The Most Elaborate Perpetual Pump'n'Dump In Need of Shorting

AI Summary

Author presents a detailed bearish short thesis on SELLAS Life Sciences (SLS), arguing overvaluation, misleading catalysts, unsustainable cash burn and CEO dilution will drive shares lower.

Unpriced research observations (excluded from Calls and Returns):

SLS — SHORT The author argues SLS is a pump-and-dump with a ~$600M market cap that is overvalued relative to a narrow WT-1/AML patient population and modest peak-sales potential. The CEO repeatedly issues ambiguous news and then raises dilutive financing, and the REGAL study delay is statistically ambiguous rather than confirmation of efficacy. Cash burn is unsustainable and further dilution is likely, so the valuation should fall once revenue projections are scrutinized. The author expresses the bearish view by buying puts but notes he is not a biochemist and may be wrong. ambiguous_option_contract

I'm gonna go with the likelihood of bad news as probable... This doesn't mean that the drug won't work, I just am certain that they will have to raise cash no matter what and the valuation once actual funds take a look at the revenue projections won't be as high as the current valuation.

The fact that the Trump Admin is pushing for cheaper drugs, is also pretty negative for any biotech trying to get their life-saving medication out there... This isn't the "age of biotech" (un)fortunately.

Hence I'm buying puts.

Score 152

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One day I decided I needed a market edge and so I took a few 50mg Vyvanse broke them off and snorted them to get a faster kick. I then sat for 10 minutes waiting for a DD miracle but nothing happened...

The problem? Vyvanse is a prodrug and so snorting it won't speed up its effects. You see the Lisdexamphetamine is dextroamphetamine with an attached L-lysine (amino acid) that breaks off in your body using enzymes... thus creating this slow-release mechanism.

I wasn't discouraged and so I took short acting expired Ritalin, crushed it into about 120mg worth of powder and used the same delivery process to give me "the edge".

[The delivery process](https://i.redd.it/guhgylvldyag1.gif)

I instantly got hit with "Writers euphoria", some people say they see colors, all I saw was a pump'n'dump right in front of my eyes reaching the top of its pump. Perfectly timed using behavioral psychology to create strong FOMO to anyone waiting for their next hit of market open.

**If you haven't figured it out yet, I'm talking about SLS.**

I will attack this pump'n'dump scheme from several different views and maybe some of you will join me on this **'short'** trip.

# Buckle up buckeroos, we're gonna start with fundamentals

Currently this shitco is trading at a share price giving it a mkt. cap close to USD 600M. First thing that I ask is who is the customer?

It's a bunch of unlucky people who basically have at most 1-2 years to live with a somewhat uncommon form of cancer: Acute Myleoid Leukemia. If we look at how many people get it globally we're gonna arrive at roughly:

1.5-2.0 persons / 100.000

Now let's look at all cancers (this will be important):

± 200 people / 100.000

**.... HOLY FUCK THE VYVANSE IS KICKING IN.**

( What I didn't realize was that the Vyvanse has still entered my bloodstream and started dislodging the dextroamphetamine into my bloodstream, I have now trasncended into a dopamine and neuroephidephrine fueled state of being.)

\-----  
Why am I mentioning all cancers? Well it's to disrupt the one thing that is being spread through all the pump'n'dump posts: That this is a replacement for **Keytruda** (which was sitting at 25B revenue with 80% gross margins). But here's the first misconception that is being omitted in all the SLS cult posts:

Keytruda is all-purpose, while the shit that SLS is producing **is NOT**. You need to be tested for the presence of WT-1 antigen which is only done for blood disorders/cancers. You may find the presence elsewhere but it says absolutely nothing about it being usable for this (source: I know a few doctors).

This means that while Keytruda might target the 200 people out of 100... SLS drugs will barely target 1% of that.  Why do I say barely? Well because that these drugs are given to specific people... CDK-9 is effective only for people with a certain (less common) mutation and GPS is given (to my understanding) to people in remission.

So let's do simple math (before I make you even more depressed):

USD 25B ---> 1% ---> 250M (let's be optimistic and say that 80% are eligible) --> 200M

But wait it gets better... however right now my heart is pumping, pupils are needle-point sized and I need to lower the adrenaline in my bloodstream by doing the only sensible thing I learnt from Elon Musk... **low doses of ketamine.**

[Unlocking my full potential](https://i.redd.it/apm2dh6tdyag1.gif)

Keytruda gets administered constantly, unlike GPS which is like <20 injections. So that 200M you were looking at? Yea it's probably way lower.

Now that we've got over the "HOLY SHIT THIS THING IS WORTH BILLIONS" let's focus on the flying ponies in front of my eyes warning me about the financials and the CEO's marketing/dilution pattern.

# A Good Modern CEO is always Professional Bullshitter.

If you've ever worked as a Software Engineer you will always notice two flavors of your average SWE.

1. The technical guy who actually knows shit
2. The bullshitter who's liked, but does shit and yaps whole day

The first one if he's career driven will become a good CTO. The second one will become CEO.

This is true for every profession, reality is that CEO needs to be able to sell, especially bullshit, to keep investors happy and to bring them exit liquidity. It's all a zero-sum game. Nobody wins, especially not the poor cancer patients who are used for advertising just like white-monkeys are in China.

