair value as of December 31, 2017. The fair value of the contingent consideration is measured at the end of each reporting period using Level 3 inputs in a probability-weighted, discounted cash-outflow model. The contingent consideration relates to Galena’s acquisition of Apthera, Inc. in 2011 and the future contingent payments of up to $32.0 million based on the achievement of certain development and commercial milestones relating to the Company’s NeuVax^TM product candidate. The contingent consideration is payable at the election of the Company in either cash or shares of common stock, provided that the Company may not issue any shares in satisfaction of any contingent consideration unless it has first obtained approval of its stockholders in accordance with Rule 5635(a) of the Nasdaq Marketplace Rules. The significant unobservable assumptions include the probability of achieving each milestone, the date the Company expects to reach the milestone, and a determination of present value factors used to discount future expected cash outflows. The change in the estimated fair value of the contingent consideration during the three months endedMarch 31, 2018 reflects an adjusted probability and timeline for the potential approval of NeuVax associated with the positive interim data from the prospective, randomized, single-blinded, controlled Phase 2b independent investigator-sponsored clinical trial (IST) of trastuzumab (Herceptin®) +/- nelipepimut-S (NeuVax™)  in HER2 1+/2+ breast cancer patients in the adjuvant setting to prevent recurrences that was announced on April 2, 2018.

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Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	March 31, 2018		December 31, 2017
Professional fees	$	1,898	$	1,744
Clinical trial costs	960		51
Compensation and related benefits	505		566
Value added tax	426		426
Rebates and returns of former commercial products	416		223
Other	265		191
Accrued expenses and other current liabilities	$	4,470	$	3,201

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Debt

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Debt

Debt

	March 31, 2018		December 31, 2017
Debt
Current portion of Senior Secured Debenture	$	7,638	$	8,377
Short-term convertible promissory notes	888		—
Non-current portion of Senior Secured Debenture	1,150		2,611
Total debt	$	9,676	$	10,988

Senior Secured Debenture

On May 10, 2016, the Company's predecessor company, Galena, entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), with JGB pursuant to which Galena sold to the Purchaser, at a 6.375% original issue discount, a $25.5 million Senior Secured Debenture and warrants to purchase up to 3,333 shares of the Company's common stock. Net proceeds to Galena from the sale of the Senior Secured Debenture and warrants, after payment of commissions and legal fees, were approximately $23.4 million. The Senior Secured Debenture remained outstanding for the Company through the consummation of the Merger with Galena on December 29, 2017.

The Senior Secured Debenture matures on November 10, 2018, and accrues interest at 9% per year, payable monthly. In addition, on the maturity date of the Senior Secured Debenture (or such earlier date that the principal amount of the Senior Secured Debenture is paid in full by acceleration or otherwise) a fixed amount, which shall be deemed interest under the Senior Secured Debenture, equal to $0.8 million will be due and payable to the JGB on such date in, at the option of the Company, cash and, subject to the same conditions for the payment of interest, in shares of the Company’s common stock, or a combination of cash and the Company’s common stock.

The Company’s obligations under the Debenture are secured under a security agreement by a senior lien on all of the Company’s assets, including all of the Company’s interests in its consolidated subsidiaries. Private SELLAS is not a party to the security agreement. Under the subsidiary guarantee agreement, each subsidiary guarantees the performance of the Company of the Securities Purchase Agreement, Senior Secured Debenture and related agreements.

The Senior Secured Debenture was amended in August 2016, May 2017, July 2017 and August 2017. After giving effect to the amendments, the Senior Secured Debenture contains the following modified and/or additional terms, among others:

• JGB can, from time to time, during the term of the Senior Secured Debenture, require the Company to prepay in cash all or a portion of the outstanding principal plus accrued and unpaid interest (the “Outstanding Amount”) on written notice to the Company, provided, that such prepayment amount shall not exceed the lesser of $18.5 million and the outstanding principal amount. If JGB elects such prepayment of the Senior Secured Debenture, then the number of shares subject to the warrants issued to the holder will be reduced in proportion to the percentage of principal and accrued interest required to be prepaid by the Company. The Company does not have the right to prepay.

• JGB has the right, which commenced on November 10, 2016, to require the Company to redeem the outstanding principal amount, up to the outstanding principal amount of the Senior Secured Debenture, by written notice to the Company and may deliver an unlimited number of redemption notices during any calendar month.

• The Company has the option to pay outstanding principal redemptions and monthly interest in shares of common stock, cash, or a combination of shares of common stock and cash. Among the various conditions that must be satisfied (or waived) in order for the Company to be able to elect to satisfy the redemption amounts in shares of common stock are: (a) the VWAP of $10.50 per share on any trading day that a redemption notice is delivered (b) no event of default has occurred and is continuing and (c) the Company’s cash on hand exceeds the outstanding principal amount by at least $10.0 million. In the event that any of these conditions are not met, the Company does not have the option to pay outstanding principal redemptions and monthly interest in cash.

• The stock payment price to satisfy outstanding principal redemptions and monthly interest is the lower of (a) 80% of the VWAP for the trading day immediately prior to the date of the applicable redemption notice (the “Prior Day VWAP”) and (b) 80% of the average of the three lowest VWAPs during the 20 consecutive trading day period immediately preceding the date of the applicable redemption notice (the “Twenty Day VWAP”); provided, however, to the extent that, on any given trading day, the price per share of common stock on such trading day equals or exceeds 115% of the Prior Day VWAP or Twenty Day VWAP, then for the such trading day, and such trading day only, each reference to 80% shall be deemed, for such trading day only, to be 92.5%

•

• The Company was required to maintain a minimum of the lesser of $18.5 million or the outstanding principal amount of unencumbered cash in a restricted account. Any funds in the restricted account in excess of the outstanding principal balance are transferred to the Company's unrestricted account to fund its ongoing operations. As of March 31, 2018 and December 31, 2017, the Company maintained $8.4 million and $10.2 million, respectively, of cash and cash equivalents in a restricted account.

As of March 31, 2018 and December 31, 2017, the outstanding principal balance of the Senior Secured Debenture was $8.0 million and $10.2 million, respectively. In addition to the outstanding principal balance, the Senior Secured Debenture has $0.8 million of additional interest that is included in the current portion of long-term debt as of March 31, 2018 and December 31, 2017. During the three months ended March 31, 2018, JGB redeemed $1.6 million of outstanding principal, which the Company satisfied with 314,228 shares of its common stock and redeemed $0.6 million of outstanding principal which the Company satisfied with cash. Subsequent to March 31, 2018 and prior to May 15, 2018, the date of issuance of the Company's condensed consolidated financial statements for the quarter ended March 31, 2018, JGB redeemed an additional $1.2 million of outstanding principal, which the Company satisfied with 345,301 shares of its common stock and is classified as long-term debt on the Company's condensed consolidated balance sheet as of March 31, 2018 as the amounts were not satisfied with working capital.

