Document

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 June 30, 2019



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.)

15 West 38^th Street, 10^th Floor, New York, NY 10018

(917) 438-4353

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

area code, of registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	SLS	The Nasdaq Capital Market

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 every Interactive Data File required to be submitted 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 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:



Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	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 August 14, 2019, SELLAS Life Sciences Group, Inc. had outstanding 226,544,712 shares of common stock.

SELLAS LIFE SCIENCES GROUP, INC.

FORM 10-Q - Quarterly Report

For the Quarter Ended June 30, 2019

TABLE OF CONTENTS



		Page
	PART I - FINANCIAL INFORMATION
Item 1	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	3
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018	4
	Unaudited Condensed Consolidated Statement of Stockholders' Equity (Deficit) for the three and six months ended June 30, 2019 and 2018	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018	7
	Unaudited Notes to Condensed Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	Controls and Procedures	32
	PART II - OTHER INFORMATION
Item 1	Legal Proceedings	33
Item 1A	Risk Factors	33
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3	Defaults Upon Senior Securities	34
Item 4	Mine Safety Disclosures	34
Item 5	Other Information	34
Item 6	Exhibits	34

	Signatures

The names “SELLAS Life Sciences Group, Inc.,” “SELLAS,” the SELLAS logo, and other trademarks or service marks of SELLAS Life Sciences Group, Inc. appearing in this Quarterly Report on Form 10-Q are the property of SELLAS Life Sciences Group, Inc. Other trademarks, service marks or trade names appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend the use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of or by either, of these other companies.

Unless the context otherwise indicates, references in these notes to the “Company,” “we,” “us” or “our” refer to SELLAS Life Sciences Group, Inc. and its wholly owned subsidiaries.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes 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 captioned “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, 2018 as filed with the Securities and Exchange Commission ("SEC"), on March 22, 2019 ("2018 Annual Report"), all of 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.

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)



	June 30, 2019			December 31, 2018
	(Unaudited)			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	12,751		$	5,337
Restricted cash and cash equivalents	114			114
Prepaid expenses and other current assets	776			387
Total current assets	13,641			5,838
Operating lease right-of-use asset	390			—
In-process research and development	8,500			8,500
Goodwill	1,914			1,914
Deposits and other assets	589			663
Total assets	$	25,034		$	16,915
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,762		$	3,755
Accrued expenses and other current liabilities	1,276			2,219
Operating lease liability, current	362			—
Total current liabilities	5,400			5,974
Operating lease liability, non-current	28			—
Deferred tax liability	357			357
Warrant liability	103			1,013
Contingent consideration	4,808			4,326
Total liabilities	10,696			11,670
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; Series A convertible preferred stock, 17,500 shares designated; no shares issued and outstanding at June 30, 2019 and December 31, 2018	—			—
Common stock, $0.0001 par value; 350,000,000 shares authorized, 100,135,175 and 22,026,476 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively.	10			2
Additional paid-in capital	103,854			87,098
Accumulated deficit	(89,526		)	(81,855		)
Total stockholders’ equity	14,338			5,245
Total liabilities and stockholders’ equity	$	25,034		$	16,915

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Operating expenses:
Research and development	$	1,381		$	1,592		$	3,240		$	3,396
General and administrative	2,638			4,909			5,138			8,789
Total operating expenses and operating loss	(4,019		)	(6,501		)	(8,378		)	(12,185		)
Non-operating income (expense):
Change in fair value of warrant liability	962			1,218			1,157			3,099
Change in fair value of contingent consideration	(95		)	(452		)	(482		)	(3,863		)
Loss on settlement of liability-classified warrants	—			(42		)	—			(727		)
Interest income (expense), net	18			(122		)	32			(218		)
Total non-operating income (expense), net	885			602			707			(1,709		)
Loss before income taxes	(3,134		)	(5,899		)	(7,671		)	(13,894		)
Income tax expense	—			163			—			163
Net loss	(3,134		)	(6,062		)	(7,671		)	(14,057		)
Deemed dividend arising from beneficial conversion feature of convertible preferred stock	—			(2,468		)	—			(4,436		)
Deemed dividend arising from warrant modifications	(952		)	—			(1,391		)	—
Net loss attributable to common stockholders	$	(4,086	)	$	(8,530	)	$	(9,062	)	$	(18,493	)

Per share information:
Net loss per common share attributable to common stockholders, basic and diluted	$	(0.13	)	$	(1.26	)	$	(0.33	)	$	(2.89	)
Weighted-average common shares outstanding, basic and diluted	32,298,234			6,767,200			27,360,621			6,391,948

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Amounts in thousands, except share amounts)

(Unaudited)



	Three Months Ended June 30, 2019
	Preferred Stock			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
	Shares	Amount		Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
Balance at March 31, 2019	—	$	—	24,176,475	$	2	$	89,340		$	(86,392	)	$	2,950
Issuance of common stock and common stock warrants, net of issuance costs	—	—		26,367,200	3		13,413			—			13,416
Issuance of common stock upon exercise of warrants, net of offering costs	—	—		1,000,000	—		1,045			—			1,045
Issuance of common stock upon exercise of pre-funded warrants	—	—		48,591,500	5		—			—			5
Impact of anti-dilution protection on liability-classified warrants	—	—		—	—		(70		)	—			(70		)
Stock-based compensation	—	—		—	—		126			—			126
Net loss	—	—		—	—		—			(3,134		)	(3,134		)
Balance at June 30, 2019	—	$	—	100,135,175	$	10	$	103,854		$	(89,526	)	$	14,338

	Six Months Ended June 30, 2019
	Preferred Stock			Common Stock			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
	Shares	Amount		Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
Balance at December 31, 2018	—	$	—	22,026,476	$	2	$	87,098		$	(81,855	)	$	5,245
Issuance of common stock and common stock warrants, net of issuance costs	—	—		26,367,200	3		13,413			—			13,416
Issuance of common stock upon exercise of warrants, net of offering costs	—	—		3,149,999	—		3,275			—			3,275
Issuance of common stock upon exercise of pre-funded warrants	—	—		48,591,500	5		—			—			5
Impact of anti-dilution protection on liability-classified warrants	—	—		—	—		(243		)	—			(243		)
Stock-based compensation	—	—		—	—		311			—			311
Net loss	—	—		—	—		—			(7,671		)	(7,671		)
Balance at June 30, 2019	—	$	—	100,135,175	$	10	$	103,854		$	(89,526	)	$	14,338

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Amounts in thousands, except share amounts)

(Unaudited)



	Three Months Ended June 30, 2018
	Preferred Stock				Common Stock			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
	Shares		Amount		Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
Balance at March 31, 2018	5,987		$	—	6,154,377	$	1	$	60,861		$	(62,180	)	$	(1,318	)
Issuance of Series A convertible preferred stock, net of offering costs	4,713		—		—	—		4,319			—			4,319
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock offering	—		—		—	—		(2,452		)	—			(2,452		)
Beneficial conversion feature arising from Series A convertible preferred stock	—		—		—	—		(2,468		)	—			(2,468		)
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	—		—		—	—		2,468			—			2,468
Conversion of Series A Convertible Preferred Stock	(2,898	)	—		499,682	—		—			—			—
Convertible preferred stock dividends	—		—		—	—		(415		)	—			(415		)
Issuance of common stock as repayment of principal and interest on long-term debt	—		—		382,134	—		1,245			—			1,245
Issuance of common stock in connection with litigation settlements	—		—		228,672	—		1,250			—			1,250
Issuance of common stock upon conversion of promissory notes	—		—		118,644	—		825			—			825
Stock-based compensation	—		—		—	—		125			—			125
Net loss	—		—		—	—		—			(6,062		)	(6,062		)
Balance at June 30, 2018	7,802		$	—	7,383,509	$	1	$	65,758		$	(68,242	)	$	(2,483	)

	Six Months Ended June 30, 2018
	Preferred Stock				Common Stock			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
	Shares		Amount		Shares	Amount		Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
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	10,700		—		—	—		9,647			—			9,647
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock offering	—		—		—	—		(5,039		)	—			(5,039		)
Beneficial conversion feature arising from Series A convertible preferred stock	—		—		—	—		(4,436		)	—			(4,436		)
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	—		—		—	—		4,436			—			4,436
Conversion of Series A Convertible Preferred Stock	(2,898	)	—		499,682	—		—			—			—
Convertible preferred stock dividends	—		—		—	—		(487		)	—			(487		)
Issuance of common stock as repayment of principal and interest on long-term debt	—		—		715,277	—		2,876			—			2,876
Issuance of common stock in connection with litigation settlements	—		—		228,672	—		1,250			—			1,250
Issuance of common stock upon conversion of promissory notes	—		—		118,644	—		825			—			825
Issuance of common stock in connection with warrant exchange agreements	—		—		54,343	—		285			—			285
Stock-based compensation	—		—		—	—		147			—			147
Net loss	—		—		—	—		—			(14,057		)	(14,057		)
Balance at June 30, 2018	7,802		$	—	7,383,509	$	1	$	65,758		$	(68,242	)	$	(2,483	)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



	For the six months ended June 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(7,671	)	$	(14,057	)
Adjustment to reconcile net loss to net cash used in operating activities:
Non-cash interest expense	—			115
Deferred taxes	—			49
Non-cash stock-based compensation	311			147
Fair value of common stock issued in connection with litigation settlements	—			1,250
Change in fair value of common stock warrants	(1,153		)	(3,099		)
Change in fair value of contingent consideration	482			3,863
Loss on settlement of liability-classified warrants	—			727
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(315		)	(604		)
Accounts payable	(263		)	408
Accrued expenses and other current liabilities	(1,038		)	(501		)
Net cash used in operating activities	(9,647		)	(11,702		)
Cash flows from financing activities:
Net proceeds from issuance of Series A convertible preferred stock and common stock warrants	—			9,647
Proceeds from issuance of common stock, net of offering costs	13,781			—
Net proceeds from exercise of warrants	3,280			—
Dividends paid	—			(111		)
Principal payments on long-term debt	—			(589		)
Net cash provided by financing activities	17,061			8,947
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	7,414			(2,755		)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period	5,451			12,750
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period	$	12,865		$	9,995

Supplemental disclosure of cash flow information:
Cash received during the periods for interest	$	32		$	79
Cash paid during the periods for interest	$	—		$	182
Supplemental disclosure of non-cash investing and financing activities:
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock recorded as issuance cost	$	—		$	5,039
Repayment of interest and principal on long-term debt through issuance of common stock	$	—		$	3,701
Reclassification of warrant liabilities upon exchange for shares of common stock	$	—		$	285
Operating right of use asset and current and non-current liability	$	550		$	—
Impact of anti-dilution protection on liability-classified warrants	$	243		$	—
Offering expenses in accounts payable and accrued expenses and other current liabilities	$	365		$	—
Long-term debt issued in connection with warrant exchange agreements	$	—		$	966

See accompanying notes to condensed consolidated financial statements.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Description of Business

Overview

SELLAS Life Sciences Group, Inc. (the "Company" or “SELLAS”) is a late-stage biopharmaceutical company focused on the development and commercialization of novel cancer immunotherapeutics for a broad range of indications.

