Earnings Call Transcript
Lantern Pharma Inc. (LTRN)
Earnings Call Transcript - LTRN Q3 2023
Operator, Operator
Good afternoon, and welcome to our Third Quarter 2023 Earnings Call. As a reminder, this call is being recorded and all attendees are in a listen-only mode. We will open the call for questions and answers after our management’s presentation. A webcast replay of today’s conference call will be available on our website at lanternpharma.com shortly after the call. We issued a press release after market close today summarizing our financial results and progress across the company for the third quarter ended September 30, 2023. A copy of this release is available through our website at lanternpharma.com where you will also find a link to the slides management will be referencing on today’s call. We would like to remind everyone that remarks about future expectations, performance, estimates and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Lantern Pharma cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those anticipated. A number of factors could cause actual results to differ materially from those indicated by forward-looking statements, including results of clinical trials and the impact of competition. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in our annual report on Form 10-K for the year ended December 31, 2022, which is on file with the SEC and available on our website. Forward-looking statements made on this conference call are as of today, November 8, 2023, and Lantern Pharma does not intend to update any of these forward-looking statements to reflect events from circumstances that occur after today, unless required by law. The webcast replay of the conference call and webinar will be available on Lantern’s website. On today’s webcast, we have Lantern Pharma’s CEO, Panna Sharma; and CFO, David Margrave. Panna will start things off with an overview of Lantern’s strategy and business model and highlight recent achievements in our operations, after which David will discuss our financial results. This will be followed by some concluding comments from Panna, and then we’ll open the call for Q&A. I’d now like to turn the call over to Panna Sharma, President and CEO of Lantern Pharma. Panna, please go ahead.
Panna Sharma, CEO
Thank you. Hello, everyone, and thank you for joining us this afternoon to hear about our third quarter results and corporate progress. We made significant strides over this past quarter in executing our mission of transforming the oncology drug discovery and development process, especially now that we have all of our clinical stage drug candidates in human clinical trials that are active, two that are in Phase 1 now and one that is in Phase II. We also continue to make significant progress in the launch of our CNS and brain cancer focused subsidiary, Starlight Therapeutics, and in developing the next major leg of our discovery and development efforts, which will be focused on drug conjugates, including antibody drug conjugates. Our team and many clinicians are particularly excited about the interesting first-in-human drug candidates, LP-184 and LP-284. Both of these candidates share a mechanism called synthetic lethality. During Q2, I was able to share the news that we launched LP-184 into a Phase I clinical trial for recurrent advanced solid tumors, especially those that are refractory to current standard of care therapies. This area is one of critical need. During Q3, we launched the sister drug candidate, LP-284, into a clinical trial for recurrent non-Hodgkin’s lymphomas and also sarcomas. We also dosed the initial patient for LP-184 this quarter. Additionally, we continue to enhance and develop our AI platform, RADR. Our AI platform is revolutionizing the way we model, predict and understand drug-cancer interactions, enabling us to advance our newly developed drug programs from initial insights to first-in-human clinical trials in an average of less than 2.5 years, and at a cost of under $2 million per program. This is a milestone unheard of in the realm of oncology drug discovery. Computational and AI-driven approaches are increasing their presence and usage at both large and emerging pharma companies for all facets of drug discovery and development. Our leadership in the innovative use of AI-driven machine learning to transform costs and timelines in the development of precision oncology therapies should yield significant returns for investors and patients as our industry matures and adopts an AI-centric approach to drug development. The golden age of AI medicine is just beginning, and it is being powered by large-scale, highly available computing, massive data storage and additionally driven by health care