Earnings Call Transcript - LTRN Q2 2021

Operator, Operator

Good afternoon and welcome to Lantern Pharma’s Second Quarter 2021 Conference Call. This call is being recorded and all participants are in listen-only mode. We will open the call for questions and answers after the presentation. I would now like to introduce your host for today's conference, Joslyn, Investor Relations at Lantern Pharma. Joslyn, please go ahead.

Joslyn, Investor Relations

Thank you, Gretchen, and thank you for joining us for Lantern Pharma’s second quarter 2021 conference call. On the call today are Panna Sharma, Lantern's President and CEO; David Margrave, Lantern’s CFO; and Dr. Kishor Bhatia, Lantern's Chief Scientific Officer. A press release was issued today with our second quarter financial results that we will be discussing in our call today. Following the Safe Harbor statement, Panna will provide an overview of business highlights, after which David will overview our quarterly financial results and Dr. Bhatia will provide an update on our R&D efforts. Panna will then offer concluding comments, after which we will open this call to questions. Please also note that we have provided a link on the Investor Relations website for additional slides that we may reference in today's call. I would also like to remind everyone that remarks about future expectations, plans, 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 our actual results to differ materially from those indicated by forward-looking statements, such as the impact of the COVID-19 pandemic, the results of our 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 the risk factors section in our Annual Report on Form 10-K which is dated March 10th, 2021 on file with the SEC. Forward-looking statements made on this conference call speak only as of today's Thursday July, 29th, 2021, and Lantern Pharma does not intend to update any of those forward-looking statements to reflect events or circumstances that occur after today. A webcast replay of the conference call will be available on Lantern Pharma’s website. And with that, I’d like to turn the call over to Panna Sharma, President and CEO of Lantern Pharma. Panna, please go ahead.