As a result of the redemptions during 2018, the Company was able to transfer $1.9 million of restricted cash into unrestricted cash and cash equivalents which is being used to fund the Company’s ongoing operations. The balance of the restricted cash exceeds the principal balance of the Senior Secured Debenture by $1.5 million as of May 15, 2018 and per the terms of the Senior Secured Debenture, as described in Note 7, should be transferred into cash and cash equivalents. As of May 15, 2018, the Company has been unable to transfer the excess $1.5 million from the restricted account as JGB has not approved the transfer required by a securities account control agreement at the Company's financial institution. The outstanding principal balance on the senior secured debenture as of May 15, 2018 is $6.9 million.

Short-term Convertible Promissory Notes

During the three months ended March 31, 2018, the Company entered into convertible promissory notes in the principal amount of $0.9 million in exchange for the surrender and cancellation of warrants to purchase 379,333 shares of its common stock pursuant to the February 2017 offering by Galena. The convertible promissory notes accrue interest at a rate of 5% per annum and the entire principal balance and accrued interest is due and payable in August 2018. The outstanding principal balance and accrued interest is convertible into shares of the Company's common stock at a conversion price equal to $7.00. In April 2018, $0.8 million of outstanding principal and accrued interest was converted 118,644 shares of common stock.

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Legal Proceedings, Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings, Commitments and Contingencies

Legal Proceedings, Commitments and Contingencies

Legal Proceedings

From time to time, the Company is 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 condensed 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. In the opinion of management, as of the date hereof, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect the Company’s consolidated results of operations, financial position or cash flows.

The Company’s predecessor company, Galena, was involved in multiple legal proceedings and administrative actions, including stockholder class actions, both state and federal, some of which are ongoing and to which the Company is now subject as a result of the Merger. They are as follows:

On February 13, 2017, a putative stockholder securities class action complaint was filed in the U.S. District Court for the District of New Jersey captioned, Miller v. Galena Biopharma, Inc., et al. On February 15, 2017, a putative stockholder securities class action complaint was filed in the U.S. District Court for the District of New Jersey entitled, Kattuah v. Galena Biopharma, Inc., et al. The actions assert that the defendants failed to disclose that Galena’s promotional practices for Abstral^® (fentanyl sublingual tablets) were allegedly improper and that Galena may be subject to civil and criminal liability, and that these alleged failures rendered Galena’s statements about its business misleading. Two groups of stockholders and one individual stockholder filed three motions to be appointed lead plaintiff on April 14, 2017 and April 17, 2017.

Subsequently, one of the stockholders groups withdrew its motion for lead plaintiff status and the individual stockholder notified the Court that he did not object to the appointment of the remaining stockholder group, GALE investor group, as lead plaintiff. On July 17, 2017, the Court approved the GALE investor group as named lead plaintiff and its counsel as lead and liaison counsel. The Court also consolidated both actions. An amended complaint was filed on October 6, 2017. On December 15, 2017, Galena and the former officers and employees filed a motion to dismiss the amended complaint. The plaintiffs responded to a former officer’s motion to dismiss on February 13, 2018 and responded to Galena's and the other former officers' and employees' motion to dismiss in March 2018. The Company, as successor to Galena, and the former officers and employees filed a reply in April 2018. The Court will take the matter under advisement. It is not known when the Court will issue a ruling in this matter.

On March 16, 2017, a complaint entitled Keller v. Ashton et al., CA No. 2:17-cv-01777 was filed in the U.S. District Court for the District of New Jersey against the Company’s then-existing directors and the Company, as a nominal defendant. The complaint purports to assert derivative claims for breach of fiduciary duty on the Company’s behalf against its directors based on substantially similar facts as alleged in the putative shareholder securities class action complaints mentioned above. The Company’s response to the complaint was due on June 1, 2017; however, on May 21, 2017, the Court entered a stay of the proceedings pending resolution of motions to dismiss in the securities litigations described above.

On April 27, 2017, a putative stockholder class action was filed in the Court of Chancery of the State of Delaware captioned Patel vs. Galena Biopharma, Inc. et. al, CA No. 2017-0325-JTL seeking relief under Section 225 of the Delaware General Corporation Law (DGCL) and alleging breaches of fiduciary duties by Galena’s former board of directors and former interim chief executive officer regarding proposals to amend Galena’s certificate of incorporation to increase the amount of authorized shares of common stock and effectuate a reverse stock split at the July 2016 and October 2016 stockholder meetings, respectively. On June 2, 2017, an amended verified complaint was filed along with a motion to expedite the proceedings. On June 5, 2017, Galena filed a verified petition under Section 205 of the DGCL and a motion to expedite the proceedings. On June 8, 2017, the Court denied a request by the plaintiff to schedule a preliminary injunction motion and ordered a prompt trial on both the plaintiff and Galena’s claims. On June 20, 2017, the Court consolidated the claims into In re Galena Biopharma, Inc., C. A. No. 2017-0423-JTL. On July 10, 2017, the Court ordered that the trial of the claims be held on August 28, 30 and 31, 2017. On July 24, 2017, Galena entered into a binding settlement term sheet, which the Court enforced on November 30, 2017, over the objection of the plaintiff. On December 8, 2017, the Court set the hearing on the settlement for March 15, 2018. On December 11, 2017, the Court also granted an order validating the ratification votes at the special stockholder meeting held on July 6, 2017 and the certificate of amendments filed by Galena for the increase in authorized shares in 2011, 2013, 2015, and 2016 as well as for the reverse stock split in 2016. On February 22, 2018, the plaintiff filed his brief in support of the settlement as well as his request for attorneys’ fees and an incentive award. On March 1, 2018, the former directors and former interim chief executive officer responded to plaintiff’s brief. On February 28, 2018, the former directors and former interim chief executive officer requested the Court continue the date of the hearing to approve the settlement as the Company was working with the staff of the SEC to obtain the no-action letter required by the binding settlement term sheet. The Plaintiff objected to such continuance. On March 15, 2018, the Court ruled in favor of the Company and continued the settlement hearing for 90 days.

Under the terms of the settlement, the class will receive a settlement payment of $1.3 million, in addition to attorney fees in an amount to be approved by the Court. The settlement payment of $1.3 million consists of $50,000 in cash to be paid by the Company or its insurers and $1,250,000 in unrestricted shares of the Company’s common stock (“Settlement Stock”), which valuation will be based on the volume-weighted average closing price for the 20 trading days immediately preceding the day before the transfer of the Settlement Stock to the settlement fund pursuant to the terms and conditions of the settlement. The Company anticipates that the Settlement Stock will be issued, pursuant to the terms of the Stipulation of Settlement, in a transaction that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(10) of the Securities Act. Any amounts awarded by the Court for attorneys’ fees will be paid in part by the settlement fund and in part by the Company’s insurance carriers. Upon the effectiveness of the proposed settlement, the individual defendants will be released from the claims that were asserted or could have been asserted in the class action by class members participating in the settlement.

On January 23, 2018, a complaint captioned Johnson v Schwartz et al., CA No. 2:18-cv-00903 was filed in the U.S. District Court for the District of New Jersey against Galena’s former directors, officers and employees and the Company as a nominal defendant. The complaint purports to assert derivative claims for breach of fiduciary duty on Galena’s behalf against its former directors, officers and employees based on substantially similar facts as alleged in the putative stockholder securities class action complaints and derivative complaints mentioned above, as well as making demand futility allegations against the current board of directors, who are not named as defendants. It is expected that the Company and the individual defendants will respond to the complaint through an appropriate pleading or motion and, if necessary, seek an order from the Court staying the proceedings pending further developments in the securities litigations described above.