2. Liquidity

The Company has not generated any revenues, including from product sales, and has funded operations primarily from the proceeds of sales of its equity interests and convertible notes. 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.

On June 18, 2019, the Company consummated an underwritten public offering (the “June 2019 Offering”) of (i) 26,367,200 shares of common stock, (ii) 73,632,800 pre-funded warrants exercisable for shares of common stock, and (iii) accompanying common stock warrants to purchase up to an aggregate of 100,000,000 shares of common stock. The shares of common stock and accompanying common stock warrants were sold at a combined price of $0.15 per share and accompanying common stock warrant. Each common stock warrant sold with the shares of common stock represented the right to purchase one share of common stock at an exercise price of $0.50 per share and may be exercised pursuant to the terms thereof on a cashless basis, at the option of the holder, in whole or in part, for one share of common stock, if the weighted average price of the common stock on any trading day immediately prior to the exercise date is lower than the then-applicable exercise price per share. See Note 10 for a description of the Investor Agreements (as defined in Note 10) pertaining to the warrants sold in the June 2019 Offering. The pre-funded warrants and accompanying common stock warrants were sold at a combined price of $0.1499 per pre-funded warrant and common stock warrant. The pre-funded warrants are exercisable immediately, at an exercise price of $0.0001 per share and expire on June 18, 2024.

The net proceeds to the Company from the June 2019 Offering, after deducting underwriting discounts and commissions and other estimated offering expenses, and excluding the exercise of any warrants, was approximately $13.4 million. See Notes 7 and 8 for further discussion of the June 2019 Offering.

On March 6, 2019, the Company entered into a Warrant Exercise Agreement (the "Exercise Agreement") with one of the holders of the Company's warrants issued in July 2018. Pursuant to the Exercise Agreement, the warrant holder agreed to exercise for cash up to 3.8 million of its warrants issued in July 2018 ("Existing Warrants") into shares of common stock at an adjusted exercise price of $1.10 per share for any Existing Warrants exercised prior to May 31, 2019. In addition to reducing the exercise price of the Existing Warrants, the Exercise Agreement also provides for the issuance of new warrants to purchase up to an aggregate of approximately 3.8 million shares of common stock at an exercise price of $1.40 per share ("New Warrants") to be issued on a share-for-share basis in an amount equal to the number of the Existing Warrants that are cash exercised by the warrant holder prior to May 31, 2019. During the six months ended June 30, 2019, the warrant holder exercised approximately 3.1 million Existing Warrants for gross proceeds of $3.5 million and approximately 3.1 million New Warrants were issued. The Exercise Agreement expired on May 31, 2019.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

In February 2019, the Company engaged Cantor Fitzgerald & Co. to explore a wide range of strategic alternatives to continue the Company's business plan, with the ultimate objective being an outcome that is in the best interest of the Company's shareholders. Such alternatives may include, but are not limited to, a sale of the Company, a business combination, a merger or reverse merger with another company, a strategic investment into the Company, a sale, license or other disposition of assets, a funded collaboration or partnership, or a financing which would allow the Company to continue with its current business plan of advancing its development plans for its lead product candidates. In addition to the consummation of the June 2019 Offering, the Company is continuing to explore other potential transactions for advancing its development programs and maximizing shareholder value. There can be no assurance that the Company will enter into any additional transactions as a result of the exploration of strategic alternatives.

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.

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, 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 evaluated the guidance of Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern, in order to determine whether there is substantial doubt about its ability to continue as a going concern for one year from the date its financial statements are available to be issued. 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. 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 the risk of failure of any such product candidates 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 June 30, 2019, the Company had cash and cash equivalents of approximately $12.8 million, and restricted cash and cash equivalents of $0.1 million. The Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $89.5 million as of June 30, 2019. In addition, the Company had aggregate outstanding accounts payable and accrued expenses and other current liabilities of $5.4 million as of June 30, 2019. The Company expects its existing cash as of June 30, 2019, will enable the Company to fund its operating expenses and capital expenditure requirements through the end of 2020.

3. Basis of Presentation and Significant Accounting Policies

The Summary of Significant Accounting Policies included in the Company's 2018 Annual Report have not materially changed, except as set forth below.

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”).

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Principles of Consolidation

The condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation. Unless the context otherwise indicates, reference in these notes to the "Company" refer to SELLAS Life Sciences Group, Inc., and its wholly owned subsidiaries, Sellas Intermediate Holdings I, Inc., Sellas Intermediate Holdings II, Inc., Private SELLAS, SLSG US, Inc., Sellas Life Sciences Limited, Sellas Life Sciences Group UK Ltd., Apthera, Inc., and Mills Pharmaceuticals, LLC. The functional currency of the Company's non-U.S. operations is the U.S. dollar.

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 the 2018 Annual Report. The accompanying condensed consolidated financial statements at June 30, 2019 and for the three and six months ended June 30, 2019 and 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, 2018 have been derived from the audited financial statements as of that date.

Cash, Cash Equivalents, Restricted Cash, and Restricted 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):



	June 30, 2019		December 31, 2018
Cash and cash equivalents	$	12,751	$	5,337
Restricted cash and cash equivalents	114		114
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	12,865	$	5,451

The Company maintained restricted cash and cash equivalents as of June 30, 2019 and December 31, 2018 as collateral for its corporate credit cards.

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.

Recent Accounting Pronouncements Adopted

On January 1, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842), as amended, which supersedes the lease accounting guidance under Topic 840, and generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use ("ROU") assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The new guidance retains a distinction between finance leases and operating leases, while requiring companies to recognize both types of leases on their balance sheet. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the criteria for distinguishing between capital leases and operating leases in legacy U.S. GAAP - ASC 840.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The Company adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The Company evaluated the potential cumulative effect of applying the new guidance and determined that such an adjustment would be immaterial. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historical accounting under Topic 840.

Under Topic 842, the Company determines if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on the Company's understanding of what the Company's credit rating would be. The Company's lease terms may include options to extend or terminate the lease and the related payments are only included in the lease liability when it is reasonably certain that the Company will exercise such options. In connection with the adoption, the Company did not separate lease and associated non-lease components for the transitioned leases, but instead are accounting for them together as a single component. The adoption did not change the classification of lease-related expenses in the condensed consolidated statements of operations, and the Company does not expect changes to the pattern of expense recognition. As a result, the adoption does not impact the Company's beginning retained earnings, or the Company's prior year condensed consolidated statements of operations and will not materially affect the condensed consolidated statements of cash flows.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity Topic (480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instrument with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception, which modifies the classification of some financial instruments. A down round feature no longer precludes equity classification, therefore a freestanding equity feature would no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity-classified financial instruments, the amendments require entities present earnings per share in accordance with Topic 260, and to recognize the effect of the down round feature when triggered. Convertible instruments are now subject to specialized contingent beneficial conversion features. The Company adopted ASU No. 2017-11 on January 1, 2019 and determined it did not have a material impact to its condensed consolidated financial statements. The Company determined its liability classified warrants contained cash settlement features that would continue to preclude equity classification subsequent to its adoption of ASU No. 2017-11.

Recent Accounting Pronouncements Pending Adoption

In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. The ASU supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. As a

result, most of the guidance in ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to nonemployee share-based payment arrangements. ASU No. 2018-07 generally requires an entity to use a modified retrospective transition approach, with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year, for all (1) liability-classified nonemployee awards that have not been settled as of the adoption date and (2) equity-classified nonemployee awards for which a measurement date has not been established. The guidance is applicable to public business entities for fiscal years beginning after December 15, 2019 and interim periods within those years. The Company is currently evaluating the potential impact of the adoption of this standard on its consolidated financial statements.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

In August 2018, FASB issued No. ASU 2018-13, Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU No. 2018-13 modifies, adds and removes certain specific disclosure requirements on fair value measurements in Topic 820. The amendments in ASU 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and to delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the potential impact of the adoption of the new standard on the consolidated financial statements.

4. 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	June 30, 2019		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	12,334	$	12,334	$	—	$	—
Total assets measured and recorded at fair value	$	12,334	$	12,334	$	—	$	—
Liabilities:
Warrant liability	$	103	$	—	$	—	$	103
Contingent consideration	4,808		—		—		4,808
Total liabilities measured and recorded at fair value	$	4,911	$	—	$	—	$	4,911



Description	December 31, 2018		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	5,195	$	5,195	$	—	$	—
Total assets measured and recorded at fair value	$	5,195	$	5,195	$	—	$	—
Liabilities:
Warrant liability	$	1,013	$	—	$	—	$	1,013
Contingent consideration	4,326		—		—		4,326
Total liabilities measured and recorded at fair value	$	5,339	$	—	$	—	$	5,339

The Company did not transfer any financial instruments into or out of Level 3 classification during the six months ended June 30, 2019 or the year ended December 31, 2018. See Note 8, Warrants to Acquire Shares of Common Stock, for a reconciliation of the changes in the fair value of the warrant liability for the six months ended June 30, 2019.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

A reconciliation of the change in the fair value of the contingent consideration liability for the six months ended June 30, 2019 is as follows (in thousands):



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Contingent consideration, December 31, 2018	$	4,326
Change in the estimated fair value of the contingent consideration	482
Contingent consideration, June 30, 2019	$	4,808

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 nelipepimut-S ("NPS") 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.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

5. Accrued Expenses and Other Current Liabilities

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



	June 30, 2019		December 31, 2018
Compensation and related benefits	$	388	$	675
Clinical trial costs	132		858
Professional fees	756		540
Rebates and returns of former commercial products	—		138
Other	—		8
Accrued expenses and other current liabilities	$	1,276	$	2,219

6. Legal Proceedings, Commitments and Contingencies

Office Space Rental

The Company has a non-cancelable operating lease for office space in New York, New York, which began August 1, 2018 with a term through July 31, 2020. As disclosed in Note 3, the Company adopted ASC 842 in the first quarter of 2019 and as a result of the adoption, the Company recognized a current operating lease liability of $0.4 million and a non-current operating lease liability of $0.2 million with a corresponding ROU asset of $0.6 million, which is based on the present value of the minimum rental payments of the lease. The discount rate used to account for the Company's operating lease under ASC 842 is the Company’s estimated incremental borrowing rate of 13%. As of June 30, 2019, the lease has a remaining term of 1.1 years.