and patient data and cancer data, which is more widely available and at increasing levels of quality. Companies that can harness these capabilities in the biotech and tech bio industry and make them core to their business will be long-term leaders that create massive value for patients, for investors and for our industry. We believe Lantern Pharma is among the leaders in this transformation of the pace, risk, and cost of the development of cancer medicines. This transformation holds the promise not only to make oncology medicines faster, cheaper and with increased precision for patients and also for orphan and ultra-orphan groups, but also to help change the direction of R&D productivity and output in the pharma industry. In the past two years, we have successfully developed and launched 11 additional programs, a testament to the agility, efficiency and groundbreaking nature of our approach. As compared to many other companies leveraging AI, our productivity and efficiency on a per-dollar basis is unparalleled. On average, these programs are advancing from initial AI insights to first human clinical trials at an unheard cost and timeline. In fact, in a recent study published in drug discovery today, it was reported that nearly half of the largest pharma companies had negative R&D productivity for the past 20 years. These startling figures serve as a stark reminder that the traditional model of big pharma R&D is not sustainable, not effective, and is not the right approach to improve drug pricing or drug availability. With escalating economic and political pressures over drug pricing and the nature of drugs, it’s clear that our industry needs to fundamentally rethink its approach, and we believe large pharma companies will increase the adoption of AI and computational approaches to elevate above this issue. These specific instances of value creation at Lantern, specifically in CNS and neuro-oncology, have allowed us to develop an entirely new company, Starlight Therapeutics, and we’ll be providing more data later this year and early next year. We believe that company will set a new standard in cancer drug development in a category that hasn’t seen a new drug candidate as monotherapy in almost 17 years. As we continue to accelerate the pace at which we’re developing and validating insights, insights that can lead to meaningful drug assets, we are then positioning these drug assets after clinical trials to partner them out with larger biopharma companies. At the same time, as David will cover shortly, we have a strong ongoing cash position, approximately $45 million in cash and cash equivalents that is being carefully utilized to make meaningful progress on both our platform and our drug candidates into human clinical trials. We believe our approach is the future of developing cancer therapies where data can be used to accelerate programs, derisk the identification and progress of life-changing medicines, and provide insights into which patients are most suitable for a trial. Now turning to some of the specific highlights during the third quarter. We received FDA clearance of our IND application for LP-284, a first-in-human clinical trial for refractory non-Hodgkin’s lymphomas and sarcomas. We also dosed the first patient in our LP-184 trial, which is for multiple advanced solid tumors. We have also expanded the number of sites in the U.S. for our LP-300 non-small cell lung cancer trial for never smokers. We’ve also started the process of expansion into East Asian countries where the demographic for this patient population is twice that of the U.S.; about 30% to 35% of non-small cell lung cancer patients are never smokers. We also developed an initial proof of concept and preclinical evidence for our novel cryptophycin-based antibody drug conjugate. We plan to share broader data from the initial exciting efficacy and scientific benchmarks achieved with that drug candidate in January 2024. We continue to advance RADR, our AI platform across several dimensions, including automation, data sets, and an increasing number of modules specifically designed for oncology drug development. Very importantly, we have continued ongoing fiscal discipline as clearly evidenced by our burn rate and our balance of approximately $45 million in cash, cash equivalents, and marketable securities at the end of the third quarter. We believe this provides us with sufficient cash runway well into Q3 of 2025 or beyond, as David will discuss in our call in a few minutes. So at this point, with the highlights behind us, I’ll come back and talk in more details, but I’ll turn the call over now to our CFO, David Margrave, who will provide an overview of the second quarter financial results. David?