On or about April 9, 2018, JGB filed a lawsuit in the U.S. District Court for the Southern District of New York captioned JGB (Cayman) Newton, Ltd. v. Sellas Life Sciences Group, Inc., et al., Case 1:18-cv-3095 (DLC), or the JGB Action. The complaint in the JGB Action asserts claims under state law and federal securities law against the Company, the Company's Chief Executive Officer, Angelos M. Stergiou, M.D., ScD H.C, and the its Interim Chief Financial Officer, Aleksey N. Krylov (Mr. Krylov together with the Company and Dr. Stergiou, the Defendants). The complaint in the JGB Action alleges, among other things, that the Company breached a contractual obligation to deliver certain shares of its common stock to JGB and that, in the course of negotiations related to the Senior Secured Debenture agreement, the Defendants failed to disclose to JGB certain information regarding positive clinical trial results that was not then public. On or about May 2, 2018, JGB filed an amended complaint, adding as defendants Jane Wasman, Stephen Ghiglieri, David Scheinberg, M.D., Robert Van Nostrand and John Varian, each of whom is a member of the Company’s Board of Directors (the “Director Defendants”). The amended complaint, in addition to the allegations in the original complaint, alleges, among other things, that the Director Defendants are liable as “control persons” for the purposes of the purported securities laws violations committed by the Company, Dr. Stergiou and Mr. Krylov. According to the amended complaint, JGB seeks to receive an unspecified number of shares of the Company's common stock, a declaratory judgment in respect of the dispute underlying the litigation, damages, and costs and expenses incurred in the JGB action, among other things. The Company disputes the claims in the JGB Action and intends to defend against them vigorously.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Stockholders' Equity

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.

Series A Convertible Preferred

On March 7, 2018, the Company entered into a Securities Purchase Agreement with investors, pursuant to which the Company agreed to sell to the investors, in a private placement pursuant to Rule 4(a)(2) and Regulation S under the Securities Act, an aggregate of 10,700 shares of the Company’s newly-created non-voting Series A Convertible Preferred, and warrants to acquire an aggregate 1,383,631 shares of the Company’s common stock, par value $0.0001 per share at an aggregate purchase price of $10.7 million. The Series A Convertible Preferred is initially convertible into 1,844,835 shares of common stock based on an initial conversion price of $5.80 per share.

At the first closing of the Series A Convertible Preferred on March 9, 2018, the Company issued an aggregate 5,987 shares of Series A Convertible Preferred and warrants to acquire 774,186 shares of common stock for aggregate gross proceeds of $6.0 million. The second closing of the remaining 4,713 shares of the Series A Convertible Preferred and warrants to acquire 609,445 shares of its common stock, for aggregate gross proceeds of $4.7 million occurred on May 1, 2018 following receipt of stockholder approval.

On March 8, 2018, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A 20% Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware, which designated up to 17,500 shares of Series A Convertible Preferred. The shares of Series A Convertible Preferred have a stated value equal to $1,000 and bear cumulative dividends, payable in cash or shares of common stock at the Company’s option, at a rate of 20% per annum, payable semiannually in arrears on June 30 and December 31, beginning on the first such date after issuance, and upon conversion if accrued and unpaid at such time. Such dividends cease to accrue upon the consummation of a Qualified Offering. Qualified Offering is defined in the purchase agreement and the Certificate of Designation as a public offering raising aggregate gross proceeds of no less than $20.0 million. In the event of a Qualified Offering, under the Series A Convertible Preferred, investors have the right to acquire the securities sold in such Qualified Offering by converting their shares of Series A Convertible Preferred into the same securities on a $1.00 for $1.00 basis based on the stated value of their shares of Series A Convertible Preferred.

Shares of Series A Convertible Preferred are convertible into common stock at the option of the holder from time to time. Conversion is subject to a beneficial ownership limitation of 4.99% (or 9.99% at the option of the investor).

The initial conversion price is $5.80 per share of common stock, subject to standard adjustments for certain transactions affecting the Company’s securities (such as stock dividends, stock splits, and the like). Until consummation of a Qualified Offering, such conversion price is also subject to anti-dilution price protection in the event of non-exempt equity issuances at a price per share lower than the then applicable conversion price. If the Company has not consummated a Qualified Offering on or before September 9, 2018 (the six month anniversary of the first closing), on each of the six month anniversary of the first and the second closings, the Conversion Price shall be reduced to the lesser of (x) the then applicable Conversion Price, as adjusted, (y) $3.00 (subject to adjustment for forward and reverse stock splits and the like) and (z) the lowest volume weighted average price for any trading day during the five trading days immediately following each such adjustment date.

The Series A Convertible Preferred generally have no voting rights. However, for so long as any shares of Series A Convertible Preferred are outstanding, the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Convertible Preferred is required to: (a) alter or change adversely the powers, preferences or rights given to the Series A Convertible Preferred or alter or amend the Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined in the Certificate of Designation) senior to, or otherwise pari passu with, the Series A Convertible Preferred (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A Convertible Preferred, (d) increase the number of authorized shares of Series A Convertible Preferred, or (e) enter into any agreement with respect to any of the foregoing.

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary that is not a Fundamental Transaction (as defined in the Certificate of Designation), the holders of Series A Convertible Preferred are entitled to receive from the Company's assets the same amount they would have received on an as converted basis, disregarding any conversion limitations. Such amounts are paid on apari passu basis with all holders of common stock.

The Company evaluated the Series A Convertible Preferred in accordance with the provisions of ASC 815, Derivatives and Hedging, including consideration of embedded derivatives requiring bifurcation. The issuance of the convertible preferred stock could generate a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective conversion price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, to additional paid-in capital, resulting in a discount on the convertible preferred stock. As the Series A Convertible Preferred may be converted immediately, the Company recognized a BCF of $2.0 million as a deemed dividend in the condensed consolidated statements of operations related to the first closing on March 9, 2018. This one-time, non-cash charge impacted net loss attributable to common stockholders and loss per share for the three months ended March 31, 2018.

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 for future issuance are reserved for as follows (in thousands):

	March 31, 2018
Warrants outstanding	1,236
Series A Convertible Preferred*	1,045
Stock options outstanding	415
Options reserved for future issuance under the Company’s 2017 Equity Incentive Plan	401
Shares reserved for future issuance under the Employee Stock Purchase Plan	115
Restricted stock units	13
Total reserved for future issuance	3,225

* On an as converted to common stock basis.