Rent expense related to the Company's operating lease was approximately $0.1 million for the three months ended June 30, 2019 and 2018. Rent expense for the six months ended June 30, 2019 and 2018 was approximately $0.2 million. Future minimum rental payments under the Company's non-cancelable operating lease are as follows as of June 30, 2019 (in thousands):



	June 30, 2019
Year ending December 31, 2019 (remaining six months)	$	191
Year ending December 31, 2020	224
Total minimum lease payments	415
Less: imputed interest	(25		)
Operating lease liabilities	$	390

Operating lease amortization of the ROU asset was $0.1 million and $0.2 million for the three and six months ended June 30, 2019, respectively.

Future minimum rental payments under the Company's non-cancelable operating lease as of December 31, 2018 are as follows (in thousands):



	December 31, 2018
2019	$	377
2020	224
Total minimum lease payments	$	601

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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, and to which the Company is now subject, as follows:

On October 13, 2016, Galena filed a complaint against Aon Risk Insurance Services West, Inc. in the Circuit Court for Multnomah County, Oregon. The lawsuit sought damages related to Galena’s coverage dispute with a certain insurer, including the amounts Galena was required to contribute to the settlements of In re Galena Biopharma, Inc. Derivative Litigation and In re Galena Biopharma, Inc. Securities Litigation as a direct result of certain insurer’s failure to pay its full policy limits. The trial in this action concluded on July 19, 2019, with a verdict which awarded no damages to Galena. A final judgment reflecting the verdict is expected to be entered within the 60 days from July 29, 2019.

On February 13, 2017, multiple putative shareholder securities class action complaints were filed in federal court alleging, among other things, that the Company and certain of the Company's former officers and directors 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. The individual actions were consolidated, lead plaintiffs were named by the federal court and a consolidated complaint was filed. The Company filed a motion to dismiss the consolidated complaint. On August 21, 2018, the Company's motion to dismiss the consolidated complaint was granted without prejudice to file an amended complaint. On September 20, 2018, the plaintiffs filed an amended complaint. The Company’s motion to dismiss the amended complaint is currently pending in the U.S. District Court for the District of New Jersey.

In March 2017, a derivative complaint was filed in the U.S. District Court for the District of New Jersey against the Company’s former directors and Galena, as a nominal defendant. In July 2017, a derivative complaint was filed in California state court against the Company’s former directors and Galena, as a nominal defendant. In January 2018, a derivative complaint was filed in the U.S. District Court for the District of New Jersey against the Company’s former directors, officers and employees, and the Company as a nominal defendant. In June 2018, a derivative complaint was filed in U.S. District Court for the Northern District of California against the Company’s current and former directors, and the Company as a nominal defendant. The plaintiff in the June 2018 case voluntarily withdrew his complaint from the U.S District Court of the Northern District of California and on August 27, 2018 refiled the complaint in the Court of Chancery of the State of Delaware. These complaints purport to assert derivative claims for breach of fiduciary duty on the Company’s behalf against the Company’s former directors and, in certain of the complaints, the Company’s current directors, and the Company’s former officers and former employees, based on substantially similar facts as alleged in the putative shareholder securities class action complaints mentioned above. The March 2017, July 2017, and January 2018 lawsuits are currently stayed pending resolution of motions to dismiss in the referenced securities class action. The defendants in the August 2018 lawsuit filed a motion to dismiss the complaint which is currently pending in the Court of Chancery of the State of Delaware.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

7. Stockholders’ Equity

Preferred Stock

The Company has authorized up to 5,000,000 shares of preferred stock, $0.0001 par value per share, for issuance.

Common Stock

The Company has authorized up to 350,000,000 shares of common stock, $0.0001 par value per share, for issuance.

On June 18, 2019, the Company consummated the June 2019 Offering of (i) 26,367,200 shares of common stock, (ii) 73,632,800 pre-funded warrants exercisable for shares of common stock, and (iii) accompanying common stock warrants to purchase up to an aggregate of 100,000,000 shares of common stock. The shares of common stock and accompanying common stock warrants were sold at a combined price of $0.15 per share and common stock warrant. Each common stock warrant sold with the shares of common stock represents the right to purchase one share of common stock at an exercise price of $0.50 per share. The common stock warrants are exercisable immediately, expire five years from the date of issuance and contain anti-dilution protection upon the issuance of any common stock, securities convertible into common stock, or certain other issuances at a price below the then-existing exercise price of the warrants, subject to certain exceptions. Additionally, the common stock warrants may be exercised pursuant to the terms thereof on a cashless basis, at the option of the holder, in whole or in part, for one share of common stock, if the weighted average price of the common stock on any trading day immediately prior to the exercise date is lower than the then-applicable exercise price per share. See Note 10 for a description of the Investor Agreements (as defined in Note 10) pertaining to the warrants sold in the June 2019 Offering.

The pre-funded warrants and accompanying common stock warrants were sold at a combined price of $0.1499 per pre-funded warrant and common stock warrant. Each pre-funded warrant represents the right to purchase one share of the Company’s common stock at an exercise price of $0.0001 per share. The pre-funded warrants are exercisable immediately and may be exercised at any time until the pre-funded warrants are exercised in full. The shares of common stock and pre-funded warrants, and accompanying common stock warrants, were issued separately and were immediately separable upon issuance.

The net proceeds to the Company from the June 2019 Offering, after deducting the underwriting discounts and commissions and other estimated offering expenses, and excluding the exercise of any warrants, were approximately $13.4 million.

As of June 30, 2019, the Company has shares of common stock reserved for future issuance for as follows (in thousands):



	June 30, 2019
Warrants outstanding	142,739
Stock options outstanding	1,281
Options reserved for future issuance under the Company’s 2017 Equity Incentive Plan	416
Shares reserved for future issuance under the Employee Stock Purchase Plan	265
Restricted stock units	13
Total common stock reserved for future issuance	144,714

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

8. Warrants to Acquire Shares of Common Stock

Warrant Exercise Agreement

On July 16, 2018, the Company issued the Existing Warrants to purchase up to an aggregate of 11,520,000 shares of common stock, with an exercise price per share of $2.10. The Existing Warrants were immediately exercisable and expire on July 16, 2023.

On March 6, 2019, the Company entered into the Exercise Agreement with one of the holders of the Existing Warrants. Pursuant to the Exercise Agreement, such warrant holder agreed to exercise for cash up to 3,800,000 of the Existing Warrants into shares of common stock at an adjusted exercise price of $1.10 per share for any Existing Warrants exercised prior to May 31, 2019. In addition to reducing the exercise price of the Existing Warrants held by the warrant holder, the Exercise Agreement also provides for the issuance of the New Warrants to purchase up to an aggregate of approximately 3,800,000 shares of common stock at an exercise price of $1.40 per share to be issued on a share-for-share basis in an amount equal to the number of the Existing Warrants that are cash exercised by the warrant holder prior to May 31, 2019. The New Warrants expire five years from the date of issuance. During the six months ended June 30, 2019, the warrant holder exercised approximately 3.1 million of the Existing Warrants for gross proceeds to the Company of $3.5 million and approximately 3.1 million New Warrants were issued. The reduced exercise price of the 3.1 million Existing Warrants exercised by the warrant holder increased the fair value of these Existing Warrants by approximately $0.1 million and $0.3 million during the three months and six months ended June 30, 2019, respectively, which is recorded as a deemed dividend increasing the net loss attributable to common stockholders and in additional paid-in capital. The Exercise Agreement expired on May 31, 2019.

Pursuant to the terms of certain warrants issued in connection with our previously outstanding Series A Convertible Preferred stock in March 2018 and May 2018, the exercise price of these warrants was automatically adjusted on March 6, 2019 to $1.10 per share from the previous exercise price of $2.10 per share as a result of the Company's entry into the Exercise Agreement. The Company recognized the $0.3 million increase to the fair value of the warrant liability as a result of the adjusted exercise price as a deemed dividend which increased the net loss attributable to common stockholders during the three months ended March 31, 2019.

Additionally, no later than November 8, 2019, the Company has agreed to seek the approval of The Nasdaq Stock Market to reduce the exercise price to $0.15 per share (subject to adjustment for stock splits and the like) of those warrants what were issued to certain holders pursuant to those certain Warrant Exercise Agreements entered into by and among the Company such holders on March 6, 2019.

June 2019 Offering

In connection with the June 2019 Offering, the Company reduced the exercise price of those warrants that were issued on July 16, 2018 (the "July 2018 Offering Warrants") to $0.15 per share from the previous exercise price of $2.10 per share. The reduced exercise price of the July 2018 Offering Warrants increased the value of fair value of the July 2018 Offering Warrants by approximately $0.8 million and is recorded as a deemed dividend increasing net loss attributable to common stockholders and additional paid-in-capital during the three and six months ended June 30, 2019.

Pursuant to the terms of certain liability-classified warrants issued in connection with our previously outstanding Series A Convertible Preferred stock in March 2018 and May 2018, the exercise price of these warrants was automatically adjusted on June 18, 2019 to $0.15 per share from the previous exercise price of $1.10 per share. The Company recognized the $0.1 million increase to the fair value of the warrant liability as a result of the adjusted exercise price as a deemed dividend which increased the net loss attributable to common stockholders during the three and six months ended June 30, 2019.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Warrants Outstanding

The following is a summary of the Company's warrants to acquire shares of common stock activity for the six months ended June 30, 2019 (in thousands):



Warrant Issuance	Outstanding, December 31, 2018	Granted	Exercised		Canceled/Expired	Outstanding, June 30, 2019	Expiration
June 2019 Offering	—	100,000	—		—	100,000	June 2024
Pre-funded June 2019 Offering	—	73,633	(47,967	)	—	25,666	June 2024
March 2019 Exercise Agreement	—	3,150	—		—	3,150	March 2024
July 2018 Offering	15,268	—	(3,150	)	—	12,118	July 2023
Pre-funded July 2018 Offering	625	—	(625	)	—	—	July 2023
Series A Convertible Preferred	1,384	—	—		—	1,384	September 2023
2017 Equilibria	316	—	—		—	316	December 2022
Galena February 2017	33	—	—		—	33	February 2022
Galena Other	72	—	—		—	72	January 2022
	17,698	176,783	(51,742	)	—	142,739

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.

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 stock, 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 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 June 30, 2019

Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Series A Convertible Preferred	1,384	$	0.15	4.26	99.14	%	1.74	%
Galena February 2017	33	$	33.00	2.63	105.00	%	1.71	%
Galena Other	72	$	829.88	1.93	105.00	%	1.71	%

As of December 31, 2018
Warrant Issuance	Outstanding (in thousands)	Strike price (per share)		Expected term (years)	Volatility %		Risk-free rate %
Series A Convertible Preferred	1,384	$	2.10	4.76	88.80	%	2.50	%
Galena February 2017	33	$	33.00	3.12	94.12	%	2.46	%
Galena Other	72	$	829.88	2.43	94.73	%	2.46	%

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

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 six months ended June 30, 2019 were as follows (in thousands):



Warrant Issuance	Warrant liability, December 31, 2018		Fair value of warrants granted		Fair value of warrants canceled		Adjustment to exercise price of warrants		Change in fair value of warrants			Warrant liability, June 30, 2019
Series A Convertible Preferred	$	1,010	$	—	$	—	$	243	$	(1,153	)	$	100
Galena February 2017	3		—		—		—		—			3
	$	1,013	$	—	$	—	$	243	$	(1,153	)	$	103

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 per share, maturing five years from issuance, to EQC Private Markets SAC Fund Ltd-EQC Biotech Sely I Fund on December 29, 2017.