David Margrave, CFO
Thank you, Panna, and good afternoon, everyone. I will now share some financial highlights from our third quarter ended September 30, 2023. Our general and administrative expenses were approximately $1.3 million for the third quarter of 2023, down slightly from approximately $1.4 million in the prior year period. R&D expenses were approximately $2.2 million for the third quarter of 2023, up from approximately $0.7 million for the third quarter of 2022. A substantial portion of the R&D increase in 2023 relative to 2022 is related to a $935,000 payment received from a service provider in July 2022 to resolve the difference of views in the service provider agreement, which reduced our research and development expenses during the third quarter of 2022. The increase in Q3 2023 was also attributable to increases in product candidate manufacturing expenses, increases in research studies, and increases in payroll and compensation expenses. We recorded a net loss of approximately $3.2 million for the third quarter of 2023 or $0.29 per share compared to a net loss of approximately $2.3 million or $0.21 per share for the third quarter of 2022. Our loss from operations in the third quarter of 2023 was partially offset by interest income and other income net, totaling approximately $362,000. Our interest income and other income net increased by an aggregate of approximately $482,000 for the third quarter of 2023 compared to the third quarter of 2022. This increase was attributable to an increase in interest of approximately $194,000; increases in dividend income of approximately $152,000; and an increase in unrealized gains on investments of approximately $102,000. As of September 30, 2023, we had approximately 10.87 million shares of common stock outstanding, outstanding warrants to purchase approximately 177,998 shares, and outstanding options to purchase approximately 1.1 million shares. These warrants and options, combined with our outstanding shares of common stock, give us a total fully diluted shares outstanding of approximately 12.1 million shares as of September 30, 2023. Our cash position, which includes cash equivalents and marketable securities, was approximately $44.9 million as of September 30, 2023. We anticipate this balance will provide us with a cash runway into at least Q3 of 2025. Importantly, we believe our solid financial position will fuel continued growth and evolution of our RADR AI platform, accelerate the development of our portfolio of targeted oncology drug candidates, and allow us to introduce additional targeted programs and collaboration opportunities in a capital-efficient manner. Our team continues to be very productive under a hybrid operating model. This hybrid model also removes geographic restrictions to our hiring initiatives, which has given us the ability to recruit extremely high-caliber team members that otherwise might not be available. We currently have 21 employees focused primarily on leading and advancing our research and drug development efforts. We see this number expanding slightly in coming quarters as we add additional experienced and talented individuals to help advance our mission. I’ll now turn the call back over to Panna for an update on some of our development programs. Panna?
Panna Sharma, CEO
Thank you, David. This past quarter, we launched another first-in-human Phase I program with LP-284, a novel synthetically lethal small-molecule in refractory non-Hodgkin’s lymphomas and sarcomas where there is a significant patient need for improved therapies. As I mentioned on our second-quarter call, we had planned to launch this trial here in Q4, and that’s our current, we’re on track to do that. So we’ve launched both 184 and 284, one quarter after another, which is what we had discussed earlier this year. Now 284 can work effectively both as monotherapy or in combination with other standard of care agents. But finding needs are critically important in cancer and can oftentimes take months or years of lab work. However, computational approaches are increasingly able to predict meaningful and clinically relevant combination regimens for cancer. Our team continues to increase the value of our platform in this regard, which helps us sharpen the focus of our existing clinical drug candidates to very specific populations. With 284, we were able to understand that advanced non-Hodgkin’s lymphoma cancer subtypes with DNA damage response deficiencies, notably those with compromised functioning of the ATM gene, have tremendous sensitivity to our drug agent. In the U.S. and Europe, mantle cell, double hit and other high-grade B cell lymphomas are diagnosed in about 16,000 to 20,000 patients each year and have an estimated annual market potential of $3 billion to $4 billion. We also observed that LP-284 showed synergistic and significantly enhanced anticancer activity when used in combination with rituximab in PDX models of high-grade B cell lymphomas. In-in vivo PDX models, the synergy of rituximab with our drug LP-284 was 63% more effective in destroying high-grade B cell lymphomas