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Warrants to Acquire Shares of Common Stock

3 Months Ended

Mar. 31, 2018

Warrants and Rights Note Disclosure [Abstract]

Warrants to Acquire Shares of Common Stock

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 three months ended March 31, 2018 (in thousands):

Warrant Issuance	Outstanding, December 31, 2017	Granted	Canceled		Outstanding, March 31, 2018	Expiration
Series A Convertible Preferred	—	774	—		774	September 2023
2017 Equilibria	316	—	—		316	December 2022
Galena February 2017	567	—	(501	)	66	February 2022
Galena Other	80	—	—		80	January 2022
	963	774	(501	)	1,236

Warrants to acquire shares of common stock consist of warrants that may be settled in cash, which are liability-classified warrants, and equity-classified warrants. During the three months ended March 31, 2018, a total of 501,000 of the Galena February 2017 liability-classified warrants to purchase shares of common stock were canceled under various warrant exchange agreements. The Company issued 54,613 shares of its common stock in exchange for the surrender and cancellation of warrants to acquire 121,667 shares of its common stock and $0.9 million in convertible promissory notes in exchange for the surrender and cancellation of warrants to acquire 379,333 shares of its common stock, as described in Note 7. The fair value of the common stock and promissory notes exchanged totaled $1.2 million, which exceeded the fair value of the warrant liability of the warrants canceled by $0.7 million and is recorded as loss on settlement of liability-classified warrants in the condensed consolidated statement of operations for the three months ended March 31, 2018.

Warrants Classified as Liabilities

Liability-classified warrants consist of warrants to acquire common stock issued in connection with previous equity financings for the Series A Convertible Preferred, Galena's February 2017 financing, and various other Galena equity financings that were assumed by the Company at the consummation of the Merger. These warrants may be settled in cash and were determined to not be indexed to the Company’s common stock.

The initial exercise price of the warrants to acquire shares of common stock in connection with the Series A Convertible Preferred is $5.80 per share of common stock, subject to standard adjustments for certain transactions affecting the Company’s securities (such as stock dividends, stock splits, and the like). From the original issue date until the one year anniversary of a Qualified Offering, the initial exercise price and number of warrants to acquire shares of common stock are subject to anti-dilution protection in the event of non-exempt equity issuances at a price per share lower than the initial exercise price ("Base Share Price"). simultaneously with the consummation of each non-exempt equity issuance the exercise price shall be reduced to equal the Base Share Price and the number of warrants to acquire shares of common stock issuable shall be increased such that the aggregate exercise price payable, after taking into account the decrease in the exercise price, shall be equal to the aggregate exercise price prior to such adjustment, provided that no adjustment to the number of warrant to purchase shares of common stock issuable shall be made, as a result of (i) a Qualified Offering or (ii) any Dilutive Issuance that occurs after the consummation of a Qualified Offering. Such adjustment shall be made whenever such common stock or common stock equivalents are issued.

The estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the condensed consolidated statement of operations as change in fair value of warrant liability. The fair value of the warrants is estimated using a Black-Scholes pricing model with the following inputs:

As of March 31, 2018
Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Series A Convertible Preferred	774	$	6.59	5.45	80.78	%	2.59	%
Galena February 2017	66	$	33.00	3.88	74.00	%	2.25	%
Galena Other	80	$	888.22	2.94	74.08	%	2.27	%
As of December 31, 2017
Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Galena February 2017	567	$	13.00	4.12	79.29	%	2.09	%
Galena Other	80	$	28.40	3.19	74.05	%	2.09	%

The expected volatility assumptions are based on the Company's implied volatility in combination with the implied volatilities of similar publicly traded entities. The expected life assumption is based on the remaining contractual terms of the warrants. The risk-free rate is based on the zero coupon rates in effect at the time of valuation. The dividend yield used in the pricing model is zero, because the Company has no present intention to pay cash dividends.

The changes in fair value of the warrant liability for the three months ended March 31, 2018 were as follows (in thousands):

Warrant Issuance	Warrant liability, December 31, 2017		Fair value of warrants granted		Fair value of warrants canceled			Change in fair value of warrants			Warrant liability, March 31, 2018
Series A Convertible Preferred	$	—	$	2,587	$	—		$	(1,083	)	$	1,504
Galena February 2017	1,305		—		(487		)	(794		)	24
Galena Other	4		—		—			(4		)	—
	$	1,309	$	2,587	$	(487	)	$	(1,881	)	$	1,528

Warrants Classified as Equity

The Company issued warrants to acquire 316,163 shares of the its common stock at an exercise price of $7.42, maturing five years from issuance, to EQC Private Markets SAC Fund Ltd-EQC Biotech Sely I Fund on December 29, 2017. These warrants are recorded in equity at fair value upon issuance, and not as liabilities, and are not subject to adjustment to fair value in subsequent reporting periods. The fair value of the warrants granted was $5.60 per share using the Black-Scholes pricing model with the fair value assumptions for the grant including a volatility of 90.10%, expected term of five years, risk free rate of 2.20%, and a dividend rate of 0.00.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Share and per share amounts below have been retroactively adjusted to reflect the exchange ratio and reverse stock split as described in Note 1.

2017 Equity Incentive Plan

On December 29, 2017, the 2017 Equity Incentive Plan was approved, and currently allows for the issuance of up to a maximum of approximately 575,000 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, not including shares subject to awards assumed in connection with certain transactions, including the Merger. Upon the consummation of the Merger, the Company assumed approximately 10,171 shares subject to outstanding common stock options granted under the Company’s 2016 Incentive Plan that will remain exercisable through December 29, 2018 for former Company employees and directors.

The amount of shares reserved for issuance under the 2017 Equity Incentive Plan will automatically increase on January 1 of each year, for a period of not more than ten years, commencing on January 1 of the year following the year in which the effective date occurs and ending on (and including) January 1, 2027, in an amount equal to 4% of the total number of shares of common stock outstanding on December 3 of the preceding calendar year. Notwithstanding the foregoing, the board of directors may act prior to January 1 of a given year to provide that there will be no January 1 increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence. The amount of shares reserved for issuance under the 2017 Equity Incentive Plan was automatically increased to approximately 805,000 on January 1, 2018. As of March 31, 2018, an aggregate of approximately 400,000 shares of common stock were reserved for future grants under the Company’s 2017 Equity Incentive Plan. There were no common stock options granted under the 2017 Equity Incentive Plan for the years ended December 31, 2017.

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively (in thousands):

	Three Months Ended March 31,
	2018		2017
Research and development	$	6	$	135
General and administrative	16		802
Total stock-based compensation	$	22	$	937

Options to Purchase Shares of Common Stock

The Company uses the Black-Scholes option-pricing model and the following assumptions were used to determine the fair value of all its stock options granted during the three months ended March 31, 2018:

Risk free interest rate	2.71	%
Volatility	80.05	%
Expected lives (years)	6.21
Expected dividend yield	—	%

The weighted-average grant date fair value of options granted during the three months ended March 31, 2018 was $3.70. There were no stock options granted during the three months ended March 31, 2017.

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 ten 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.

As of March 31, 2018, there was $1.5 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 2.95 years.

The following table summarizes stock option activity of the Company for the three months ended March 31, 2018:

	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2018	10	$	1,240.55		$	—
Granted	405	5.22			—
Outstanding at March 31, 2018	415	$	35.03	9.70	$	—
Options exercisable at March 31, 2018	10	$	1,240.55	0.75	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at March 31, 2018 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on March 31, 2018 of $3.45 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.

RSUs with Time-Based and Performance-Based Conditions

In addition to the RSUs with time-based conditions, the Company granted RSUs subject to both time-based and performance-based vesting conditions to certain of its employees and non-employees pursuant to the 2016 Incentive Plan. These RSUs vest based on both (i) continued service either over a three-year measurement period or at the end of the required service period and (ii) the achievement of a liquidity event. The vesting dates for these RSUs was February 27, 2018. The liquidity event, as defined in the relevant RSU grant agreements, will be satisfied upon the earlier of either: a) change of control or b) a qualified initial public offering. As of March 31, 2018 and December 31, 2017, there were approximately 13,000 RSUs outstanding with a weighted average grant date fair value of $52.94.