Panna Sharma, President and CEO

Thank you, Joslyn, and good afternoon to everyone on the call today. I appreciate your participation in our second quarter 2021 conference call. For those unfamiliar with our company, Lantern Pharma is an oncology biopharma company utilizing our internally developed artificial intelligence and machine learning platform, RADR, to rescue and develop cancer-focused therapies. We believe we are transforming how oncology drugs are developed by improving the speed, cost, and risk associated with drug development. We stand out as one of the few AI-focused biopharma companies with several clinical-stage programs and a rapidly advancing proprietary platform that enhances our understanding, modeling, and prediction of tumor responses to cancer therapies, including those in our portfolio and in molecules that work synergistically, as well as those of our partners. During the second quarter, we achieved significant milestones. In April, we revealed that our RADR AI platform surpassed 4.6 billion data points, and we are now enriching our data lake with information from various blood cancers. We're excited about our rapid growth currently, which is bolstered by the new functionalities we are integrating into our platform due to a remarkable increase of over 4x since the start of the year, approaching 5x growth. With this expansion, we anticipate reaching over 8 billion data points during our next campaign, set to begin later this quarter. Regarding our portfolio, we announced a significant milestone this past week in our existing Phase 2 clinical program for metastatic castration-resistant prostate cancer by reacquiring all global development and commercialization rights from our previous licensing partner. This program was formerly licensed to Allarity Therapeutics, a public Danish biotech firm, and this move ensures that we can allocate the necessary resources and focus to the future of the Irofulven or LP-100 program. We also made important advancements in pancreatic cancer, which Dr. Kishor Bhatia, our Chief Scientific Officer, will elaborate on later. As you know, pancreatic cancer is rare, with a survival rate of 7.9%, accounting for nearly 490,000 cases worldwide, including 62,000 in North America. There is a substantial need for better therapies, and we believe that about 35% of these pancreatic cancer cases could be suitable candidates for our LP-184 drug candidate, representing a market worth over $1 billion in annual therapy sales in North America alone. Moreover, we have made new strides in confirming the application of LP-184 for bladder cancers and potentially other cancers with DNA damage repair mutations. We will share data on these indications as we gear up for upcoming conferences, publications, and manuscripts. Additionally, we advanced the selection of clinical trial sites for LP-300 in an upcoming Phase 2 trial for non-small cell lung cancer in never smokers, an important program since there are currently no approved therapies for this group. During the quarter, we faced some delays in this program due to issues with equipment and materials from our main manufacturing partner, but we now anticipate the final drug product will be ready later this quarter, followed by subsequent shipments to trial sites. Selecting patients and sites that meet the inclusion criteria for LP-300 will be critical, as we aim to recruit patients who are not only never smokers but also chemo-naive, with no prior chemotherapy history, and who have either become non-responsive or have relapsed from previous TKI therapies. We will work closely with leading sites to raise awareness and educate on LP-300 while identifying potential patients who may benefit from this therapy. The current Phase 2 trial includes two arms for a total of 80 patients: one arm receiving the standard-of-care chemo doublet, and the other receiving LP-300 along with the standard-of-care in a combination regimen. Furthermore, we advanced our ADC program by testing and refining our conjugation processes and exploring various methods to develop a highly targeted and effective new molecule for certain solid cancers. Our initial work indicates that this approach may also be applicable to certain hematologic cancers. This is still in early development, but we expect to complete additional validation during this quarter and Q4, along with finalizing our conjugation process and design for this molecule. We plan to announce details of the program, its design, and targets later this year. In the second quarter, we announced a collaboration with Actuate Therapeutics to utilize our AI engine to help advance key aspects of their drug candidate 9-ING-41, which is a best-in-class GSK-3β inhibitor under active development in multiple Phase 2 clinical trials, including for pancreatic cancer. This collaboration could provide significant equity-based milestones for Lantern and our shareholders, and we are actively discussing similar partnerships with other biopharma companies where our platform can assist in de-risking development decisions and enhance therapeutic options for cancer patients. Our base patents and intellectual property are central to establishing significant barriers around our business. We are focused on patenting our drug candidates, the applications of these candidates, our AI platform, and our methods. In the second quarter, we filed 11 patents, two related to the RADR platform and the rest concerning our drug candidates and their specific applications in particular cancers or in combination with other drugs and drug classes. We plan to continue aggressively developing and filing intellectual property, especially as our data-driven approach accelerates the creation of unique insights, generating precision correlations of response and other findings, which we then validate and refine in the lab. Our iterative and rapid approach is producing patents we believe will hold considerable value in the future. We are particularly excited to explore areas with significant clinical needs for improved therapies, especially within rare and ultra-rare cancers. This focus may enable faster development and the possibility of priority review vouchers for certain assets, like LP-184 for Atypical Teratoid Rhabdoid tumors and ultra-rare brain cancer, or LP-284 for certain ultra-rare blood cancers, where we see potential for meaningful responses. This is crucial for developing transformative value, not only for our shareholders but more importantly, for cancer patients who require improved and personalized treatment options in many instances where few or no therapies exist. At Lantern, we are passionate about accelerating the development of oncology drugs and reducing cancer treatment costs. We believe leveraging AI and machine learning is the best way to achieve this, as it has already significantly changed product development cycles and cost structures in other industries, and we are eager to see how it can radically transform cancer drug development. Now, I will turn it over to David Margrave, our CFO, for an update on our financials, the transaction regarding LP-100, and other financial details.