The pre-funded warrants exercisable for shares of common stock and warrants to acquire shares of common stock issued during the June 2019 Offering and July 2018 Offering were recorded in equity upon issuance. During its evaluation of equity classification for the pre-funded warrants exercisable for shares of common stock and warrants to acquire shares of common stock issued in the June 2019 Offering, the Company considered the conditions as prescribed within ASC 815-40, Derivatives and Hedging, Contracts in an Entity’s own Equity (“ASC 815-40”). The conditions within ASC 815-40 are not subject to a probability assessment. The pre-funded warrants exercisable for shares of common stock and warrants to acquire shares of common stock do not fall under the liability criteria within ASC 480, Distinguishing Liabilities from Equity, as they are not puttable and do not represent an instrument that has a redeemable underlying security. The pre-funded warrants exercisable for shares of common stock and warrants to acquire shares of common stock do meet the definition of a derivative instrument under ASC 815, but are eligible for the scope exception as they are indexed to the Company’s own stock and would be classified in permanent equity if freestanding. In addition, the Company determined that the down round feature in the warrants to acquires shares of common stock issued in the June 2019 Offering did not preclude equity classification. As described in Note 3, the Company adopted ASU No. 2017-11 on January 1, 2019 which changed the classification of certain equity-linked financial instruments (or embedded features) with down round features. A down round feature no longer precludes equity classification, therefore a freestanding equity feature would no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature.

9. Stock-Based Compensation

2017 Equity Incentive Plan

On December 29, 2017, the 2017 Equity Incentive Plan was approved by the stockholders of the Company, and currently allows for the issuance of up to a maximum of approximately 1,686,000 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 maturity for former Company employees and directors.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

The number 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 31 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 number of shares reserved for issuance under the 2017 Equity Incentive Plan was automatically increased to approximately 1,686,000 on January 1, 2019. As of June 30, 2019, an aggregate of approximately 416,000 shares of common stock were reserved for future grants under the 2017 Equity Incentive Plan.

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2019 and 2018, respectively (in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Research and development	$	(43	)	$	27	$	(4	)	$	33
General and administrative	169			98		315			114
Total stock-based compensation	$	126		$	125	$	311		$	147

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 six months ended June 30, 2019 and 2018:



	Six Months Ended June 30,
	2019		2018
Risk free interest rate	2.49	%	2.73	%
Volatility	96.57	%	80.83	%
Expected lives (years)	6.20		6.20
Expected dividend yield	—	%	—	%

There were no stock options granted during the three months ended June 30, 2019. The weighted-average grant date fair value of options granted during the six months ended June 30, 2019 and 2018 was $1.08 and $3.73, respectively. The weighted-average grant date fair value of options granted during the three months ended June 30, 2018 was $3.89.

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 approximately 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 June 30, 2019, there was $1.4 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 2.67 years.

Table of Contents

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 six months ended June 30, 2019:



	Total Number of Shares (In Thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2018	395		$	37.09	9.01	$	—
Granted	940		1.38			—
Canceled	(54	)	5.24			$	—
Outstanding at June 30, 2019	1,281		$	12.21	9.38	$	—
Options exercisable at June 30, 2019	157		$	85.51	8.25	$	—

The aggregate intrinsic values of outstanding and exercisable stock options at June 30, 2019 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on June 30, 2019 of $0.11 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

The Company granted Restricted Stock Units ("RSUs") subject to both time-based and performance-based vesting conditions to certain of its employees and non-employees pursuant to the Company's 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 initial vesting date 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 public offering. As of June 30, 2019, 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.

10. Subsequent Events

The Company evaluated all events or transactions that occurred after June 30, 2019 up through the date these financial statements were issued. Other than as disclosed elsewhere in the notes to the condensed consolidated financial statements, including below, the Company did not have any material subsequent events.

On July 8, 2019, the Company entered into a series of Investor Agreements (collectively, the "Investor Agreements") with certain purchasers of securities (each an "Investor") in connection with the June 2019 Offering. In connection with the Investor Agreements, the parties thereto agreed to, among other things, (i) amend the expiration date of those certain leak-out agreements previously entered into with certain Investors in connection with the June 2019 Offering from August 2, 2019 to August 15, 2019, (ii) amend the warrants issued to such Investors in connection with the June 2019 Offering such that they became cashlessly exercisable pursuant to the terms thereof on July 10, 2019 (the "Warrant Amendment"), and (iii) amend the warrant agreement entered into with Computershare Trust Company, N.A. on June 18, 2019 to reflect the terms of the Warrant Amendment. Pursuant to the Investor Agreements, the Investors also agreed to vote their shares of the Company’s common stock held on the applicable record date in favor of one or more future proposals that the Company expects to ask its stockholders to approve in connection with a contemplated reverse stock split of the Company’s common stock, at a ratio to be determined in the future by the Company’s board of directors.

Table of Contents

SELLAS LIFE SCIENCES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued

(Unaudited)

Subsequent to June 30, 2019, 98,634,000 warrants to acquire shares of common stock issued in the June 2019 Offering were cashlessly exercised. In addition, the remaining 25,666,300 pre-funded warrants to acquire shares of common stock issued in the June 2019 Offering were exercised at an exercise price of $0.0001 per share. The Company also received $0.3 million from the exercise of 2,100,130 warrants to acquire shares of common stock at an exercise price of $0.15 per share.

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 June 30, 2019 and results of operations for the three and six months ended June 30, 2019 and 2018, respectively, should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2018 Annual Report, and our other public reports filed with the SEC.

Overview

We are a late-stage biopharmaceutical company focused on the development of novel cancer immunotherapeutics for a broad range of indications.

Galinpepimut-S, or GPS

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 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.

In November 2018, following discussions with the U.S. Food and Drug Administration, or FDA, regarding a clinical trial design and biostatistical plan, we commenced preparations for a Phase 3 trial for GPS monotherapy in patients with acute myeloid leukemia, or AML, in the maintenance setting after achievement of their second complete remission, or CRem2, following successful completion of second-line antileukemic therapy. This trial is expected to serve as the basis for a Biologics License Application, or BLA, submission, subject to positive results. We plan to initiate this Phase 3 trial in the fourth quarter of 2019. The study is expected to enroll approximately 116 patients at approximately 50 clinical sites in the United States and Europe and is contemplated to have a planned interim safety and futility analysis after 80 events (deaths).

In December 2018, we initiated a Phase 1/2 multi-arm ("basket" type) clinical study of GPS in combination with Merck & Co., Inc.’s anti-PD-1 therapy, Keytruda® (pembrolizumab). In July 2019, we dosed the first patient in this trial. We plan to enroll approximately 90 patients at up to 20 centers in the United States. The trial is initially evaluating patients with ovarian cancer (second or third line) and colorectal cancer (third or fourth line), to be followed by patients with AML who are unable to attain deeper morphological response than partial on hypomethylating agents and who are not eligible for allogeneic hematopoietic stem cell transplant, and patients with triple negative breast cancer (TNBC) (second line), and small cell lung cancer (second line).

GPS was granted Orphan Drug Product Designations from the FDA as well as Orphan Medicinal Product Designations from the European Medicines Agency, or EMA, for GPS in AML, malignant pleural mesothelioma, or MPM, and multiple myeloma, or MM, as well as Fast Track Designation for AML, MPM, and MM from the FDA.

Nelipepimut-S, or NPS

Nelipepimut-S, or NPS, is a cancer immunotherapy targeting the human epidermal growth factor receptor, or HER2, expressing cancers. Data presented in 2018 from our Phase 2b clinical trial of the combination of trastuzumab (Herceptin®) plus NPS in HER1/2+ breast cancer patients in the adjuvant setting to prevent recurrences showed a clinically and statistically significant improvement in the disease-free survival, or DFS, rate for the TNBC cohort at 24 months for patients treated with NPS plus trastuzumab of 92.6% compared to 70.2% for those treated with trastuzumab alone. In October 2018, the Data Safety Monitoring Board, or DSMB, unanimously concluded that the final analysis of the Phase 2b study data, with a median follow-up of 26 months, confirmed that TNBC patients should be the key target population for the development of trastuzumab plus NPS in the adjuvant setting in early-stage HER2 1+/2+ breast cancer patients. We are having ongoing discussions with the FDA since January 2019 to define an optimal path for further development of the combination of NPS plus trastuzumab in TNBC.

FBP-targeting bivalent vaccine (GALE-301/-302)

GALE-301 and GALE 302 are cancer immunotherapies that target the E39 peptide derived from the folate binding protein, or FBP. In a Phase 1/2a investigator sponsored trial, or IST, assessing GALE-301 in ovarian and endometrial cancers, we observed improvement in the 24-month DFS rate, in a small number of patients treated with the optimal dose. We are evaluating GALE-301/302 for potential internal development in a Phase 2 setting for ovarian cancer, strategic partnership, or other type of candidate rationalization.

Recent Developments

On June 18, 2019, we consummated an underwritten public offering, or the June 2019 Offering, of (i) 26,367,200 shares of common stock, (ii) 73,632,800 pre-funded warrants exercisable for shares of common stock, and (iii) accompanying common stock warrants to purchase up to an aggregate of 100,000,000 shares of common stock. The shares of common stock and accompanying common stock warrants were sold at a combined price of $0.15 per share and common stock warrant. Each common stock warrant sold with the shares of common stock represents the right to purchase one share of common stock at an exercise price of $0.50 per share. The pre-funded warrants and accompanying common stock warrants were sold at a combined price of $0.1499 per pre-funded warrant and common stock warrant. The pre-funded warrants are exercisable immediately at an exercise price of $0.0001 per share, and expire on June 18, 2024.

The net proceeds to us from the June 2019 Offering, after deducting underwriting discounts and commissions and other estimated offering expenses, and excluding the exercise of any warrants, was approximately $13.4 million.

On July 8, 2019, we entered into a series of agreements, or the Investor Agreements, with certain purchasers of securities, or Investors, in connection with the June 2019 Offering. In connection with the Investor Agreements, the parties thereto agreed to, among other things, (i) amend the expiration date of those certain leak-out agreements previously entered into with certain Investors in connection with the June 2019 Offering from August 2, 2019 to August 15, 2019, (ii) amend the warrants issued to such Investors in connection with the June 2019 Offering such that they became cashlessly exercisable pursuant to the terms thereof on July 10, 2019 (the "Warrant Amendment"), and (iii) amend the warrant agreement entered into with Computershare Trust Company, N.A. on June 18, 2019, to reflect the terms of the Warrant Amendment. Pursuant to the Investor Agreements, the Investors have agreed to vote their shares of our common stock held on the applicable record date in favor of one or more future proposals that we expect to ask our stockholders to approve in connection with a contemplated reverse stock split of our common stock, at a ratio to be determined in the future by our board of directors.