The Company recognizes compensation expense related to these RSUs when the liquidity event is deemed probable. As such, no compensation expense was recorded to date as the liquidity event is outside the Company’s control and not deemed probable until it occurs.

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Subsequent Events

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company evaluated all events or transactions that occurred after March 31, 2018 up through the date these financial statements were issued. Other than as disclosed elsewhere in the notes to the condensed consolidated financial statements and below, the Company did not have any material subsequent events.

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Basis Of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed 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

Principles of Consolidation

The condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, SELLAS Life Sciences Group Ltd., SELLAS Life Sciences Group UK Ltd (“SELLAS UK”), Apthera, Inc. (“Apthera”) and Mills Pharmaceuticals, LLC (“Mills”). All significant intercompany accounts and transactions have been eliminated upon consolidation.

Preferred Stock

Preferred Stock

The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.

Convertible Instruments

Convertible Instruments

The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.

The Company also records, when necessary, deemed dividends for the intrinsic value of the conversion options embedded in preferred stock based upon the difference between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the preferred stock.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash. ASU No. 2016-18 requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. In accordance with ASU No. 2016-18, the Company adopted this standard in the first quarter of 2018.

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

	March 31, 2018		December 31, 2017
Cash and cash equivalents	$	3,474	$	2,319
Restricted cash and cash equivalents	8,612		10,431
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	12,086	$	12,750

In connection with the Company's Senior Secured Debenture, the Company was required to maintain a minimum of the lesser of $18.5 million or the outstanding principal amount of unencumbered cash in a restricted account. Any funds in the restricted account in excess of the outstanding principal balance are transferred to the Company's unrestricted account to fund its ongoing operations. As of March 31, 2018 and December 31, 2017, the Company maintained $8.4 million and $10.2 million, respectively, of cash and cash equivalents in a restricted account. In addition the Company maintained $0.2 million as of March 31, 2018 and December 31, 2017 on hand with the Company's financial institutions as collateral for its corporate credit cards.

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting. ASU No. 2017-09 clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This guidance is to be applied prospectively to awards modified on or after the adoption date and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. In accordance with ASU No. 2017-09, the Company adopted this standard prospectively in the first quarter of 2018. The adoption of ASU No. 2017-09 did not have a material impact on the Company's consolidated financial statements.

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Basis Of Presentation and Significant Accounting Policies Basis Of Presentation and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

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

	March 31, 2018		December 31, 2017
Cash and cash equivalents	$	3,474	$	2,319
Restricted cash and cash equivalents	8,612		10,431
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	12,086	$	12,750

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Acquisition (Tables)

3 Months Ended

Mar. 31, 2018

Business Combinations [Abstract]

Summary of Proforma Information

Pro forma condensed consolidated financial information for the three months ended March 31, 2017 (in thousands except per share amounts):

Net loss	$	(6,753	)
Basic and diluted net loss per share	$	(1.87	)

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Contingent Purchase Price Consideration, Measured at Estimated Fair Value on Recurring Basis

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

Description	March 31, 2018		Quoted Prices In     Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	3,172	$	3,172	$	—	$	—
Restricted cash equivalents	8,423		8,423		—		—
Total assets measured and recorded at fair value	$	11,595	$	11,595	$	—	$	—
Liabilities:
Warrants potentially settleable in cash	$	1,528	$	—	$	—	$	1,528
Contingent consideration	4,705		—		—		4,705
Total liabilities measured and recorded at fair value	$	6,233	$	—	$	—	$	6,233

Description	December 31, 2017		Quoted Prices In     Active Markets (Level 1)		Significant Other Observable  Inputs (Level 2)		Unobservable  Inputs (Level 3)
Assets:
Cash equivalents	$	1,662	$	1,662	$	—	$	—
Restricted cash equivalents	10,245		10,245		—		—
Total assets measured and recorded at fair value	$	11,907	$	11,907	$	—	$	—
Liabilities:
Warrants potentially settleable in cash	$	1,309	$	—	$	—	$	1,309
Contingent consideration	1,294		—		—		1,294
Total liabilities measured and recorded at fair value	$	2,603	$	—	$	—	$	2,603

Reconciliation of Level 3 Liabilities

A reconciliation of the beginning and ending contingent consideration liability for the three months endedMarch 31, 2018 is as follows (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent consideration, January 1, 2018	$	1,294
Change in the estimated fair value of the contingent consideration	3,411
Contingent consideration, March 31, 2018	$	4,705

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2018

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

	March 31, 2018		December 31, 2017
Professional fees	$	1,898	$	1,744
Clinical trial costs	960		51
Compensation and related benefits	505		566
Value added tax	426		426
Rebates and returns of former commercial products	416		223
Other	265		191
Accrued expenses and other current liabilities	$	4,470	$	3,201

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Debt (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of Debt

	March 31, 2018		December 31, 2017
Debt
Current portion of Senior Secured Debenture	$	7,638	$	8,377
Short-term convertible promissory notes	888		—
Non-current portion of Senior Secured Debenture	1,150		2,611
Total debt	$	9,676	$	10,988

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Common Stock are Reserved for Future Issuance

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

	March 31, 2018
Warrants outstanding	1,236
Series A Convertible Preferred*	1,045
Stock options outstanding	415
Options reserved for future issuance under the Company’s 2017 Equity Incentive Plan	401
Shares reserved for future issuance under the Employee Stock Purchase Plan	115
Restricted stock units	13
Total reserved for future issuance	3,225

* On an as converted to common stock basis.

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Warrants to Acquire Shares of Common Stock (Tables)

3 Months Ended

Mar. 31, 2018

Warrants and Rights Note Disclosure [Abstract]

Schedule of Warrant Activity

The following is a summary of the Company's warrants to acquire shares of common stock activity for the three months ended March 31, 2018 (in thousands):

Warrant Issuance	Outstanding, December 31, 2017	Granted	Canceled		Outstanding, March 31, 2018	Expiration
Series A Convertible Preferred	—	774	—		774	September 2023
2017 Equilibria	316	—	—		316	December 2022
Galena February 2017	567	—	(501	)	66	February 2022
Galena Other	80	—	—		80	January 2022
	963	774	(501	)	1,236

Fair Value of Warrants is Estimated Using Black-Scholes Option Pricing Model

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

As of March 31, 2018
Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Series A Convertible Preferred	774	$	6.59	5.45	80.78	%	2.59	%
Galena February 2017	66	$	33.00	3.88	74.00	%	2.25	%
Galena Other	80	$	888.22	2.94	74.08	%	2.27	%
As of December 31, 2017
Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Galena February 2017	567	$	13.00	4.12	79.29	%	2.09	%
Galena Other	80	$	28.40	3.19	74.05	%	2.09	%

Changes in Fair Value of Warrant Liability

The changes in fair value of the warrant liability for the three months ended March 31, 2018 were as follows (in thousands):