The CEO SLS is no different to other CEOs except that this guy is a master bullshitter. How do you become a master bullshitter? Ambiguity. Think of the (1) technical guy, he will always be precise in his formulations, because he knows what he's talking about. the (2) bullshitter will always be ambiguous because he wants to sound smart.

The CEO has a beautiful pattern of selling very ambiguous news, carefully wording them in a way that the SLS cult members (read bagholders and MLM leaders) parrot the "actual" but not-factual message to the masses. Just look up the recent posts on bagholder/p'n'd subreddits for SLS. It's all bullshit purposefully pushed by bots and marketing team.

After the share price jumps high, the CEO cuts a financing deal that basically tanks the price into oblivion, not including the perpetual warrant inducement plan (which alone makes acquisition very unlikely).

The best part? The CEO gets paid heftily even though close to 50% shareholders want to lower his above-standard pay. And there's a good reason he's getting such high cash bonuses - he knows it's all bullshit.

All of this will mean that if this company gets acquired (which is unlikely) it will be sold at a discount and not a premium. Notice the pattern that even after so many dilutions the market drives the price close to $4 a share... with constantly increasing share count it's amplifying the speed at which the company's valuation grows even though they still haven't really presented anything substantial.

# Let's Look at the Recent Catalyst

So what spiked the current share price above $4? Results of the REGAL study were postponed, which was seen negatively and so the CEO wrote a very ambiguous post saying something on the lines of:

"We're still waiting for more deaths so that we can conclude the study." Which is absolutely hilarious. Because it doesn't say anything about SLS specifically, yet people interpret it in a way that it does and that the SLS specific treatment is actually the good one (it may be, but given the pattern I doubt it will be statistically significant)

The study includes both BAT (best available treatment) and the SLS drugs. The deaths they are waiting for might well be the BAT ones, while the SLS patients have already died (grim I know). Their argument: Average BAT life expectancy is 8 months or whatever they're saying.

So why do people think it's "good news" for SLS? Because people think they understand statistics when they actually don't. Heck I studied it, specialized in it as a mathematician... and even I will never dare to say that I fully understand statistics. Reality is that the delay might be negative, neutral or positive.  
**WHY?:**

* Many factors come into patient selection - The study isn't the typical "let's pick 130 people at day 1 and start our tests" they come in different cohorts/groups
* You have high odds of selecting the "good group" that could even survive 5 years with bad treatment (this can be 10-15%)
* All the bull posts you see focus on using the average as proof that this study is going on longer than it should (which is a very misleading statistic, and using it like this is pure bullshit for gullible people)... Average needs to be understood in a way that you will have people who died after 3 months and people who lived those 5 years -> and that will average out, so just looking at number of occurred deaths is not enough to know if there is a statistical significance. Saying that the study is going longer than expected is absolute bullshit, because if you have the healthier group by accident they will survive longer, but it will also be reflected in the final statistical analysis.
* A small sample size like this is prone to distortions, follow up studies will be needed to know if this really works or not, which btw will definitely lead to more cash burn.

**But most importantly:**

* BAT for AML has significantly improved... and by significantly I mean really significantly. The 8 month figure is somewhat outdated by now as it might be closer to 10-12 months. Increasing the actual statistical significance needed to be observed with GPS.

# Unsustainable Cash Burn and More to Come

The cash burn of this company is insane and even if they succeed with their tests they will face even higher cash burn due to the necessary shit they need to do to get this drug approved and into production. Given their current free cash, it's more than likely that they will need to raise more money.

# So Why Are You Bearish?

Well I like to think of it in terms of probability / uncertainty, specifically conditional probability. (Let's denote P(event | A ) as Probability of Event conditioned by A happening) Asks yourself this, which probability is higher?:

(1) P( Good News | CEO Bullshitted every single time AND Cash Burn bad )  
(2) P( Bad News | CEO Bullshitted every single time AND Cash Burn bad )

Which is more likely to be true? (1) > (2) or (1) < (2)?

I'm gonna go with the likelihood of bad news as probable... This doesn't mean that the drug won't work, I just am certain that they will have to raise cash no matter what and the valuation once actual funds take a look at the revenue projections won't be as high as the current valuation.

The fact that the Trump Admin is pushing for cheaper drugs, is also pretty negative for any biotech trying to get their life-saving medication out there... This isn't the "age of biotech" (un)fortunately.

Hence I'm buying puts.

**NOTE:** I'm not a biochemist, I might be wrong and I'm betting only money that I'm willing to lose, so don't follow blindly, do your own DD. Also brace for this post being downvoted by the SLS gang and Indian bots. One last thing... a big middle finger fuck you to anyone who is trying to profit by using dying people as advertisement.

https://preview.redd.it/xul15buwdyag1.png?width=892&format=png&auto=webp&s=292f3986d4e479518690dcee02953c68b4212c9d

**My position is small, because I'm locked down in other trades, sharing mostly because I like to do equity research:**

https://preview.redd.it/86f0tiv8eyag1.jpg?width=549&format=pjpg&auto=webp&s=971f62f43ea2409f69d90f4b226e6efcc0e59418

EDIT: To the existing and new bots out there, the SLS cult and other believers, yes I will double down if the stock price goes up:) Answering here since I received "very nice" DM requests.

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