On March 6, 2019, we entered into a Warrant Exercise Agreement, or the Exercise Agreement, with one of the holders of our warrants issued in July 2018. Pursuant to the Exercise Agreement, such holder agreed that it would cash exercise up to 3.8 million of its warrants issued in July 2018, or Existing Warrants, into shares of common stock, at a reduced exercise price of $1.10 per share for any Existing Warrants exercised prior to May 31, 2019. In addition to reducing the exercise price of the Existing Warrants, the Exercise Agreement also provides for the issuance of new warrants to purchase up to an aggregate of approximately 3.8 million shares of common stock at an exercise price of $1.40 per share, or New Warrants, to be issued on a share-for-share basis in an amount equal to the number of the Existing Warrants that are cash exercised by the holder prior to May 31, 2019. The holder exercised approximately 3.1 million Existing Warrants for gross proceeds of $3.5 million and approximately 3.1 million New Warrants were issued. The Exercise Agreement expired on May 31, 2019.

Components of Results of Operations

Research and Development

Research and development expenses consist of expenses incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses include:


•	expenses incurred under agreements with contract research organizations, or 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 our license agreements, under which we acquired certain intellectual property;


•	expenses relating to certain 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 our 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 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 the later stages of clinical development generally have higher development costs than those in the earlier stages of clinical development, primarily due to the increased size and duration of the later-stage clinical trials. We expect our research and development expenses to increase significantly over the next several years as we initiate additional and late stage clinical trials and as our research and development related personnel costs increase, including stock-based compensation.

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, accounting, consulting, legal and tax-related services associated with maintaining compliance with our Nasdaq listing and U.S. Securities and Exchange Commission reporting requirements, investor relations costs, and director and officer insurance premiums associated with being a public company.

We anticipate that our general and administrative expenses will decrease as we focus on managing outside service providers in order to prudently preserve capital. If and when we believe that regulatory approval of a product candidate appears likely, we anticipate that an increase in payroll and expenses will occur as a result of our preparation for commercial operations, particularly as it relates to the sales and marketing of such product candidate.

Non-Operating Income (Expense), Net

Non-operating income (expense), net consists of changes in fair value of our warrant liability, changes 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.

Critical Accounting Policies and Estimates

In the 2018 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, 2018 that are not included in Note 3 of the accompanying condensed consolidated financial statements for the three and six months ended June 30, 2019. Readers are encouraged to read the 2018 Annual Report in conjunction with this Quarterly Report on Form 10-Q.

Results of Operations for the Three and Six Months Ended June 30, 2019 and 2018

The following table summarizes our results of operations for the three months ended June 30, 2019 and 2018:



(dollars in thousands)	Three Months Ended June 30,
	2019			2018			Change
Operating expenses:
Research and development	$	1,381		$	1,592		$	(211	)
General and administrative	2,638			4,909			(2,271		)
Total operating expenses and operating loss	(4,019		)	(6,501		)	2,482
Non-operating income, net	885			602			283
Loss before income taxes	(3,134		)	(5,899		)	2,765
Income tax expense	—			163			(163		)
Net loss	$	(3,134	)	$	(6,062	)	$	2,928

The following table summarizes our results of operations for the six months ended June 30, 2019 and 2018:



(dollars in thousands)	Six Months Ended June 30,
	2019			2018			Change
Operating expenses:
Research and development	$	3,240		$	3,396		$	(156	)
General and administrative	5,138			8,789			(3,651		)
Total operating expenses and operating loss	(8,378		)	(12,185		)	3,807
Non-operating income (expense), net	707			(1,709		)	2,416
Loss before income taxes	(7,671		)	(13,894		)	6,223
Income tax expense	—			163			(163		)
Net loss	$	(7,671	)	$	(14,057	)	$	6,386

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

Research and Development

Research and development expenses were $1.4 million for the three months ended June 30, 2019 compared to $1.6 million for the three months ended June 30, 2018. The $0.2 million decrease was primarily attributable to a $0.5 million decrease in personnel related expenses due to reduced headcount and a $0.3 million decrease in outsourced clinical and regulatory consulting services. These decreases were partially offset by a $0.5 million increase in clinical trial expenses due to our ongoing basket trial of GPS in combination with pembrolizumab, and a $0.1 million increase in licensing fees. We anticipate that our research and development expenses will increase in the future as we continue to advance our product candidates into and through clinical trials, including the ongoing basket trial of GPS in combination with pembrolizumab, and our planned Phase 3 trial of GPS in AML.

Research and development expenses were $3.2 million for the six months ended June 30, 2019 compared to $3.4 million for the six months ended June 30, 2018. The $0.2 million decrease was primarily attributable to a $0.8 million decrease in personnel related expenses due to reduced headcount. This decrease was partially offset by a $0.3 million increase in clinical trial expenses due to our ongoing basket trial of GPS in combination with pembrolizumab, and a $0.3 million increase in licensing fees.

General and Administrative

General and administrative expenses were $2.6 million for the three months ended June 30, 2019 compared to $4.9 million for the three months ended June 30, 2018. The $2.3 million decrease was due to a $1.3 million decrease in legal fees, a $0.4 million decrease in public company costs, a $0.3 million decrease in personnel related expenses due to reduced headcount, and a $0.3 million decrease in other expenses. These decreases were driven by our focus on reducing expenses as we prudently manage our capital in order to continue with our current business plan of advancing our development programs for our product candidates.

General and administrative expenses were $5.1 million for the six months ended June 30, 2019 compared to $8.8 million for the six months ended June 30, 2018. The $3.7 million decrease was due to a $1.8 million decrease in legal fees, a $0.5 million decrease in public company costs, a $0.4 million decrease in accounting and audit fees, a $0.3 million decrease in personnel related expenses due to reduced headcount, a $0.3 million decrease in outsourced consulting, and a $0.4 million decrease in other expenses.

Non-Operating Income (Expense), Net

Non-operating income (expense), net for the three and six months ended June 30, 2019 and 2018, respectively, was as follows (in thousands):



	Three Months Ended June 30,									Six Months Ended June 30,
	2019			2018			Change			2019			2018			Change
Change in fair value of warrant liability	$	962		$	1,218		$	(256	)	$	1,157		$	3,099		$	(1,942	)
Change in fair value of contingent consideration	(95		)	(452		)	357			(482		)	(3,863		)	3,381
Loss on settlement of liability-classified warrants	—			(42		)	42			—			(727		)	727
Interest income (expense), net	18			(122		)	140			32			(218		)	250
Total non-operating income (expense), net	$	885		$	602		$	283		$	707		$	(1,709	)	$	2,416

Net non-operating income of $0.9 million during the three months ended June 30, 2019 was primarily due to a $1.0 million gain arising from the decrease in the fair value of liability-classified warrants to acquire shares of common stock, partially offset by a $0.1 million increase in the fair value of the contingent consideration liability. Net non-operating income of $0.7 million during the six months ended June 30, 2019 was primarily due to a $1.2 million gain arising from the decrease in the fair value of liability-classified warrants to acquire shares of common stock, partially offset by a $0.5 million increase in the fair value of the contingent consideration liability. The decreases in the estimated fair value of our warrant liability were primarily due to decreases in our common stock price.

Net non-operating income of $0.6 million during the three months ended June 30, 2018 was primarily due to a $1.2 million gain arising from the decrease in the fair value of liability-classified warrants to acquire shares of common stock, partially offset by a $0.5 million increase in the fair value of the contingent consideration liability, and $0.1 million of interest expense. Net non-operating expense of $1.7 million during the six months ended June 30, 2018 was primarily due to a $3.9 million increase in the fair value of the contingent consideration liability, a $0.7 million loss on settlement of liability-classified warrants to acquire shares of common stock, and $0.2 million of interest expense. These non-operating expenses during the six months ended June 30, 2018 were partially offset by a $3.1 million gain arising from the decrease in the fair value of liability-classified warrants to acquire shares of common stock. The change in the estimated fair value of the contingent consideration during the six months ended June 30, 2018 reflects an adjusted probability and time line for the potential approval of NPS associated with the positive interim data from the Phase 2b investigator-sponsored clinical trial of trastuzumab +/- NPS that was announced on April 2, 2018.

During the six months ended June 30, 2018, the $0.7 million loss on settlement of liability-classified warrants relates to warrants to acquire shares of common stock issued by Galena in February 2017 that were assumed in the Merger. A total of 534,333 of the Galena February 2017 liability-classified warrants to acquire shares of common stock were canceled under various warrant exchange agreements. We issued 54,343 shares of our common stock in exchange for the surrender and cancellation of warrants to acquire 121,667 shares of our common stock and $1.0 million in convertible promissory notes in exchange for the surrender and cancellation of warrants to acquire 412,667 shares of our common stock. The fair value of the consideration exchanged totaling $1.3 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 six months ended March 31, 2018.

Interest expense, net for the three and six months ended June 30, 2019 and 2018 primarily consisted of interest expense incurred on our previously outstanding 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.

Income Tax Expense

There was no income tax expense for the three and six months ended June 30, 2019. For the three and six months ended June 30, 2018, we recognized income tax expense of $0.2 million. We continue to maintain a full valuation allowance against our net deferred tax assets.

Liquidity and Capital Resources

We have not generated any revenue from product sales or collaboration and licensing agreements in the six months ended June 30, 2019 and 2018. Since inception, we have incurred net losses, used net cash from our operations, and have funded substantially all of our operations through proceeds of the sale of equity securities and convertible notes.

In February 2019, we engaged Cantor Fitzgerald & Co. to explore a wide range of strategic alternatives, with the ultimate objective being an outcome that is in the best interest of our shareholders. Such alternatives may include, but are not limited to, a sale of the Company, a business combination, a merger or reverse merger with another company, a strategic investment into the Company, a sale, license or other disposition of corporate assets, a funded collaboration or partnership, or a financing which would allow us to continue with our current business plan of advancing its development programs for our product candidates. On June 18, 2019, we received $13.8 million in net proceeds from the sale of shares of common stock, pre-funded warrants to acquire shares of common stock, and accompanying common stock warrants to acquire shares of common stock. We are using the proceeds of this offering to advance our development programs. We are also continuing to explore other potential transactions for advancing our development plans and maximizing shareholder value. There can be no assurance that we will enter into any additional transactions as a result of the exploration of strategic alternatives. In addition to the June 2019 financing, during the six months ended June 30, 2019, we received $3.3 million in net proceeds from the exercise of the Existing Warrants. Subsequent to June 30, 2019, we received $0.3 million in net proceeds from the exercise of 2.1 million warrants to acquire shares of common stock at an exercise price of $0.15 per share.