Warrant Issuance	Warrant liability, December 31, 2017		Fair value of warrants granted		Fair value of warrants canceled			Change in fair value of warrants			Warrant liability, March 31, 2018
Series A Convertible Preferred	$	—	$	2,587	$	—		$	(1,083	)	$	1,504
Galena February 2017	1,305		—		(487		)	(794		)	24
Galena Other	4		—		—			(4		)	—
	$	1,309	$	2,587	$	(487	)	$	(1,881	)	$	1,528

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Allocated Stock-based Compensation Expense

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, respectively (in thousands):

	Three Months Ended March 31,
	2018		2017
Research and development	$	6	$	135
General and administrative	16		802
Total stock-based compensation	$	22	$	937

Assumptions for Option Grants Issued

The Company uses the Black-Scholes option-pricing model and the following assumptions were used to determine the fair value of all its stock options granted during the three months ended March 31, 2018:

Risk free interest rate	2.71	%
Volatility	80.05	%
Expected lives (years)	6.21
Expected dividend yield	—	%

Stock Option Activity

The following table summarizes stock option activity of the Company for the three months ended March 31, 2018:

	Total Number of Shares (In Thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2018	10	$	1,240.55		$	—
Granted	405	5.22			—
Outstanding at March 31, 2018	415	$	35.03	9.70	$	—
Options exercisable at March 31, 2018	10	$	1,240.55	0.75	$	—

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Organization and Description of Business (Narrative) (Details)	Dec. 29, 2017 shares	Dec. 28, 2017 $ / shares	Mar. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares
Schedule Of Summary Of Significant Accounting Policies [Line Items]
Common stock, par value (usd per share)			$ 0.0001	$ 0.0001
Common stock, shares outstanding (in shares) | shares	5,766,891		6,154,377	5,766,891
Galena Biopharma, Inc
Schedule Of Summary Of Significant Accounting Policies [Line Items]
Reverse stock split ratio		0.0333
Common stock, par value (usd per share)		$ 0.0001
Private SELLAS Security Holders
Schedule Of Summary Of Significant Accounting Policies [Line Items]
Common stock ownership percentage	67.50%
Private SELLAS Security Holders | Galena Biopharma, Inc
Schedule Of Summary Of Significant Accounting Policies [Line Items]
Common stock conversion ratio	43.9972
Pre-Merger Securityholders
Schedule Of Summary Of Significant Accounting Policies [Line Items]
Common stock ownership percentage	32.50%

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Liquidity (Details) - USD ($) $ in Thousands			3 Months Ended
	May 01, 2018	Mar. 07, 2018	Mar. 31, 2018	May 15, 2018	Dec. 31, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Decrease in restricted cash			$ 1,900
Cash and cash equivalents			3,474		$ 2,319
Restricted cash			8,612		$ 10,431
Accounts payable and accrued liabilities			17,200
Long-term debt			9,700
Series A- Convertible Preferred Stock
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from issuance of private placement		$ 10,700
Series A- Convertible Preferred Stock | First Tranche
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from issuance of private placement		6,000
Series A- Convertible Preferred Stock | Second Tranche
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from issuance of private placement		$ 4,700
JGB (Cayman) Newton Ltd | Debenture
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Debt conversion, original debt, amount			$ 2,800
Debt conversion, converted instrument, shares issued (in shares)			659,529
Repayments of convertible debt			$ 600
Subsequent Event
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Balance Of restricted cash over senior secured debenture				$ 1,500
Subsequent Event | Series A- Convertible Preferred Stock
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Proceeds from issuance of redeemable preferred stock	$ 4,700
Subsequent Event | JGB (Cayman) Newton Ltd | Debenture
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Long-term debt, gross				$ 6,900

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Basis Of Presentation and Significant Accounting Policies Basis Of Presentation and Significant Accounting Policies- Components of Cash (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016	Aug. 22, 2016
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 3,474,000	$ 2,319,000
Restricted cash and cash equivalents	8,612,000	10,431,000
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	12,086,000	12,750,000	$ 2,159,000	$ 5,962,000
Corporate Credit Cards
Cash and Cash Equivalents [Line Items]
Restricted cash and cash equivalents	200,000	200,000
Amendment Agreement | Secured Debt
Cash and Cash Equivalents [Line Items]
Maximum prepayment of principle if demanded					$ 18,500,000.0
Restricted cash	$ 8,400,000	$ 10,200,000

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Acquisition (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) $ / shares
Business Acquisition [Line Items]
Net loss	$ (6,753)
Basic net loss per share (usd per share) | $ / shares	$ (1.87)
Diluted net loss per share (usd per share) | $ / shares	$ (1.87)
Conversion of convertible notes	$ 5,800
Historical Interest Expense
Business Acquisition [Line Items]
Proforma adjustments to net loss	$ (100)

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Fair Value Measurements (Contingent Purchase Price Consideration, Measured at Estimated Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Liabilities:
Warrants potentially settleable in cash	$ 1,528	$ 1,309
Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	4,705	1,294
Fair Value, Measurements, Recurring
Assets:
Cash equivalents	3,172	1,662
Restricted cash equivalents	8,423	10,245
Total assets measured and recorded at fair value	11,595	11,907
Liabilities:
Warrants potentially settleable in cash	1,528	1,309
Contingent consideration	4,705	1,294
Total liabilities measured and recorded at fair value	6,233	2,603
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets (Level 1)
Assets:
Cash equivalents	3,172	1,662
Restricted cash equivalents	8,423	10,245
Total assets measured and recorded at fair value	11,595	11,907
Liabilities:
Warrants potentially settleable in cash	0	0
Contingent consideration	0	0
Total liabilities measured and recorded at fair value	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2)
Assets:
Cash equivalents	0	0
Restricted cash equivalents	0	0
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrants potentially settleable in cash	0	0
Contingent consideration	0	0
Total liabilities measured and recorded at fair value	0	0
Fair Value, Measurements, Recurring | Unobservable Inputs (Level 3)
Assets:
Cash equivalents	0	0
Restricted cash equivalents	0	0
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrants potentially settleable in cash	1,528	1,309
Contingent consideration	4,705	1,294
Total liabilities measured and recorded at fair value	$ 6,233	$ 2,603

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Fair Value Measurements (Reconciliation of Level 3 Liabilities) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in fair value of the contingent consideration	$ (3,411)	$ 0
Unobservable Inputs (Level 3)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance Liabilities	1,294
Change in fair value of the contingent consideration	3,411
Ending Balance Liabilities	$ 4,705
Apthera, Inc.
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration payable, maximum amount			$ 32,000

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Payables and Accruals [Abstract]
Professional fees	$ 1,898	$ 1,744
Clinical trial costs	960	51
Compensation and related benefits	505	566
Value added tax	426	426
Rebates and returns of former commercial products	416	223
Other	265	191
Accrued expenses and other current liabilities	$ 4,470	$ 3,201

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Debt (Summary of Debt) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Current portion of Senior Secured Debenture	$ 8,526	$ 8,377
Non-current portion of Senior Secured Debenture	1,150	2,611
Total debt	9,676	10,988
Secured Debt | Securities Purchase Agreement
Debt Instrument [Line Items]
Current portion of Senior Secured Debenture	7,638	8,377
Non-current portion of Senior Secured Debenture	1,150	2,611
Convertible Notes Payable
Debt Instrument [Line Items]
Short-term convertible promissory notes	$ 888	$ 0