than rituximab alone. When we combined 284 with rituximab, we had 93% tumor growth inhibition compared to only 57% with rituximab alone. As many of you probably know, rituximab is a standard of care approved therapy in a wide range of B cell cancers and non-Hodgkin’s lymphomas. We plan to release additional details on this data in the coming month. Nearly all mantle-cell DHL and high-grade cell lymphoma patients relapse from the current standard of care agent, and we believe there is an urgent and unmet need to introduce this drug either as monotherapy or in combination in the relapsed and refractory setting for this patient group. Moving on to 184, we discussed that we dosed the first patient in the Phase IA clinical trial. It was the first in-human Phase I basket trial across multiple solid tumor indications. We think the market potential for this drug is quite significant since 20% to 25% of solid tumors have DNA damage repair deficiency, and the majority of them become refractory to existing standard of care therapies. This trial is anticipated to enroll patients with relapsed refractory advanced solid tumors, such as pancreatic, GBM, triple-negative breast cancer, lung, and multiple other solid tumors, including GBM and brain cancers. Lantern expects to continue Phase I enrollment throughout the remainder of this year with additional sites and patients and potentially finish the first few cohorts of patients, with a number of major centers like Fox Chase and Johns Hopkins Medicine and USC also joining the trial. The dosage and safety data obtained in this trial will be used to advance the central nervous system trials for a future Phase II to be sponsored by Lantern’s wholly owned subsidiary, Starlight Therapeutics. Globally, the aggregate annual market potential of LP-184 target indications so far is in excess of $11 billion, consisting of about $4.5 to $5.5 billion for CNS cancers and well over $6 billion for solid tumors. As you can see, we’re very excited about this drug as a potential blockbuster across multiple tumors. As we mentioned, our drug LP-300 in a previous multicenter Phase III clinical trial, a subset of never-smokers and non-small cell lung cancer patients who received that drug with chemotherapy showed an increased overall survival of 91% and an increase in two-year survival of 125%, respectively. This was compared to patients who only received the chemo doublet alone. Now, we are currently doing that in a 90-patient Phase 2 trial, and we continue to expand into multiple sites. Dr. Joseph Treat, who has been appointed the lead principal investigator of the Harmonic study, is a leading expert in lung malignancies, including non-small cell lung cancer and never-smokers. Additionally, he has specific experience with many Asian collaborators where this population is significantly higher. So we’re advancing the Harmonic trial into Asia, specifically Taiwan, Japan, and South Korea, where there’s a higher incidence of never-smokers in non-small cell lung cancer, roughly double that of patients in the U.S., 32% to 35% plus. These instances are largely driven by pointed and subtle mutations in EGFR or other kinases. As I mentioned earlier in our call, we’ll be sharing our preliminary work in the ADC category. This work has been accomplished in the last six months at an impressive pace, but also at a reasonable cost, largely driven by insights from our AI platform and through fruitful collaborations with our partners in Germany. We’ve had very good results with our initial ADC designs and believe the cryptophycin-linked conjugate has picomolar IC50 values across multiple cancers. We've focused on five or six indications. Again, we’ll be discussing more details about this program and how it will expand. An update for investors and analysts is planned for January 2024. This past quarter, we had two major presentations. Presentations like this are significant because they help highlight why we’re excited about the molecules and how we’re derisking them, also generating interest among the pharma community. So for 284, we presented at SOHO 2023, discussing the drug’s tremendous efficacy in B cell cancers, particularly non-Hodgkin’s lymphomas that feature homologous repair deficiency. This allows us to zero in after the Phase I trial on HRD-focused B cell cancers. For 184, we presented at a joint ASCO-SNO conference, demonstrating how the molecule is activated in certain high-expressing PTGR-brain cancers, effectively inhibiting or killing cancer cells. Subsequently, we will present at the Society of Neuro-Oncology on November 17, where our collaborator, Dr. John Laterra, will demonstrate how our drug candidate performs in GBMs, independent of MGMT status. On December 1, we’ll be presenting at the Bengaluru Tech Summit in India about our AI platform and its future in Pharma 4.0. Lastly, on December 5, in Boston at the CNS Drug Delivery Summit, we will cover how we’re leveraging our AI to expedite the development of drug candidates for CNS and brain cancers, specifically discussing how our algorithms can predict