After Seelos Therapeutics’ amyotrophic lateral sclerosis (ALS) candidate failed a phase 2/3 study, the biotech has filed for bankruptcy.
The New York-based company’s chapter 11 bankruptcy was voluntarily filed Nov. 15, according to Nov. 22 Securities and Exchange Commission (SEC) documents. Seelos will continue to operate under the jurisdiction of the bankruptcy court and has 120 days to come up with a reorganization plan.
The bankruptcy filing triggered a change in the biotech’s stocks as well. On Nov. 19, Seelos’ shares were moved from the OTC Market Group’s OTCQB market to the OTC Pink Market—or the “pink sheets”—the lowest tier of three for over-the-counter stocks.
Seelos plans to file a Form 15 with the SEC, which would effectively delist the company and suspend public reporting obligations.
Since market close yesterday, the biotech’s stock is down 31%, resting at 37 cents per share as of 10:30 a.m. ET.
When considering the biotech’s recent history, the bankruptcy comes as no surprise. Seelos’ SEC-mandated 10-Q filing was delayed due to preparations and resources needed for the bankruptcy filing, including “staffing issues,” according to SEC documents.
Before that, the company’s annual stockholders’ meeting was postponed twice, with Seelos citing "an anticipated lack of quorum"—meaning the expected number of stockholders present wouldn’t meet the required minimum—and to “provide further time to solicit proxies from the company’s stockholders,” according to an Oct. 24 release.
In September, Seelos implemented a reverse stock split, decreasing the number of common stock shares from 50,000,000 to 3,125,000.
The biotech also inked a material transfer agreement with the U.S. Army Medical Materiel Development Activity for its lead asset, SLS-002, an intranasal form of ketamine, to test the candidate in post-traumatic stress disorder (PTSD). The phase 2 trial is funded by the U.S. Department of Defense and is expected to start before the end of the year.
All this follows the company’s phase 2/3 readout for its ALS treatment SLS-005, an IV-delivered sugar that failed to show a significant improvement in slowing disease severity compared to placebo. The treatment was also unable to spur a statistically significant improvement in patients’ physical function or mortality rates.
Seelos had prioritized ALS as the primary use of SLS-005, pausing enrollment in a mid-stage trial for patients with spinocerebellar ataxia type 3 due to financial reasons.
Fierce Biotech has reached out to Seelos for comment and will update this article as more information becomes available.