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Debt (Senior Secured Debenture) (Details) - USD ($)					1 Months Ended	3 Months Ended
	Jul. 10, 2017	May 01, 2017	Aug. 22, 2016	May 10, 2016	May 14, 2018	Mar. 31, 2018	May 15, 2018	Dec. 31, 2017	Dec. 29, 2017	Apr. 01, 2017
Debt Instrument [Line Items]
Number of shares available from warrants (in shares)									316,163
Outstanding principle						$ 8,000,000		$ 10,200,000
Principle redeemed						$ 1,600,000
Shares issued for debt (in shares)						314,228
Debt amount redeemed, settled in cash						$ 600,000
Decrease in restricted cash						1,900,000
Secured Debt
Debt Instrument [Line Items]
Fixed coupon rate				9.00%
Securities Purchase Agreement | Secured Debt
Debt Instrument [Line Items]
Fixed coupon rate				6.375%
Principle amount of debt				$ 25,500,000
Number of shares available from warrants (in shares)				3,333
Proceeds from issuance of debt and warrants				$ 23,400,000
Percentage of VWAPs				92.50%
Amendment Agreement | Secured Debt
Debt Instrument [Line Items]
Final payment of interest				$ 800,000
Maximum prepayment of principle if demanded			$ 18,500,000.0
Debt instrument, covenant, compensating cash balance			$ 18,500,000.0
Restricted cash						$ 8,400,000		$ 10,200,000
2017 Amendment Agreement | Secured Debt
Debt Instrument [Line Items]
Minimum price condition (per share)		$ 10.50
First Waiver | Secured Debt
Debt Instrument [Line Items]
Cash in excess of debenture										$ 10,000,000.0
July 2017 Amendment Agreement | Secured Debt
Debt Instrument [Line Items]
Percentage of VWAPs	80.00%
Percentage of prior day VMAP	115.00%
Subsequent Event
Debt Instrument [Line Items]
Principle redeemed					$ 1,150,000
Shares issued for debt (in shares)					345,301
Balance Of restricted cash over senior secured debenture							$ 1,500,000
JGB (Cayman) Newton Ltd | Subsequent Event | Debenture
Debt Instrument [Line Items]
Long-term debt, gross							$ 6,900,000

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Debt (Convertible Debt) (Details) - USD ($)	1 Months Ended		3 Months Ended
	May 14, 2018	Apr. 30, 2018	Mar. 31, 2018
Debt Instrument [Line Items]
Common stock acquired in exchange for warrants (in shares)			379,333
Principle redeemed			$ 1,600,000
Convertible Notes Payable | Convertible Promissory Notes
Debt Instrument [Line Items]
Debt instrument, face amount			$ 900,000
Debt instrument, interest rate, stated percentage			5.00%
Debt instrument, convertible, conversion price			$ 7.00
Subsequent Event
Debt Instrument [Line Items]
Principle redeemed	$ 1,150,000
Subsequent Event | Convertible Notes Payable | Convertible Promissory Notes
Debt Instrument [Line Items]
Principle redeemed		$ 800,000
Stock Issued During Period, Shares, Conversion of Units		118,644

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Legal Proceedings, Commitments and Contingencies (Details) - Pending Litigation - Patel vs Galena biopharma, Inc $ in Thousands	Jul. 24, 2017 USD ($)
Loss Contingencies [Line Items]
Amount awarded to other party	$ 1,300
Payments for legal settlement	50
Litigation settlement with issuance of common stock	$ 1,250

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Stockholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	Mar. 09, 2018	Mar. 08, 2018	Mar. 07, 2018	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 29, 2017
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)				5,000,000		5,000,000
Preferred stock, par value (usd per share)				$ 0.0001		$ 0.0001
Preferred stock, shares issued (in shares)				5,987		0
Warrants issued (in shares)							316,163
Proceeds from issuance of preferred stock, preference stock, and warrants				$ 5,328	$ 0
Common stock, shares authorized (in shares)				350,000,000		350,000,000
Common stock, par value (usd per share)				$ 0.0001		$ 0.0001
Purchase Agreement | Private Placement First Closing
Class of Stock [Line Items]
Warrants issued shares (in shares)	774,186
Series A- Convertible Preferred Stock
Class of Stock [Line Items]
Preferred stock, par value (usd per share)		$ 1,000
Debt instrument, interest rate, stated percentage		20.00%
Ownership limitation		4.99%
Ownership percentage		9.99%
Conversion price (USD per share)		$ 5.80
Adjustment to common stock in connection with reverse forward stock split. (USD per share)		$ 3.00
Series A- Convertible Preferred Stock | Private Placement First Closing
Class of Stock [Line Items]
Deemed dividend on beneficial conversion feature of convertible preferred stock	$ 2,000
Series A- Convertible Preferred Stock | Purchase Agreement
Class of Stock [Line Items]
Conversion price (USD per share)	$ 5.80
Minimum proceed required under qualified offering	$ 20,000
Series A- Convertible Preferred Stock | Purchase Agreement | Private Placement First Closing
Class of Stock [Line Items]
Proceeds from issuance of preferred stock, preference stock, and warrants	$ 6,000
Convertible preferred stock issued shares (in shares)	5,987
Series A- Convertible Preferred Stock | Purchase Agreement | Private Placement Second Closing
Class of Stock [Line Items]
Proceeds from issuance of preferred stock, preference stock, and warrants	$ 4,700
Convertible preferred stock issued shares (in shares)	4,713
Warrants issued shares (in shares)	609,445
Series A- Convertible Preferred Stock | Maximum
Class of Stock [Line Items]
Shares issued upon conversion (in shares)		17,500
Series A Non-voting Convertible | Purchase Agreement
Class of Stock [Line Items]
Preferred stock, par value (usd per share)			$ 0.0001
Shares issued upon conversion (in shares)			1,844,835
Conversion price (USD per share)			$ 1.00
Preferred stock, shares issued (in shares)			10,700
Warrants issued (in shares)			1,383,631
Proceeds from issuance of preferred stock, preference stock, and warrants			$ 10,700

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Stockholders' Equity (Common Stock are Reserved for Future Issuance) (Details) - shares shares in Thousands	Mar. 31, 2018	Dec. 31, 2017
Equity [Abstract]
Warrants outstanding (in shares)	1,236	963
Series A Convertible Preferred (in shares)	1,045
Stock options outstanding (in shares)	415	10
Options reserved for future issuance under the Company's 2017 Incentive Plan (in shares)	401
Shares reserved for future issuance under the Employee Stock Purchase Plan (in shares)	115
Restricted stock units (in shares)	13
Total reserved for future issuance (in shares)	3,225