David Margrave, CFO

Thank you, Panna and good afternoon, everybody. I will share some of the financial highlights from the second quarter of 2021 into June 30 and also discuss some of the details around the transaction to reacquire the global development and commercial rights to LP-100 that we announced earlier this week. We had a net loss of approximately $2.3 million, or $0.21 per share for the quarter ended June 30, 2021 compared to a net loss of approximately $833,000 or $0.31 per share for the quarter ended June 30, 2020. Research and development expenses were approximately $1.2 million in the second quarter of 2021 compared to $157,000 for the second quarter of 2020. The increase was primarily attributable to increases in research studies, including manufacturing expenses, expansion of our research team, and non-cash research and development related stock option compensation expense. We expect we will continue to increase our R&D spend as we advance and grow our pipeline. We've further advanced our portfolio and recently initiated the ADC program, which is now moving towards additional validation and research studies. Additionally, we have begun site selection for LP-300, our planned Phase 2 clinical trial in never smokers with non-small cell lung cancer. As the trial sites are selected and opened and enrollment advances, we expect R&D expenses to increase for the third and fourth quarters of 2021. General and administrative expenses were $1.3 million in the second quarter of 2021 compared to approximately $676,000 for the second quarter of 2020. The increase was primarily attributable to an increase in expenses associated with operating as a public company, along with increases in non-cash general and administrative related stock option compensation expense. Many of you are excited about the LP-100 program being required by Lantern so that we can move forward with the drug candidate and provide clarity to the market as to the future of this program. This program, as Panna described earlier, is in a Phase 2 trial, where we will now assess future enrollment and other improvement opportunities to reacquire the global rights to the compound in the existing Phase 2 trial, an existing stock of drug supply along with an exclusive license to the DRP technology named LP-100 as a companion diagnostic in mCRPC. We invested an upfront amount of $1 million. An additional $1 million was placed in escrow to be paid over the next 24 months as milestones are met for drug development and advancing clinical trials. Additionally, we may pay up to an additional $16 million based on regulatory filings and eventual future market and approval for the drug in the U.S. and EU. Our team continues to be very productive, especially as we migrate to a hybrid work policy. We currently have 15 full-time employees, we're primarily focused on leading and advancing our drug development, biology and data science efforts. As of June 30, 2021, we had 11,184,039 shares of common stock outstanding. This includes 4,928,571 shares that were issued in our January 2021 follow on offerings. At June 30, 2021, we also had warrants outstanding to purchase 302,036 shares, and outstanding options to purchase 823,826 shares. These warrants and options, combined with outstanding shares of common stock, give us a total of fully diluted shares outstanding of 12,309,901 shares as of June 30, 2021. Our cash position, inclusive of cash equivalents and marketable securities at June 30, 2021 was $79.6 million. This balance is expected to carry us into 2025. 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 product opportunities in a capital-efficient manner. I'll now hand the call back to Panna. Panna?

Panna Sharma, President and CEO

David, thank you very much. Thank you for that overview. I would like now to invite Dr. Kishor Bhatia, our Chief Scientific Officer, and one of our esteemed colleagues to provide some detail on the growing data and excitement on our early stage drug development programs. Kishor, please go ahead.

