Struggling Seelos raises $1.1M after string of clinical setbacks

Seelos Therapeutics Inc. (Nasdaq: SEEL) has raised approximately $1.1 million through a combined registered direct offering and private placement, according to a news release Thursday.

The New York-based biotech, which is focused on developing treatments for central nervous system disorders and rare diseases, sold 380,968 shares of common stock at $2.46 per share to institutional investors through the direct offering. It also issued pre-funded warrants for the purchase of up to 81,239 additional shares.

Seelos said it expects around $1.1 million in gross proceeds from the registered direct portion before fees and expenses. Concurrently, it agreed to issue unregistered warrants to the same investors for the private placement purchase of up to 924,414 shares at $2.21 per share.

The transactions, undertaken with Roth Capital Partners acting as the placement agent, are anticipated to close around May 21, subject to customary conditions.

For Seelos, the $1.1 million cash infusion provides a modest financial lifeline as the company looks to pivot following a string of clinical trial disappointments over the past year.

In March, Seelos reported that its drug candidate SLS-005 failed a study evaluating its potential to treat amyotrophic lateral sclerosis (ALS), causing the company’s shares to plunge from around 93 cents to 37 cents on the day before partially recovering.

Seelos had been hopeful the low molecular weight disaccharide drug could help slow the progression of the incurable neurodegenerative disease, which impacts motor neurons and results in progressive muscle wasting and paralysis. However, the study missed its primary and secondary endpoints, despite some potential efficacy signals in a subgroup analysis.

The ALS trial failure came on the heels of another setback last September, when Seelos’ investigational ketamine nasal spray therapy SLS-002 aimed at treating acute suicidal ideation in depression patients failed to achieve its primary endpoint in a Phase 2 study.

Citing financial constraints that prevented the company from reaching its planned enrollment target, analysts at Cantor Fitzgerald subsequently downgraded Seelos stock over doubts about its ability to effectively conduct and complete future clinical trials.

Despite the high-profile study failures, Seelos has pushed forward with SLS-002’s development path. That following November, it announced the drug’s inclusion in a Department of Defense-funded adaptive platform trial evaluating potential treatments for post-traumatic stress disorder in military personnel.

Seelos said at the time that the larger DoD study, if successful, could potentially support pursuing regulatory approval for SLS-002 to treat PTSD based on its data — positioning the drug as a potential path to profits if it can prove effective across a bigger trial population than Seelos’ prior studies.

With its latest $1.1 million raise, the company said it intends to use the net proceeds for general corporate purposes, funding development of its pipeline candidates like SLS-002, and servicing its outstanding convertible debt obligations.