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Warrants to Acquire Shares of Common Stock (Schedule of Warrant Activity) (Details)	3 Months Ended
	Mar. 31, 2018 shares
Class of Warrant or Right, Outstanding [Roll Forward]
Warrants outstanding , Beginning balance (in shares)	963,000
Granted (in shares)	774,000
Canceled (in shares)	(501,000)
Warrants outstanding , Ending balance (in shares)	1,236,000
Series A Convertible Preferred
Class of Warrant or Right, Outstanding [Roll Forward]
Warrants outstanding , Beginning balance (in shares)	0
Granted (in shares)	774,000
Canceled (in shares)	0
Warrants outstanding , Ending balance (in shares)	774,000
2017 Equilibria
Class of Warrant or Right, Outstanding [Roll Forward]
Warrants outstanding , Beginning balance (in shares)	316,000
Granted (in shares)	0
Canceled (in shares)	0
Warrants outstanding , Ending balance (in shares)	316,000
Galena February 2017
Class of Warrant or Right, Outstanding [Roll Forward]
Warrants outstanding , Beginning balance (in shares)	567,000
Granted (in shares)	0
Canceled (in shares)	(501,000)
Warrants outstanding , Ending balance (in shares)	66,000
Galena Other
Class of Warrant or Right, Outstanding [Roll Forward]
Warrants outstanding , Beginning balance (in shares)	80,000
Granted (in shares)	0
Canceled (in shares)	0
Warrants outstanding , Ending balance (in shares)	80,000

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Warrants to Acquire Shares of Common Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Dec. 29, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Class of Warrant or Right [Line Items]
Warrants canceled (in shares)		501,000
Shares issued for cancellation of warrants (in shares)		54,613
Common stock issued in exchange for surrender and cancellation of warrants (in shares)		6,154,377		5,766,891
Surrender and cancellation of warrants (in shares)		121,667
Common stock acquired in exchange for warrants (in shares)		379,333
Fair value of consideration exchanged		$ 1,200
Loss on settlement of liability classified warrants		$ 685	$ 0
Exercise price (usd per share)	$ 7.42
Fair value assumptions, risk free interest rate	2.20%	0.00%
Fair value assumptions, expected dividend rate	0.00%	0.00%
Number of shares available from warrants (in shares)	316,163
Galena February 2017
Class of Warrant or Right [Line Items]
Warrants canceled (in shares)		501,000
Series A Convertible Preferred
Class of Warrant or Right [Line Items]
Warrants canceled (in shares)		0
Exercise price (usd per share)		$ 5.80
Convertible Promissory Notes | Convertible Notes Payable
Class of Warrant or Right [Line Items]
Debt instrument, face amount		$ 900

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Warrants to Acquire Shares of Common Stock (Fair Value of Warrants is Estimated Using Black-Scholes Option Pricing Model) (Details) - $ / shares shares in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2016	Dec. 31, 2017
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	1,236		963
Series A Convertible Preferred
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	774		0
Strike price (in usd per share)	$ 6.59
Expected term (years)	5 years 5 months 12 days
Volatility %	80.78%
Risk-free rate %	2.59%
Galena February 2017
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	66		567
Strike price (in usd per share)	$ 33.00		$ 13.00
Expected term (years)	3 years 10 months 17 days	4 years 1 month 13 days
Volatility %	74.00%		79.29%
Risk-free rate %	2.25%		2.09%
Galena Other
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	80		80
Strike price (in usd per share)	$ 888.22		$ 28.40
Expected term (years)	2 years 11 months 9 days	3 years 2 months 9 days
Volatility %	74.08%		74.05%
Risk-free rate %	2.27%		2.09%

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Warrants to Acquire Shares of Common Stock (Changes in Fair Value of Warrant Liability) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, Beginning balance	$ 1,309
Fair value of warrants granted	2,587
Fair value of warrants canceled	(487)
Change in fair value of warrants	(1,881)
Warrant liability, Ending balance	1,528
Series A Convertible Preferred
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, Beginning balance	0
Fair value of warrants granted	2,587
Fair value of warrants canceled	0
Change in fair value of warrants	(1,083)
Warrant liability, Ending balance	1,504
Galena February 2017
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, Beginning balance	1,305
Fair value of warrants granted	0
Fair value of warrants canceled	(487)
Change in fair value of warrants	(794)
Warrant liability, Ending balance	24
Galena Other
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, Beginning balance	4
Fair value of warrants granted	0
Fair value of warrants canceled	0
Change in fair value of warrants	(4)
Warrant liability, Ending balance	$ 0

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Warrants to Acquire Shares of Common Stock (Warrants Classified as Equity) (Details) - $ / shares		3 Months Ended
	Dec. 29, 2017	Mar. 31, 2018
Warrants and Rights Note Disclosure [Abstract]
Warrants issued (in shares)	316,163
Exercise price (usd per share)	$ 7.42
Warrant term	5 years
Fair value of warrants granted (usd per share)	$ 5.60
Fair value assumptions, expected volatility rate	90.10%
Fair value assumptions, expected term (in years)	5 years
Fair value assumptions, risk free interest rate	2.20%	0.00%
Fair value assumptions, expected dividend rate	0.00%	0.00%

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Stock-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended		12 Months Ended
	Dec. 30, 2017	Dec. 29, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average exercise price, granted (USD per share)			$ 3.70
Options, grants in period, net of forfeitures (in shares)				0
Averages contractual term			10 years
Expected dividend yield			0.00%
Unrecognized compensation cost			$ 1.5
Operating expenses weighted average period			2 years 11 months 12 days
Closing price of the Company's common stock			$ 3.45
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity instruments other than options, vesting period			3 years
Equity instruments other than options, outstanding, number (in shares)			13,000		13,000
Equity instruments other than options, vested in period, weighted average grant date fair value			$ 52.94		$ 52.94
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term			6 years
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average vesting term			4 years
2017 Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)			400,000
Options expire from date of grant		10 years
Share based compensation exercise period		1 year
Percentage increase in number of shares available for future issuance under stock based awards		4.00%
Number of additional shares authorized (in shares)	805,000
Options, grants in period, net of forfeitures (in shares)					0
2017 Equity Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)		575,000
Incentive Plan 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options assumed In merger (in shares)		10,171

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Stock-Based Compensation (Allocated Stock-based Compensation) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 22	$ 937
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	6	135
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share based compensation expense	$ 16	$ 802

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Stock-Based Compensation (Assumptions for Option Grants Issued) (Details)	3 Months Ended
	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Risk free interest rate	2.71%
Volatility	80.05%
Expected lives (years)	6 years 2 months 16 days
Expected dividend yield	0.00%

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Stock-Based Compensation (Stock Option Activity) (Details) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding beginning balance (in shares) | shares	10
Granted during the period (in shares) | shares	405
Outstanding ending balance (in shares) | shares	415
Exercisable (in shares) | shares	10
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted average exercise price, beginning balance (usd per share) | $ / shares	$ 1,240.55
Weighted average exercise price, granted (usd per share) | $ / shares	5.22
Weighted average exercise price, ending balance (usd per share) | $ / shares	35.03
Weighted average exercise price, exercisable (usd per share) | $ / shares	$ 1,240.55
Weighted average remaining contractual term, outstanding (in years)	9 years 8 months 12 days
Weighted average remaining contractual term, options exercisable (in years)	9 months
Stock options activity, aggregate intrinsic value, beginning balance | $	$ 0
Stock options activity, aggregate intrinsic value, granted | $	0
Stock options activity, aggregate intrinsic value, ending balance | $	0
Stock options activity, aggregate intrinsic value, exercisable | $	$ 0