blood-brain barrier permeability of any compound with 92% to 95% accuracy. Moving on to RADR, we continue to advance the platform in terms of size, scope, and capabilities, believing it is progressing towards becoming a standard for AI-driven drug development in oncology, suitable for both early-stage development and later-stage patient biomarker stratification and combination therapy identification. RADR has now surpassed 36 billion oncology-focused data points, and we project it will reach over $50 billion by the end of this year. The scope of RADR’s data has broadened its strategic focus on additional classes of compounds, including antibodies, checkpoint inhibitors, and DNA damaging agents, alongside additional data from clinical studies such as liquid biopsy and combination studies. The importance of these data points and the advancements in automation will enhance RADR’s drug development capabilities. The key modules currently being advanced aim to predict patient response and identify optimal combination regimens for immuno-oncology drugs, such as immune checkpoint inhibitors which boast about $30 billion in sales. We are also advancing our ADC module for generating templates for the next generation of ADCs. More data and potential publications on this module are expected by the end of the year and across the next several quarters. These three modules exemplify RADR's significant progress, which we believe could serve as a hallmark for many companies in oncology drug development. Additionally, a primary focus during the second half of 2023 has been to further accelerate enrollment in the Harmonic trial and enhance our position within the patient advocacy community to improve awareness and enrollment in trials for LP-300, LP-184, and LP-284. We’ve engaged with several groups from GBM awareness and lung cancer advocacy, generating interest in our trials, creating an enthusiastic groundswell for participation. We have an upcoming ATRT rally where our Head of Clinical Development will speak about an ultra-rare brain cancer, ATRT. This pediatric indication will be pursued through Starlight, where our molecule shows tremendous efficacy in preclinical models, discovered through insights from our AI platform, validated in the lab, and now poised for rare pediatric disease designation. Thus, 2023 is shaping up to be pivotal as our insights move towards patients, marking the start of their journey to meaningful therapies in cancer. The collective efforts of our dedicated teams are fostering a shift for our company, setting us on an exciting trajectory toward a future in which we improve the lives of cancer patients with effective and affordable targeted treatment options. In closing, I want to express my deep gratitude to our team, our partners, and our stakeholders for their unwavering support. Together, we’re lighting the way toward a brighter future in oncology, solving real-world problems with our proprietary AI platform that enables the rapid development of genomically targeted therapeutics. These developments will transform the cost and timelines in drug discovery, positioning us at the forefront of a new era in cancer therapy and medicine. I’d now like to open the call to some questions or clarifications, and I’ll take questions from our audience now. Yes, we’ve got a couple of questions already lined up, which is great. We’ll go first to a question from John. This question I’ll repeat: As you move past the Phase I trial for LP-184, do you anticipate refining the indication? What will guide efforts to narrow it down? Well, that’s a great question. We will be taking liquid biopsies from patients in Phase I and obviously some other PK/PD data as well, and we think that will help us refine it. Since it is a basket trial, we expect there to be a range of responses, and that will help us guide us further. Is there a new higher level of PTGR1 or a bigger genomic signature for homologous repair deficiency or nucleotide excision deficiency, meaning a better response? Are we getting a muted response in certain cancers versus a higher response in others? We will have the Phase I data, and since it’s a basket design, we allow all solid tumors that are refractory, so we’ll be obviously doing a lot of biomarker work on the FFPE slides and also on liquid biopsy. So yes, this will be a very data-heavy process, even in Phase I. The second question asked is if we could provide guidance regarding when we expect to secure initial data from Harmonic Phase I studies for LP-184 and LP-284? For clarification, Harmonic isn’t Phase II. We expect to have perhaps some initial data in the first half of next year. However, we expect that once we reach 27 events, which we hope to reach by the end of next year, then we’ll be able to provide some good data. Now, of course, it could happen a lot sooner. We could have one or two readouts for Harmonic next year. For the Phase I, LP-184, I expect that to be definitely in the first half of the year. As I mentioned earlier, LP-284 is about a quarter behind that. So I expect data in Q1, Q2, and throughout the year, definitely