As of June 30, 2019, we had an accumulated deficit of $89.5 million, cash and cash equivalents of $12.8 million, and restricted cash and cash equivalents of $0.1 million. In addition, we had accounts payable and accrued expenses and other current liabilities of $5.0 million as of June 30, 2019. We have prepared our condensed consolidated financial statements assuming that we will 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 our condensed consolidated financial statements are available to be issued, and if not, whether our liquidation is imminent. Our management believes that our cash of $12.8 million as of June 30, 2019, will enable us to fund our operating expenses and capital expenditure requirements through the end of 2020. We will require additional financing to fund our operations thereafter and to commercially develop any current or future product candidates. We may be required to delay, scale back or eliminate some or all of our research and development programs and place certain activities on hold, or cease operations if we are unable to raise funds as needed. 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 public and private placements of equity and/or debt securities, payments from potential strategic research and development collaborations, 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. To the extent that we raise additional capital through the sale of our common stock, the interests of our current stockholders may be diluted. If we issue additional preferred stock or convertible debt securities, it could affect the rights of our common stockholders or reduce the value of our common stock or any outstanding classes of preferred stock. There can be no assurance that these future funding efforts will be successful.

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

Cash Flows

The following table summarizes our cash flows from operating and financing activities for the six months ended June 30, 2019 and 2018 (amounts in thousands):



	Six Months Ended June 30,
	2019			2018
Net cash (used in) provided by:
Operating activities	$	(9,647	)	$	(11,702	)
Financing activities	17,061			8,947
Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents	$	7,414		$	(2,755	)

Net Cash Flow from Operating Activities

Net cash used in operating activities of $9.6 million during the six months ended June 30, 2019 was primarily attributable to our net loss of $7.7 million. This amount was impacted by a non-cash gain of $1.2 million from the decrease in the fair value of liability-classified warrants, partially offset by various net non-cash charges of $0.8 million, which was comprised of $0.5 million increase in the fair value of our contingent consideration liability, and a $0.3 million increase in stock-based compensation. The net change in our operating assets and liabilities of $1.6 million is primarily attributable to an increase in prepaid expenses of $0.3 million, and a $1.3 million decrease in our accounts payable and accrued expenses and other current liabilities as we paid down longer outstanding payables during the first half of 2019.

Net cash used in operating activities of $11.7 million during the six months ended June 30, 2018 was primarily attributable to our net loss of $14.0 million. This amount was offset by various net non-cash charges of $3.1 million, which was comprised of $3.9 million increase in the fair value our contingent consideration liability, a $1.3 million increase in the fair value of common stock issued in connection with litigation settlements, and a $0.7 million loss on settlement of liability-classified warrants, partially offset by a gain of $3.1 million from the decrease in the fair value of liability-classified warrants. The net change in our operating assets and liabilities of $0.7 million was primarily attributable to an increase in our accounts payable and accrued expenses and other current liabilities as we extended payables until we received additional financing.

Net Cash Flow from Financing Activities

We generated $17.1 million of net cash from financing activities for the six months ended June 30, 2019. We received $13.8 million in net proceeds from our June 2019 Offering through the sale of shares of common stock, pre-funded warrants to acquire shares of common stock, and accompanying common stock warrants to acquire shares of common stock. As of June 30, 2019, we had $0.4 million of offering expenses from the June 2019 Offering in accounts payable and accrued expenses that are expected to be paid in the third quarter of 2019. In addition, during the six months ended June 30, 2019, we received $3.3 million in net proceeds from the exercise of the Existing Warrants.

We generated $8.9 million of net cash from financing activities for the six months ended June 30, 2018, which was primarily attributable to $9.6 million in net proceeds from the sale of the Series A Convertible Preferred stock and warrants, partially offset by $0.6 million in redemptions of a senior secured debenture satisfied in cash.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet financing arrangements as of June 30, 2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and our principal financial officer (the “Certifying Officer”), evaluated the effectiveness of our disclosure controls and procedures. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Disclosure controls and procedures are also designed to reasonably assure that such information is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure. Based on these evaluations, the Certifying Officers have concluded, that, as of the end of the period covered by this Quarterly Report on Form 10-Q:


(a)	our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and


(b)	our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Exchange Act was accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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 June 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Please refer to Note 6 (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.

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.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in our 2018 Annual Report. The risks described in such 2018 Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition, operating results and stock price.

Our common stock may be delisted from the Nasdaq Capital Market which could negatively impact the price of our common stock, liquidity and our ability to access the capital markets.

The listing standards of the Nasdaq Capital Market provide that a company, in order to qualify for continued listing, must maintain a minimum stock price of $1.00 and satisfy standards relative to minimum stockholders’ equity, minimum market value of publicly held shares and various additional requirements. If we fail to comply with all listing standards applicable to issuers listed on the Nasdaq Capital Market, our common stock may be delisted. If our common stock is delisted, it could reduce the price of our common stock and the levels of liquidity available to our stockholders. In addition, the delisting of our common stock could materially adversely affect our access to the capital markets and any limitation on liquidity or reduction in the price of our common stock could materially adversely affect our ability to raise capital. Delisting from the Nasdaq Capital Market could also result in other negative consequences, including the potential loss of confidence by suppliers, customers and employees, the loss of institutional investor interest and fewer business development opportunities.

As previously reported, on May 31, 2019, we received a letter from Nasdaq indicating that, based upon the closing bid price of our common stock for the last 30 consecutive business days, we did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Minimum Bid Price Rule. We have been provided an initial period of 180 calendar days, or until November 27, 2019, to regain compliance with the Minimum Bid Price Rule. The letter also indicated that if at any time before November 27, 2019 the closing bid price for our common stock is at least $1.00 for a minimum of ten consecutive business days, Nasdaq will provide written notification to the company that it complies with the Minimum Bid Price Rule. If we do not regain compliance with the Minimum Bid Price Rule by November 27, 2019, we may be eligible for a second compliance period of 180 calendar days, provided that we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and notify Nasdaq of our intention to cure the deficiency during such second compliance period, including by effecting a reverse stock split, if necessary. If we do not regain compliance with the Minimum Bid Price Rule by November 27, 2019 and are not eligible for a second compliance period at that time, Nasdaq will provide written notification to us that our common stock may be delisted. At that time, we may appeal Nasdaq’s delisting determination to a Nasdaq hearings panel. If we timely appeal, our common stock would remain listed pending the panel’s decision. There can be no assurance that, if we do appeal the delisting determination by Nasdaq to the panel, such appeal would be successful.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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	Amended and Restated By-Laws of the Registrant	8-K	3.3	January 5, 2018
10.1	Warrant Agreement including form of accompanying Common Warrant, dated June 18, 2019, between the Company and Computershare Trust Company, N.A.	8-K	10.1	June 18, 2019
10.2	Form of Pre-Funded Warrant	8-K	10.2	June 18, 2019
10.3	Form of Investor Agreement	8-K	10.1	July 9, 2019
10.4	Amendment to Warrant Agreement	8-K	10.2	July 9, 2019
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.

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. Stergiou, MD, ScD h.c.
			President and Chief Executive Officer

			Date: August 14, 2019

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2019	Aug. 14, 2019
Document Document And Entity Information [Abstract]
Entity Registrant Name	SELLAS Life Sciences Group, Inc.
Entity Central Index Key	0001390478
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		226,544,712

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	350,000,000	350,000,000
Common stock, shares issued (in shares)	100,135,175	22,026,476
Common stock, shares outstanding (in shares)	100,135,175	22,026,476
Series A Preferred Stock
Preferred stock, shares authorized (in shares)	17,500	17,500

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Operating expenses:
Research and development	$ 1,381	$ 1,592	$ 3,240	$ 3,396
General and administrative	2,638	4,909	5,138	8,789
Total operating expenses and operating loss	(4,019)	(6,501)	(8,378)	(12,185)
Non-operating income (expense):
Change in fair value of warrant liability	962	1,218	1,157	3,099
Change in fair value of contingent consideration	(95)	(452)	(482)	(3,863)
Loss on settlement of liability-classified warrants	0	(42)	0	(727)
Interest income (expense), net	18	(122)	32	(218)
Total non-operating income (expense), net	885	602	707	(1,709)
Loss before income taxes	(3,134)	(5,899)	(7,671)	(13,894)
Income tax expense	0	163	0	163
Net loss	(3,134)	(6,062)	(7,671)	(14,057)
Deemed dividend arising from beneficial conversion feature of convertible preferred stock	0	(2,468)	0	(4,436)
Deemed dividend arising from warrant modifications	(952)	0	(1,391)	0
Net loss attributable to common stockholders	$ (4,086)	$ (8,530)	$ (9,062)	$ (18,493)
Per share information:
Net loss per common share attributable to common stockholders, basic and diluted (in dollars per share)	$ (0.13)	$ (1.26)	$ (0.33)	$ (2.89)
Weighted-average common shares outstanding, basic and diluted (in shares)	32,298,234	6,767,200	27,360,621	6,391,948

Organization and Description of Business	6 Months Ended
Organization and Description of Business	Jun. 30, 2019
Accounting Policies [Abstract]
Organization and Description of Business	Organization and Description of Business Overview SELLAS Life Sciences Group, Inc. (the "Company" or “SELLAS”) is a late-stage biopharmaceutical company focused on the development and commercialization of novel cancer immunotherapeutics for a broad range of indications.

