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Seelos Therapeutics (NASDAQ:SEEL) is gearing up to report results from two studies before the end of 2023. The first catalyst deals with the release of results from part 2 of a phase 2 registration directed study, which is using SLS-002 for the treatment of patients with Acute Suicidal ideation and behavior [ASIB] in Major Depressive Disorder [MDD]. The MDD market is huge and with successful data here, I believe it could really boost the value of this company. Results from this registration-directed study are expected to be released in Q3 of 2023. Besides this catalyst, there is another one for investors to look forward to. This would be with respect to the release of results from a phase II/III study using SLS-005 for the treatment of patients with amyotrophic lateral sclerosis [ALS]. This is also a registration-study and results from it are expected to be released from it by Q4 of 2023. This is another billion dollar plus market opportunity for it as well. With a few catalysts expected before the end of 2023 in large market indications, plus a pipeline full other preclinical programs, these are the reasons why I believe that investors might have a chance to benefit from any potential gains.
SLS-002 For ASIB In Patients With Major Depressive Disorder
As I stated above, Seelos Therapeutics is working on advancing its clinical candidate SLS-002 for acute suicidal ideation and behavior for patients with major depressive disorder. For starters, the Major Depressive Disorder [MDD] market is huge. The major depressive disorder treatment market is expected to reach $14.96 billion by 2032. This a huge market opportunity for sure, but consider that SLS-002 is specifically being developed to prevent suicide in MDD patients. Even if only zeroing in on those with suicidal ideation, it will still be a large market opportunity for this company. Why is that? Well, consider that about 58% of MDD patients have suicidal ideation. Not only that, but consider that in 2021 there were about 48,183 suicides in the United States. Despite this major issue, there is a lack of an FDA approved therapeutic to treat these suicidal patients. Therefore, as you can see, SLS-002 could end up helping a lot of patients should it successfully make it through its study along with regulatory approval.
The importance of this study is huge, because it is a registration directed-trial. This means, should Seelos Therapeutics achieve the primary endpoint for this study, then it could possibly be allowed to file for regulatory approval of SLS-002 for Acute Suicidal ideation and behavior [ASIB] for Major Depressive Disorder [MDD]. This phase 2 study is a 2-part type, whereby the first part “Part 1” was set as the open-label portion. Then, part 2 was established to be the randomized, double-blind, placebo-controlled, multicenter portion. Part 1 of the study, the open-label portion, had data reported back on May 17, 2021. It was noted that patients given SLS-002 had achieved a 76.5% response rate with respect to the primary endpoint of MADRS 24-hours after the first dose. In addition, there was a mean reduction in total score from 39.4 to 14.5 points.
This is good news, in that Part 2 has also been established to evaluate the same primary endpoint. However, there are two major things to be aware of that could change the final outcome for this portion of this study. The first item to note is that the positive data obtained from Part 1 was done so with only 17 patients. Whereas, Part 2 is going to have 236+ patients. Secondly, in Part 1 of the study SLS-002 was the only drug given to patients and was being compared to no other treatment option. In Part 2 of this study, SLS-002 + standard of care [SOC] is going to be compared against placebo + SOC. Thus, this time around the drug along with SOC will have to achieve the primary endpoint of MADRS Total Score at 24 hours post first dose compared to placebo + SOC. Thus, what is being evaluated is going to be from Baseline [Day 1, predose] to 24 hours post first dose [Day 2]. In order to understand this endpoint, it is important to understand what MADRS is. MADRS stands for Montgomery-Asberg Depression Rating Scale and it is a clinician-rated scale that is to be used in patients with MDD. It measures depression severity and detects changes due to antidepressant treatments. Such items that are evaluated are as follows:
- Sadness
- Reported Sadness
- Sleep
- Inner tension
- Suicidal thoughts
- Concentration
- Appetite
- Lassitude
- Interest Level
- Pessimistic
As such, this score looks at all of the 10 items I just listed directly above. However, each one of the 10 items are placed with a score from “0” [not present or normal] to 6 [severe or continuous presence of symptoms]. The total possible score can be anywhere between “0” to “60”. The higher the score a patient gets, the worse off they are. SLS-002 was able to reduce the average score from 39.4 points to 14.5 points in the open-label portion. This is not bad at all, but it remains to be seen what happens when it is compared to placebo + standard of care in Part 2 of this phase 2 study. Investors won’t have to wait long to see such a comparison. That’s because Seelos announced on June 22, 2023 that it closed registration to this study. As such, there is a major catalyst opportunity for investors to look forward to in the coming months. It is expected that final results from Part 2 of this phase 2 registration directed study are going to be released by Q3 of 2023. Hopefully the data is good, because if it is, then I believe the value of this company will greatly increase. Not only because of a positive outcome, if achieved, but the fact that there are no FDA approved treatments for ASIB in MDD.