Kishor Bhatia, Chief Scientific Officer

Thank you, Panna. In the next few minutes, I will review some additional details about LP-184 and its role in pancreatic cancers, glioblastomas, and ATRT, while also introducing our newest molecule, LP-284. As many of you know, the current standard treatment for pancreatic cancer is FOLFIRINOX, which includes Fluorouracil, Irinotecan, and Oxaliplatin. Unfortunately, fewer than 25% of pancreatic cancer patients survive their first year after diagnosis, and under 8% live beyond five years. This highlights the urgent need for improved therapies. The preliminary results of our drug, LP-184, in pancreatic cancers are very promising, and I will explain why. One particularly aggressive subtype, sometimes referred to as the unstable subtype, often has mutations in DNA damage response genes, with over 20% of pancreatic cancers exhibiting such mutations. For example, the ATM gene is mutated in nearly 5% of sporadic pancreatic cancers. We validated the effectiveness of LP-184 in pancreatic cancers with mutations in ATM, BRCA2, and other DNA damage response genes using patient-derived xenograft models. Mutated ATM is noteworthy because it also leads to homologous recombination deficiency and can cause aggressive metastatic cancers to go through epithelial-mesenchymal transition, which negatively affects patient prognosis. This aggressiveness correlates with a heightened deficiency in DNA repair, but the resulting vulnerability can be strategically targeted by LP-184. Our in-silico analyses suggest that LP-184 demonstrates enhanced effectiveness in tumors utilizing EMT pathways. While PARP inhibitors have shown clinical effectiveness in pancreatic cancers with homologous recombination deficiencies, it’s essential to recognize that resistance to PARP often develops within the first year of treatment. Alongside our PDX models, we performed original experiments that downregulated the ERCC4 gene, resulting in a two-fold increase in sensitivity in nucleotide excision repair deficient tumors. These findings strongly indicate that LP-184 is synthetically lethal not only in homologous recombination deficient tumors but also in those deficient in nucleotide excision repair. This observation excites us, as it broadens the potential use of LP-184 in other NER-deficient tumors, such as bladder cancers, where over 30% exhibit mutations that impair NER repair. It also allows exploration of using LP-184 in combination with drugs that hinder DNA damage repair. As Panna mentioned earlier, we have filed intellectual property in areas that exhibit potential for combining our drug candidates. Moving forward, we aim to develop combination therapies with PARP inhibitors and other DNA damage repair protein inhibitors, including those targeting the ERCC proteins. This approach should enhance pancreatic cancers’ susceptibility to LP-184 and extend its effectiveness across various genomic subtypes, while also offering a way to mitigate resistance to current therapies. Since the key enzyme that influences tumor sensitivity to LP-184, PTGR1, is regulated by stress responses, we are investigating whether other treatment modalities, like radiation, can elevate PTGR1 expression, potentially amplifying LP-184’s tumoricidal effects following treatment. This avenue is particularly interesting, given that more than half of solid tumors are initially managed with radiation, and the localized increase in PTGR1 presents a window of vulnerability that could protect non-tumor cells from harm. Now, I will transition to discussing our research studies in CNS tumors. We have compelling evidence for the efficacy of LP-184 in glioblastomas and a rare CNS tumor called ATRT. We gathered this data through in-vivo models, including both subcutaneous and orthotopic approaches for glioblastoma. Notably, initial suggestions for both indications arose from in-silico gene correlations using the NCSL miner and our RADR platform. Low or absent levels of smarD1, a genomic lesion associated with ATRT, show a significant negative correlation of -0.4 with LP-184's efficacy. Based on published studies, we believe that the loss of this chromatin modifier confers a DNA repair deficiency to cancer cells, making ATRT tumors susceptible to LP-184. Thus, the selectivity observed is reminiscent of what is seen in pancreatic cancers. Similarly, our RADR data indicates that certain glioblastoma subsets, particularly those with active EGFR pathways, may be highly sensitive to LP-184. Excitingly, our in-silico analysis has also predicted that MGMT expression correlates with increased cytotoxicity of LP-184. This is critical since MGMT expression links to resistance against the standard treatment temozolomide, with over 50% of glioblastoma patients not responding to it. Consequently, LP-184 may serve as a valuable alternative, both alone and in combination with temozolomide for glioblastoma patients. Our forthcoming preclinical collaborations with Johns Hopkins specifically aim to gather further evidence for such applications in glioblastomas, focusing on those that have resumed MGMT expression. We anticipate sharing more about this in the upcoming weeks. Preliminary screenings of LP-184 across various tumors have conclusively demonstrated its selectivity in solid tumors and lack of activity in hematological cancers. Interestingly, the potential negativity in this compound is the foundation for our next drug candidate, LP-284, which appears promising in various hematologic malignancies. We hypothesize that LP-284 operates independently of PTGR1 due to its distinct structure while relying on other oxidoreductases. Similar to LP-184, LP-284 severely disrupts tumor DNA and ceases RNA synthesis, with this shutdown being more prolonged in blood cancers characterized by slow DNA repair rates. Many hematological cancers, including those with translocations common in such malignancies, show low expression of DNA repair genes. The ongoing transcription shutdown in these tumors leads to a dependency on short-lived proteins vital for their survival. We have also found that the effectiveness of LP-284 can be enhanced in hematologic cancers through combinations with drugs that degrade repair proteins like ERCC3. We are actively pursuing partnerships to advance the development of LP-284 in blood cancers, especially those with significant unmet needs like double-hit lymphoma and relapsed and resistant mantle cell lymphoma, as well as CML instances resistant to kinase inhibitors. We expect to provide more updates on these findings and related indications later this year. With that, Panna, I will return the call to you.