Liquidity	6 Months Ended
Liquidity	Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Liquidity	Liquidity The Company has not generated any revenues, including from product sales, and has funded operations primarily from the proceeds of sales of its equity interests and convertible notes. 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. On June 18, 2019, the Company consummated an underwritten public offering (the “June 2019 Offering”) of (i) 26,367,200 shares of common stock, (ii) 73,632,800 pre-funded warrants exercisable for shares of common stock, and (iii) accompanying common stock warrants to purchase up to an aggregate of 100,000,000 shares of common stock. The shares of common stock and accompanying common stock warrants were sold at a combined price of $0.15 per share and accompanying common stock warrant. Each common stock warrant sold with the shares of common stock represented the right to purchase one share of common stock at an exercise price of $0.50 per share and may be exercised pursuant to the terms thereof on a cashless basis, at the option of the holder, in whole or in part, for one share of common stock, if the weighted average price of the common stock on any trading day immediately prior to the exercise date is lower than the then-applicable exercise price per share. See Note 10 for a description of the Investor Agreements (as defined in Note 10) pertaining to the warrants sold in the June 2019 Offering. The pre-funded warrants and accompanying common stock warrants were sold at a combined price of $0.1499 per pre-funded warrant and common stock warrant. The pre-funded warrants are exercisable immediately, at an exercise price of $0.0001 per share and expire on June 18, 2024. The net proceeds to the Company from the June 2019 Offering, after deducting underwriting discounts and commissions and other estimated offering expenses, and excluding the exercise of any warrants, was approximately $13.4 million. See Notes 7 and 8 for further discussion of the June 2019 Offering. On March 6, 2019, the Company entered into a Warrant Exercise Agreement (the "Exercise Agreement") with one of the holders of the Company's warrants issued in July 2018. Pursuant to the Exercise Agreement, the warrant holder agreed to exercise for cash up to 3.8 million of its warrants issued in July 2018 ("Existing Warrants") into shares of common stock at an adjusted exercise price of $1.10 per share for any Existing Warrants exercised prior to May 31, 2019. In addition to reducing the exercise price of the Existing Warrants, the Exercise Agreement also provides for the issuance of new warrants to purchase up to an aggregate of approximately 3.8 million shares of common stock at an exercise price of $1.40 per share ("New Warrants") to be issued on a share-for-share basis in an amount equal to the number of the Existing Warrants that are cash exercised by the warrant holder prior to May 31, 2019. During the six months ended June 30, 2019, the warrant holder exercised approximately 3.1 million Existing Warrants for gross proceeds of $3.5 million and approximately 3.1 million New Warrants were issued. The Exercise Agreement expired on May 31, 2019. In February 2019, the Company engaged Cantor Fitzgerald & Co. to explore a wide range of strategic alternatives to continue the Company's business plan, with the ultimate objective being an outcome that is in the best interest of the Company's shareholders. Such alternatives may include, but are not limited to, a sale of the Company, a business combination, a merger or reverse merger with another company, a strategic investment into the Company, a sale, license or other disposition of assets, a funded collaboration or partnership, or a financing which would allow the Company to continue with its current business plan of advancing its development plans for its lead product candidates. In addition to the consummation of the June 2019 Offering, the Company is continuing to explore other potential transactions for advancing its development programs and maximizing shareholder value. There can be no assurance that the Company will enter into any additional transactions as a result of the exploration of strategic alternatives. 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. 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, 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 evaluated the guidance of Accounting Standards Codification ("ASC") 205-40, Presentation of Financial Statements - Going Concern, in order to determine whether there is substantial doubt about its ability to continue as a going concern for one year from the date its financial statements are available to be issued. 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. 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 the risk of failure of any such product candidates 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 June 30, 2019, the Company had cash and cash equivalents of approximately $12.8 million, and restricted cash and cash equivalents of $0.1 million. The Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $89.5 million as of June 30, 2019. In addition, the Company had aggregate outstanding accounts payable and accrued expenses and other current liabilities of $5.4 million as of June 30, 2019. The Company expects its existing cash as of June 30, 2019, will enable the Company to fund its operating expenses and capital expenditure requirements through the end of 2020.


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


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.



	/s/ Angelos M. Stergiou

	Angelos M. Stergiou, MD, ScD h.c.
	President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)



	By:		/s/ Angelos M. Stergiou

			Angelos M. Stergious, MD, ScD h.c.
			President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)

			Date: August 14, 2019

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 12,751	$ 5,337
Restricted cash and cash equivalents	114	114
Prepaid expenses and other current assets	776	387
Total current assets	13,641	5,838
Operating lease right-of-use asset	390	0
In-process research and development	8,500	8,500
Goodwill	1,914	1,914
Deposits and other assets	589	663
Total assets	25,034	16,915
Current liabilities:
Accounts payable	3,762	3,755
Accrued expenses and other current liabilities	1,276	2,219
Operating lease liability, current	362	0
Total current liabilities	5,400	5,974
Operating lease liability, non-current	28	0
Deferred tax liability	357	357
Warrant liability	103	1,013
Contingent consideration	4,808	4,326
Total liabilities	10,696	11,670
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; Series A convertible preferred stock, 17,500 shares designated; no shares issued and outstanding at June 30, 2019 and December 31, 2018	0	0
Common stock, $0.0001 par value; 350,000,000 shares authorized, 100,135,175 and 22,026,476 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively.	10	2
Additional paid-in capital	103,854	87,098
Accumulated deficit	(89,526)	(81,855)
Total stockholders’ equity	14,338	5,245
Total liabilities and stockholders’ equity	$ 25,034	$ 16,915

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Convertible Notes Payable	Convertible Notes Payable Common Stock	Convertible Notes Payable Additional Paid-In Capital	Secured Debt	Secured Debt Common Stock	Secured Debt Additional Paid-In Capital	Patel vs Galena biopharma, Inc	Patel vs Galena biopharma, Inc Common Stock	Patel vs Galena biopharma, Inc Additional Paid-In Capital
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)		10,700					118,644						228,672
Issuance of common stock upon exercise of warrants, net of offering costs	9,647			9,647		$ 825		$ 825				$ 1,250		$ 1,250
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock offering	(5,039)			(5,039)
Beneficial conversion feature arising from Series A convertible preferred stock	(4,436)			(4,436)
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	4,436			4,436
Issuance of common stock as repayment of principal and interest on long-term debt (in shares)		(2,898)	499,682							715,277
Convertible preferred stock dividends	(487)			(487)
Issuance of common stock as repayment of principal and interest on long-term debt									$ 2,876		$ 2,876
Issuance of common stock in connection with warrant exchange agreements (in shares)			54,343
Issuance of common stock in connection with warrant exchange agreements	285			285
Stock-based compensation	147			147
Net loss	(14,057)				(14,057)
Ending balance (in shares) at Jun. 30, 2018		7,802	7,383,509
Ending balance at Jun. 30, 2018	(2,483)	$ 0	$ 1	65,758	(68,242)
Beginning balance (in shares) at Mar. 31, 2018		5,987	6,154,377
Beginning balance at Mar. 31, 2018	(1,318)	$ 0	$ 1	60,861	(62,180)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Series A convertible preferred stock, net of offering costs (in shares)		4,713					118,644						228,672
Issuance of common stock upon exercise of warrants, net of offering costs	4,319			4,319		$ 825		$ 825				$ 1,250		$ 1,250
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock offering	(2,452)			(2,452)
Beneficial conversion feature arising from Series A convertible preferred stock	(2,468)			(2,468)
Deemed dividend arising from beneficial conversion feature of Series A convertible preferred stock	2,468			2,468
Issuance of common stock as repayment of principal and interest on long-term debt (in shares)		(2,898)	499,682							382,134
Convertible preferred stock dividends	(415)			(415)
Issuance of common stock as repayment of principal and interest on long-term debt									$ 1,245		$ 1,245
Stock-based compensation	125			125
Net loss	(6,062)				(6,062)
Ending balance (in shares) at Jun. 30, 2018		7,802	7,383,509
Ending balance at Jun. 30, 2018	(2,483)	$ 0	$ 1	65,758	(68,242)
Beginning balance (in shares) at Dec. 31, 2018		0	22,026,476
Beginning balance at Dec. 31, 2018	5,245	$ 0	$ 2	87,098	(81,855)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock and common stock warrants, net of issuance costs (in shares)			26,367,200
Issuance of common stock and common stock warrants, net of issuance costs	13,416		$ 3	13,413
Issuance of Series A convertible preferred stock, net of offering costs (in shares)			3,149,999
Issuance of common stock upon exercise of warrants, net of offering costs	$ 3,275			3,275
Issuance of common stock upon exercise of pre-funded warrants (in shares)	48,591,500
Issuance of common stock upon exercise of pre-funded warrants	$ 5
Impact of anti-dilution protection on liability-classified warrants	(243)			(243)
Stock-based compensation	311			311
Net loss	(7,671)				(7,671)
Ending balance (in shares) at Jun. 30, 2019		0	100,135,175
Ending balance at Jun. 30, 2019	14,338	$ 0	$ 10	103,854	(89,526)
Beginning balance (in shares) at Mar. 31, 2019		0	24,176,475
Beginning balance at Mar. 31, 2019	2,950	$ 0	$ 2	89,340	(86,392)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock and common stock warrants, net of issuance costs (in shares)			26,367,200
Issuance of common stock and common stock warrants, net of issuance costs	13,416		$ 3	13,413
Issuance of Series A convertible preferred stock, net of offering costs (in shares)			1,000,000
Issuance of common stock upon exercise of warrants, net of offering costs	1,045			1,045
Issuance of common stock upon exercise of pre-funded warrants (in shares)			48,591,500
Issuance of common stock upon exercise of pre-funded warrants	5		$ 5
Impact of anti-dilution protection on liability-classified warrants	(70)			(70)
Stock-based compensation	126			126
Net loss	(3,134)				(3,134)
Ending balance (in shares) at Jun. 30, 2019		0	100,135,175
Ending balance at Jun. 30, 2019	$ 14,338	$ 0	$ 10	$ 103,854	$ (89,526)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net loss	$ (7,671)	$ (14,057)
Adjustment to reconcile net loss to net cash used in operating activities:
Non-cash interest expense	0	115
Deferred taxes	0	49
Non-cash stock-based compensation	311	147
Fair value of common stock issued in connection with litigation settlements	0	1,250
Change in fair value of common stock warrants	(1,153)	(3,099)
Change in fair value of contingent consideration	482	3,863
Loss on settlement of liability-classified warrants	0	727
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(315)	(604)
Accounts payable	(263)	408
Accrued expenses and other current liabilities	(1,038)	(501)
Net cash used in operating activities	(9,647)	(11,702)
Cash flows from financing activities:
Net proceeds from issuance of Series A convertible preferred stock and common stock warrants	0	9,647
Proceeds from issuance of common stock, net of offering costs	13,781	0
Net proceeds from exercise of warrants	3,280	0
Dividends paid	0	(111)
Principal payments on long-term debt	0	(589)
Net cash provided by financing activities	17,061	8,947
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents	7,414	(2,755)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the beginning of period	5,451	12,750
Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of period	12,865	9,995
Supplemental disclosure of cash flow information:
Cash received during the periods for interest	32	79
Cash paid during the periods for interest	0	182
Supplemental disclosure of non-cash investing and financing activities:
Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock recorded as issuance cost	0	5,039
Repayment of interest and principal on long-term debt through issuance of common stock	0	3,701
Reclassification of warrant liabilities upon exchange for shares of common stock	0	285
Operating right of use asset and current and non-current liability	550	0
Impact of anti-dilution protection on liability-classified warrants	243	0
Offering expenses in accounts payable and accrued expenses and other current liabilities	365	0
Long-term debt issued in connection with warrant exchange agreements	$ 0	$ 966

Subsequent Events	6 Months Ended
Subsequent Events	Jun. 30, 2019
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events The Company evaluated all events or transactions that occurred after June 30, 2019 up through the date these financial statements were issued. Other than as disclosed elsewhere in the notes to the condensed consolidated financial statements, including below, the Company did not have any material subsequent events. On July 8, 2019, the Company entered into a series of Investor Agreements (collectively, the "Investor Agreements") with certain purchasers of securities (each an "Investor") in connection with the June 2019 Offering. In connection with the Investor Agreements, the parties thereto agreed to, among other things, (i) amend the expiration date of those certain leak-out agreements previously entered into with certain Investors in connection with the June 2019 Offering from August 2, 2019 to August 15, 2019, (ii) amend the warrants issued to such Investors in connection with the June 2019 Offering such that they became cashlessly exercisable pursuant to the terms thereof on July 10, 2019 (the "Warrant Amendment"), and (iii) amend the warrant agreement entered into with Computershare Trust Company, N.A. on June 18, 2019 to reflect the terms of the Warrant Amendment. Pursuant to the Investor Agreements, the Investors also agreed to vote their shares of the Company’s common stock held on the applicable record date in favor of one or more future proposals that the Company expects to ask its stockholders to approve in connection with a contemplated reverse stock split of the Company’s common stock, at a ratio to be determined in the future by the Company’s board of directors. Subsequent to June 30, 2019, 98,634,000 warrants to acquire shares of common stock issued in the June 2019 Offering were cashlessly exercised. In addition, the remaining 25,666,300 pre-funded warrants to acquire shares of common stock issued in the June 2019 Offering were exercised at an exercise price of $0.0001 per share. The Company also received $0.3 million from the exercise of 2,100,130 warrants to acquire shares of common stock at an exercise price of $0.15 per share.