Financials
According to the 10-Q SEC Filing, Seelos Therapeutics had cash and cash equivalents of $14.1 million as of March 31, 2023. This, compared to the prior quarter ending December 31, 2022 whereby it had $15.5 million of cash. The reason for the cash position is because of a registered direct offering of common stock and warrants to purchase common stock. It was said that it was to generate gross proceeds of $11.24 million from this offering, before deducting fees and expenses. This cash raising activity was done on March 10, 2023 and is a huge reason for the current cash on hand. Despite this offering, the company is low on cash and it will need to enact another cash raise in the coming months. There are four options it could take with respect to raising additional funds.
The first is to raise cash through its Open Market Sale Agreement made with Jefferies LLC on May 12, 2022. This where Seelos could offer and sell up to an aggregate offering price of up to $50 million. A second option would be to use the approximately $67.2 million available under the Registration Statement [inclusive of the $49.5 million that remained allocated to sales of shares its common stock pursuant to the Sale Agreement as of such date]. A third option would be to raise cash through another financial tool before any clinical results are released. A fourth option would be to raise cash upon successful results to be released from either the ASIB in MDD or ALS study. Results from each of these studies are expected to be released in Q3 and Q4 of 2023 respectively. That’s because if positive data is obtained in either of these indications, then the company won’t hesitate to enact a cash raise immediately.
Risks To Business
There are several risks that investors should be aware of before investing in Seelos Therapeutics. The first risk to consider would be with respect to Part of the ongoing phase 2 registration-directed study, which is using SLS-002 for the treatment of patients with ASIB in MDD. That’s because while preliminary data released from Part 1 of this study was positive with respect to the MADRS score, there is no guarantee that a similar outcome will be obtained in Part 2. Especially since there were only 17 patients recruited for Part 1 and SLS-002 was not being compared to placebo + standard of care either. Thus, there is no assurance that the primary endpoint of MADRS will be met in Part 2 of this study. The second risk to consider is with respect to the ongoing phase 2/3 pivotal study, which is using SLS-005 for the treatment of patients with amyotrophic lateral sclerosis [ALS].
That’s because this biotech expects to release results from this late-stage study in Q4 of 2023 and there is no guarantee that the final primary endpoint will be achieved here either. The final risk to consider would be with respect to the financial position that this biotech is in. It doesn’t have a lot of cash on hand, as such, there is a major risk of additional dilution. I laid out some options/paths that it could take to raise some cash in the coming weeks/months if it needs to take such routes. It’s hard to predict if management will raise cash now or wait until after the release of results from the two studies I highlighted above. However, it is good that it at least has additional options to play around with.
Conclusion
Seelos Therapeutics has several programs being advanced, such as the use of SLS-002 for the treatment of patients with ASIB for MDD. It is expecting to release results from Part 2 of the registration directed phase 2 study using this drug for the treatment of this patient population by Q3 of 2023. Success for this indication would be huge for the reason I stated above, which is that there are no FDA approved drugs to treat ASIB for MDD. Not only that, but the Major Depressive Disorder treatment market is expected to reach $14.96 billion by 2032. Even if only accounting for 58% of this total patient population, then that is still a good market opportunity for it to go after.
The advancement of SLS-005 for the treatment of patients with ALS isn’t that bad either. That’s because it is expected that the Amyotrophic Lateral Sclerosis market is expected to grow to $1.13 billion by 2030. The use of SLS-005 is being used to treat these ALS patients in the ongoing phase II/III study. It is expected that results from this trial are going to be released in Q4 of 2023. Plus, there are many other programs in preclinical development such as SLS-004 as a gene therapy for the treatment of patients with Parkinson’s Disease [PD] and SLS-009 for the treatment of patients with Huntington’s Disease, Alzheimer’s Disease and ALS. With a few catalysts expected before the end of 2023 in large market opportunities, plus a pipeline full other preclinical programs, these are the reasons why I believe that investors might have a chance to benefit from any potential gains.
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