Panna Sharma, President and CEO

Thank you, Kishor. Before we begin the Q&A session, I want to share some final thoughts regarding our business model and our near-term focus. The data we have is accelerating our progress. We will keep developing our pipeline of drug candidates. Our approach, which is rooted in genomically-targeted and data-driven strategies, represents the future of drug development, specifically in oncology, where abundant data can guide our processes of discovery, development, and patient stratification. We aim for RADR to emerge as one of the largest AI platforms for oncology drug discovery and development. We will also actively seek further collaborations and partnerships with larger biotech and pharmaceutical companies. We are optimistic that the growth in RADR and our algorithms will create more opportunities for drug development, research and development collaborations, and partnerships. Our approach, focused on data, genomic targeting, and biomarkers, enables us to pursue a transformative drug development strategy that can identify, rescue, or develop potential drug candidates in a fraction of the time and cost compared to traditional cancer drug development. Since our IPO, we have expanded our programs from three to over eight while maintaining a capital-efficient and low burn rate. Our dual strategy in oncology drug discovery, which includes developing new biomarker-guided drug candidates and rescuing previously deprioritized ones, represents a new era in drug discovery where we believe Lantern can lead. There are potentially hundreds, if not thousands, of overlooked therapeutic candidates each decade in both industry and academia, and we aim to integrate many of these into our pipeline every 12 to 18 months. Over the past year, we have significantly surpassed this target. Our priority is on ensuring the quality of our drug candidates and our ability to thoroughly understand and characterize them as they enter clinical development in a low-risk manner. We are focused on building a portfolio of high-quality, impactful oncology drug candidates that can either be rapidly brought to market or partnered in rare and ultra-rare situations. This strategy offers a clear path to potentially create significant value for our shareholders while enhancing personalized cancer treatment options for patients. Our goal is to harness the capabilities of RADR in our AI platform to change the speed, risk, and cost of oncology drug discovery and development. This is vital for affecting the lives of patients worldwide. RADR could greatly enhance our understanding of which compounds to develop and for which indications. We believe we are in a unique position to pursue this agenda. In line with this, we have increased our active development programs from three to eight and have regained control of molecule LP-184, which is currently in a Phase 2 clinical trial. This development opens up more chances for near-term benefits and aligns well with our portfolio while enhancing the risk/reward profile for investors. Now, I would like to invite any questions.

Operator, Operator

Looks like our first question is from Kyle Bauser. Your line is open. Please go ahead.

Kyle Bauser, Analyst

Hey, thanks. Hi Panna, thanks for the updates today. Maybe a couple questions on the collaboration with Actuate. To the extent you can share what sort of development milestones are attached to this? And have other companies approached Lantern as a result of your agreement with Actuate?

Panna Sharma, President and CEO

Hi Kyle, that's a very good question. I believe that has prompted several companies to reach out to us, and we are currently in discussions with a few of them. Some may have identified certain molecules as promising candidates, while others might present more challenges. We want to engage in projects that are sensible for us, ensuring we receive fair consideration. There are numerous unique opportunities available. However, we prefer to have a significant stake in the potential success of the molecules. If there are development milestones, that's crucial for both our shareholders and our own benefits. Additionally, if the molecule targets areas that were previously unknown or unexplored due to our platform, those also serve as milestones for upside potential. These are the types of triggers we experienced with the Actuate deal, although specific details weren't disclosed in the press release. Essentially, we acquire stock and equity in the company for providing insights on various indications and for details regarding companion diagnostics or stratification strategies. Once these strategies move to the commercial market, we receive further equity based on that progress.

Kyle Bauser, Analyst

Got it. That's helpful. And can you talk a little bit about how big agreements kind of play out? For example, does Actuate kind of work with your team to answer questions or is there a dashboard that you can give them access to? It's probably not that simple. But just trying to understand how automated RADR is and what the goal is here? Thank you.

Panna Sharma, President and CEO

As I mentioned before Kyle, the goal is twofold, one to find additional indications where their drug, which is a GSK-3β inhibitor may be applied either monotherapy or in combination therapy. Finding those indications is partly involved in-silico and real-world enrichment from looking at different classes of molecules. There's not a dashboard, we're routinely interaction with the Chief Scientific and Medical Officer. I don't think this approach is dashboard-like, I mean, we do share findings and data. We just finished a big data enrichment campaign, we just finalized curating and cleaning some of their existing data from clinical trials and it's interactive. I think there could be a day though, in probably in the next few quarters, where there's more of a dashboard-like delivery system for RADR. But again, remember, this is not a primary business model. Our business model, the way we're going to create value is by advancing our drugs to patients. This is a wonderful way to increase the value of our platform and give it more experience in terms of making it more robust, but it's not the primary driver of value.

Kyle Bauser, Analyst

No, that makes sense. Appreciate it. Thanks for all the updates Panna.

Operator, Operator

Our next question comes from John Vandermosten. Your line is open, please go ahead.

John Vandermosten, Analyst

Hi Panna.

Panna Sharma, President and CEO

Hi John, how are you?

John Vandermosten, Analyst

Doing pretty good, pretty good here. On the LP-100, you're bringing that back in house, that's great. How much of that data will you be able to use as you move forward with it? And are you able to pick up where you left off in the Phase 2 trial? Or do you have to start over or are you evaluating that?