Liquidity (Details) - USD ($) $ / shares in Units, $ in Thousands		6 Months Ended
	Jun. 18, 2019	Jun. 30, 2019	Mar. 06, 2019	Dec. 31, 2018	Jul. 16, 2018	Dec. 29, 2017
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Warrants issued (in shares)	100,000,000
Sale of stock, price per share (in dollars per share)	$ 0.50
Exercise price of pre-funded warrants (in dollars per share)	$ 0.0001
Net proceeds from Offering	$ 13,400	$ 13,400
Warrant exercise price (in dollars per share)						$ 7.42
Number of warrants exercised (in shares)		51,742,000
Number of warrants issued (in shares)		176,783,000
Cash and cash equivalents		$ 12,751		$ 5,337
Restricted cash and cash equivalents		114		114
Accumulated deficit		89,526		$ 81,855
Accounts payable and accrued liabilities		$ 5,400
July 2018 Offering
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of warrants to be exercised (in shares)			3,800,000
Warrant exercise price (in dollars per share)			$ 1.10		$ 2.10
Number of warrants exercised (in shares)		3,150,000
Gross proceeds from warrant exercises		$ 3,500
Number of warrants issued (in shares)		0
Warrant Exercise Agreement
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Warrant exercise price (in dollars per share)			$ 1.40
Number of warrants exercised (in shares)		0
Number of warrants issued (in shares)		3,150,000
Common Stock
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares)	26,367,200
Sale of stock, price per share (in dollars per share)	$ 0.15				$ 0.15
Warrant
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares of stock (in shares)	73,632,800
Sale of stock, price per share (in dollars per share)	$ 0.1499

Fair Value Measurements (Contingent Purchase Price Consideration, Measured at Estimated Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Liabilities:
Warrant liability	$ 103	$ 1,013
Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	4,808	4,326
Fair Value, Measurements, Recurring
Assets:
Cash equivalents	12,334	5,195
Total assets measured and recorded at fair value	12,334	5,195
Liabilities:
Warrant liability	103	1,013
Contingent consideration	4,808	4,326
Total liabilities measured and recorded at fair value	4,911	5,339
Fair Value, Measurements, Recurring \| Quoted Prices In Active Markets (Level 1)
Assets:
Cash equivalents	12,334	5,195
Total assets measured and recorded at fair value	12,334	5,195
Liabilities:
Warrant liability	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
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrant liability	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
Total assets measured and recorded at fair value	0	0
Liabilities:
Warrant liability	103	1,013
Contingent consideration	4,808	4,326
Total liabilities measured and recorded at fair value	$ 4,911	$ 5,339

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Compensation and related benefits	$ 388	$ 675
Clinical trial costs	132	858
Professional fees	756	540
Rebates and returns of former commercial products	0	138
Other	0	8
Accrued expenses and other current liabilities	$ 1,276	$ 2,219

Legal Proceedings, Commitments and Contingencies (Maturities of Lease Liabilities - 842) (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Leases [Abstract]
Year ending December 31, 2019 (remaining six months)	$ 191
Year ending December 31, 2020	224
Total minimum lease payments	415
Less: imputed interest	(25)
Operating lease liabilities	$ 390

Legal Proceedings, Commitments and Contingencies (Maturities of Lease Liabilities - 840) (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 377
2020	224
Total minimum lease payments	$ 601

Stockholders' Equity (Common Stock are Reserved for Future Issuance) (Details) - shares shares in Thousands	Jun. 30, 2019	Dec. 31, 2018
Equity [Abstract]
Warrants outstanding (in shares)	142,739	17,698
Stock options outstanding (in shares)	1,281	395
Options reserved for future issuance under the Company's 2017 Incentive Plan (in shares)	416
Shares reserved for future issuance under the Employee Stock Purchase Plan (in shares)	265
Restricted stock units (in shares)	13
Total common stock reserved for future issuance (in shares)	144,714

Warrants to Acquire Shares of Common Stock (Schedule of Warrant Activity) (Details) shares in Thousands	6 Months Ended
	Jun. 30, 2019 shares
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	17,698
Granted (in shares)	176,783
Exercised (in shares)	(51,742)
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	142,739
March 2019 Exercise Agreement
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	0
Granted (in shares)	3,150
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	3,150
July 2018 Offering
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	15,268
Granted (in shares)	0
Exercised (in shares)	(3,150)
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	12,118
Pre-funded July 2018 Offering
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	625
Granted (in shares)	0
Exercised (in shares)	(625)
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	0
Series A Convertible Preferred
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	1,384
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	1,384
2017 Equilibria
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	316
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	316
Galena February 2017
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	33
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	33
Galena Other
Class of Warrant or Right, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	72
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	72

Warrants to Acquire Shares of Common Stock (Warrants Outstanding) (Details) shares in Thousands	6 Months Ended
	Jun. 30, 2019 shares
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	17,698
Granted (in shares)	176,783
Exercised (in shares)	(51,742)
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	142,739
June 2019 Offering
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	0
Granted (in shares)	100,000
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	100,000
Pre-funded June 2019 Offering
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	0
Granted (in shares)	73,633
Exercised (in shares)	(47,967)
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	25,666
March 2019 Exercise Agreement
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	0
Granted (in shares)	3,150
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	3,150
July 2018 Offering
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	15,268
Granted (in shares)	0
Exercised (in shares)	(3,150)
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	12,118
Pre-funded July 2018 Offering
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	625
Granted (in shares)	0
Exercised (in shares)	(625)
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	0
Series A Convertible Preferred
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	1,384
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	1,384
2017 Equilibria
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	316
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	316
Galena February 2017
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	33
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	33
Galena Other
Class Of Warrant Or Right [Roll Forward]
Outstanding, beginning of period (in shares)	72
Granted (in shares)	0
Exercised (in shares)	0
Canceled/Expired (in shares)	0
Outstanding, end of period (in shares)	72

Warrants to Acquire Shares of Common Stock (Fair Value of Warrants is Estimated Using Black-Scholes Option Pricing Model) (Details) - $ / shares shares in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	142,739	17,698
Series A Convertible Preferred
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	1,384	1,384
Strike price (in dollars per share)	$ 0.15	$ 2.10
Expected term	4 years 3 months 4 days	4 years 9 months 4 days
Volatility %	99.14%	88.80%
Risk-free rate %	1.74%	2.50%
Galena February 2017
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	33	33
Strike price (in dollars per share)	$ 33	$ 33
Expected term	2 years 7 months 17 days	3 years 1 month 13 days
Volatility %	105.00%	94.12%
Risk-free rate %	1.71%	2.46%
Galena Other
Class of Warrant or Right [Line Items]
Warrants outstanding (in shares)	72	72
Strike price (in dollars per share)	$ 829.88	$ 829.88
Expected term	1 year 11 months 4 days	2 years 5 months 5 days
Volatility %	105.00%	94.73%
Risk-free rate %	1.71%	2.46%
Measurement Input, Risk Free Interest Rate
Class of Warrant or Right [Line Items]
Warrants and rights outstanding, measurement input	0
Measurement Input, Expected Dividend Rate
Class of Warrant or Right [Line Items]
Warrants and rights outstanding, measurement input	0

Warrants to Acquire Shares of Common Stock (Changes in Fair Value of Warrant Liability) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, beginning balance	$ 1,013
Fair value of warrants granted	0
Fair value of warrants canceled	0
Adjustment to exercise price of warrants	243
Change in fair value of warrants	(1,153)
Warrant liability, ending balance	103
Series A Convertible Preferred
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, beginning balance	1,010
Fair value of warrants granted	0
Fair value of warrants canceled	0
Adjustment to exercise price of warrants	243
Change in fair value of warrants	(1,153)
Warrant liability, ending balance	100
Galena February 2017
Class of Warrant or Right, Fair Value [Roll Forward]
Warrant liability, beginning balance	3
Fair value of warrants granted	0
Fair value of warrants canceled	0
Adjustment to exercise price of warrants	0
Change in fair value of warrants	0
Warrant liability, ending balance	$ 3

Warrants to Acquire Shares of Common Stock (Warrants Classified as Equity) (Details)	Dec. 29, 2017 $ / shares shares
Warrants and Rights Note Disclosure [Abstract]
Warrants issued (in shares) \| shares	316,163
Warrant exercise price (in dollars per share) \| $ / shares	$ 7.42
Warrant term	5 years

Stock-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended		6 Months Ended		9 Months Ended
	Jan. 01, 2019	Dec. 29, 2017	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			0		940,000
Weighted average exercise price, granted (in dollars per share)				$ 3.89	$ 1.08	$ 3.73
Averages contractual term					10 years
Expected dividend yield					0.00%		0.00%
Unrecognized compensation cost					$ 1.4
Operating expenses weighted average period					2 years 8 months 2 days
Closing price of the Company's common stock (in dollars per share)			$ 0.11		$ 0.11
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, outstanding, weighted average grant date fair value (in dollars per share)			$ 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)			416,000		416,000
Options expire from date of grant		10 years
Percentage increase in number of shares available for future issuance under stock based awards		4.00%
Number of additional shares authorized (in shares)	1,686,000
2017 Equity Plan \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)		1,686,000
Incentive Plan 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options assumed in merger (in shares)		10,171

Stock-Based Compensation (Assumptions for Option Grants Issued) (Details)	6 Months Ended	9 Months Ended
	Jun. 30, 2019	Sep. 30, 2017
Share-based Payment Arrangement [Abstract]
Risk free interest rate	2.49%	2.73%
Volatility	96.57%	80.83%
Expected lives	6 years 2 months 12 days	6 years 2 months 12 days
Expected dividend yield	0.00%	0.00%