in Q2, Q3, and Q4. Another question, regarding the ADC program: We will be refining some of the indications and will share data in January. We expect that IND application to be in early 2024 or possibly in early 2025; it really depends on how quickly we can manufacture and gain clarity on GMP-level production. That’s going to be the key driver. We believe we have a super potent molecule and that there is no other design like it with cryptophycin. It’s novel and can extend to many cancers. For us, the challenge will come down to manufacturing. We’re exploring aspects that may significantly shorten the manufacturing time for the ADC, including synthetic nanobodies that can take on the form and function of an antibody but are easier and cheaper to manufacture. This could be one of the first synthetic fragment nanobody drug conjugates. Good question. So for another, regarding 184 and 284: On 184 and 284, could you please discuss the timing of potential readouts? Yes. Since 184 just started this past quarter, we have that designed in what’s called cohorts of three, meaning you have three patients that you dose in the first level. If we see everything green light, we can move to the second cohort, which also has three. We can proceed with these cohorts until we reach the maximum tolerated dose, which we expect to see sometime during Q1 and early Q2. We’ll obviously be sharing that. The same with LP-284; it’s a quarter behind that. The cohort design for the first two cohorts in 284 is a bit different since they are designed as cohorts of one. So we’ll be able to get to the first two cohorts fairly quickly and then take cohort three with just three patients. Again, in both, I think they’re a quarter behind one another, with 284 possibly speeding up as we plan outbound activity with the lymphoma community; that could help us. These are fairly focused trials, and we expect signals over Q2 and Q3. If not earlier, we’ll be starting the partnering discussions as well. I have a few more questions via email that we’ll tackle. One is about Starlight: Yes, our goal for Starlight was to pursue data and explore where LP-184 could be most effective through our AI platform. We initially thought that other solid tumors would be more sensitive, but then the data showed otherwise. Once we got the signals for GBM, we discovered numerous other brain cancers too. We normalized our findings quickly, finding very good results and even more sensitivity than we anticipated. This led us to realize the market opportunity across various neuro-oncology fields. We believe that Starlight could be one of the first new codes spun out directly as a result of AI-driven drug development. The potential of moving forward with this requires an independent management team focused on CNS trials, enabling exceptional progress. We’re excited about it and look forward to raising funds in Q1 and Q2 of next year while initiating the Phase 2 trial for multiple indications in GBM and potentially brain mets.
David Margrave, CFO
Sure, we have an aggregate of over 95 granted patents and pending patent applications. We have a strong patent position in each of our lead product candidate areas for LP-300. We have claims extending into at least 2032 for LP-184, claims extending into at least 2041, and for 284, we have claims extending into at least 2039. One interesting aspect we’ve seen with our RADR platform is that it serves as a generator of new insights that can also be used to expand our IP position. We expect to continue this trend, and as you saw, we described our filing activities in Q3. We will actively file and further build our IP position in the coming quarters as well.
Panna Sharma, CEO
Thanks, David. Another question we have from Sean. His question is, what are your expectations around the pace of RADR data accumulation in 2024 as you look beyond the 50 billion data points anticipated by the end of 2023? That’s a great question. It’s very exciting. We plan to provide specific updates in January or early February regarding our RADR platform. We anticipate surpassing $50 billion in data points in the next month or two easily. We are developing internal goals, suggesting a three- to fourfold increase for next year. We're targeting to reach $100 billion, maybe even $150 billion to $200 billion. Much of this depends on the quality of our data sets, and we have initiatives in place that will help us achieve this. We have been considering large-scale automated scraping from quality publications and improved feeds from existing sources providing machine-readable data formats. I believe we will exceed the $50 billion mark next year, potentially achieving a multiplier of two to four times that amount. However, it’s crucial to remember that the normalization and curation of that data, along with the algorithms needed for effective analysis, are equally important. With that, I want to thank everyone for participating. We had a lot of really good questions. Since there are no further questions, we’d like to conclude today’s call. Thank you.
David Margrave, CFO
Thanks, everybody.