Panna Sharma, President and CEO

We're evaluating that. That's a great question. The first nine patients enrolled had a mean overall survival of 12.5 months, which represents a significant improvement compared to other trials for fourth line or later metastatic castration resistant prostate cancer, where mean overall survival has typically been as low as five to ten months, depending on the patient population. This suggests a major advancement. Although it's a small patient cohort, we believe we can enhance this by reaching our target enrollment of 27. We are also gaining new insights related to PTGR1 and DNA repair genes that may allow us to create a better enriched trial. Discussions with the investigators are underway, and we will collect all the trial data as part of the transaction, ensuring compliance with GDPR regulations in Europe. While there may be some detailed information we won't obtain, we will incorporate this data into our analysis going forward. We will also leverage findings from our other molecules to guide development. There is a significant need for treatment options in the fourth line and beyond, as most cases have a survival rate under a year, typically around nine months. This need is particularly acute for patients who are non-responsive to both chemotherapy and androgen therapies. With only nine patients, the number is small, but the overall survival observed is highly meaningful, and we believe there's potential for improvement. The market indication suggests around $200 million in U.S. spending and close to $700 million globally, indicating substantial commercial potential for this drug.

John Vandermosten, Analyst

And then in terms of R&D spend for LP-100, how much should we layer on for that?

Panna Sharma, President and CEO

We'll provide any additional financial details as we get all the data and have conversations with the investigators. I expect very modest amount in the third quarter, but more in the fourth quarter.

John Vandermosten, Analyst

Okay. And in 2022, I assume as well, or is that?

Panna Sharma, President and CEO

Yes, 2022 will be the main period for the bulk of the work. We are already in the third quarter, which starts in August. As you know, August in Europe tends to be less busy. We will be analyzing the data, transferring site IRBs, and working on some regulatory aspects, and ensuring control of the drug product and drug substance. Everything is progressing to prepare for the transition. Therefore, we expect a modest spending in the third quarter, but significantly more in the fourth quarter and the first quarter of next year.

John Vandermosten, Analyst

Okay, great. And then LP-184, that's a busy candidate for you guys. It's in a number of different areas, never a number of programs, ADCs, pancreatic, bladder, GBM, ATRT, maybe I missed one. How do you prioritize or rank those internally in terms of their importance?

Panna Sharma, President and CEO

Currently, the pancreatic program is the most advanced. There is a clear need in the market, with spending close to $1 billion. This indicates a high demand and significant commercial potential, making it a top priority. We are also starting work on bladder due to recent findings and are collaborating with key opinion leaders who are very interested. However, pancreatic and GBM are our primary focuses for LP-184 at the moment, as we aim to bring these therapies to patients.

John Vandermosten, Analyst

Great. Thanks for taking my questions Panna.

Operator, Operator

Our next question comes from Catherine Novak. Your line is open, please go ahead.

Unidentified Analyst, Analyst

Hi, thank you for taking my question. I wanted to ask about the LP-300 Phase 2 study. You previously mentioned that you plan to enroll never smokers who have not undergone chemotherapy and have failed prior TKI treatments. Could you clarify the status of patients who have received prior checkpoint inhibitors? Additionally, are there any other important inclusion or exclusion criteria that could help us better understand the patient population?

Panna Sharma, President and CEO

That's a great question, Catherine. Typically, a checkpoint patient is someone who has received a checkpoint inhibitor, and many of these are administered alongside chemotherapy, which would make them ineligible for the trial. If a patient has an outcome that is below a certain number of months, that would also exclude them. Other comorbidities often lead to exclusion as well, but the key focus is on patients who are chemotherapy naive. Generally, these patients are not suitable for immunotherapy. They will undergo hotspot or DNA sequencing, and if they have specific mutations like EGFR, they might receive targeted TKIs. However, patients often experience TKI fatigue, whether in the first round, second round, or even with third-generation TKIs, where they eventually stop responding. Tagrisso is a significant exception to this trend. For nearly all other cases, TKI fatigue tends to set in, which can lead to additional side effects. At that point, clinicians must decide whether to discontinue TKI treatment, which poses challenges since cancer will likely return. Therefore, they often opt for a chemotherapy doublet. Clinicians then face the decision of choosing a doublet combination or a doublet plus another treatment. Those patients are the ideal candidates for this trial. As you know, there are several TKIs used for treating non-small cell lung cancer. We believe that increasing awareness about clinical trials and the role of patient selection will help us enroll more quickly. There is significant excitement from patient advocacy groups and patients with specific targeted mutations who, despite being targeted, either stop responding or are never smokers who develop the disease. There is a lot of interest. However, previous chemotherapy, checkpoint inhibitors, or other comorbidities could disqualify patients from participating in the trial.

Unidentified Analyst, Analyst

Got it, that makes sense. I just wanted to confirm the timing of the trial initiation. I believe you mentioned it was planned for the third quarter or the second half of the year. You also indicated that a meeting with the FDA is scheduled for June. I was wondering if you received any feedback from the agency regarding the trial design and your patient selection approach.

Panna Sharma, President and CEO

We had a meeting that didn't present any issues, so we will be submitting the final CMC. As I mentioned earlier, we've experienced delays in manufacturing due to equipment problems and supply issues at the manufacturer level. Those have now been resolved, and we expect to have the final drug product later this quarter. We are making efforts to save time by working in parallel. There's no issue with the trial design, which is proceeding as planned. Once we have the final CNC, it will be submitted, and we expect site selection and activities to occur this quarter, with enrollment hopefully beginning in Q4.

Unidentified Analyst, Analyst

Got it. Thanks very much.

Panna Sharma, President and CEO

Thank you.

Operator, Operator

And our next question comes from Ram Selvaraju. Your line is open, please go ahead.

Unidentified Analyst, Analyst

Hi, this is someone calling in for Ram Selvaraju. Thanks for taking my question. Regarding LP-100, I know you released median overall survival data, but I'm curious if you can comment on other parameters, like duration of response and more. Also, will the drug be evaluated in the remaining 18 patients that were initially expected to enroll?

Panna Sharma, President and CEO

We will be assessing that with the investigators. There are not 18 patients remaining to be enrolled; they need to be identified and prioritized for the trial. The trial was delayed due to COVID and resources from our partner. We are now resuming this active trial and moving forward. We will provide more information on the duration of response and overall details at a later date after we have reviewed everything with the investigators.

Unidentified Analyst, Analyst

Understood. So, now that you regained the LP-100 rights, so what are your thoughts on initiating clinical trial activities in the U.S. with respect to timing? And are you planning to do small Phase 2b prior to launching a pivotal trial? And approximately how many U.S. patients must demonstrate drug efficacy to win FDA approval?

Panna Sharma, President and CEO

It is a great question, we do not have plans to do anything in the U.S. with the drug at this time. So, at this time, we have a lot of investigators who are interested in the drug. Since we've been in discussions with it for some other indications. We may pursue some of those that are with investigator-led initiatives. But right now, the priority would be to properly wrap up the existing trial and evaluate how to best move forward in that indication. But that's already active and dollars have been spent in Europe. So, our goal is, of course, to maximize the amount of already spent investment in this drug. And so I think once we evaluate that, then we can consider perhaps U.S.-focused efforts. But right now, our focus is on these the existing efforts, as well as the investigators that have reached out for some really unique applications of the drug.

Unidentified Analyst, Analyst

Great. One final from me, just like a clarification. So, others terms and conditions associated with using Allarity companion diagnostic tool? Or is it already embedded in the roughly $18 million total deal?

Panna Sharma, President and CEO

The total deal value is $1 million upfront, $1 million over the next 24 months based on milestones, and then up to $16 million based on commercialization and marketing approvals. David?

David Margrave, CFO

A significant part of that later amount is contingent on receiving actual marketing approval. Therefore, it would depend on when the drug obtains marketing approval in the U.S. or Europe.

Panna Sharma, President and CEO

We have the right to use their companion diagnostic for the LP-100 drug in this application. They have conducted some interesting work on it, but we also possess additional insights regarding the molecule and its intended use. We have identified new opportunities that we find very promising, particularly in bladder cancer, which we have previously discussed. This will be a high priority indication for this molecule.

Unidentified Analyst, Analyst

All right, that's it from me. Congrats on your progress.

Panna Sharma, President and CEO

Thank you.

Operator, Operator

And it appears we have no further questions at this time.

Panna Sharma, President and CEO

All right, thank you for everyone's questions. I really thank everyone for their participation in today's call. And I look forward to giving you updates as we advance the molecules and as also as we develop new ideas for the platform and announce new details about our existing trials and/or new developments. Thank you.

Operator, Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time.