Earnings Call Transcript - LTRN Q3 2021

Nicole Leber, Host

We'll get started here. Good afternoon. And welcome to the Lantern Pharma's Third Quarter 2021 Earnings Call. This call is being recorded and all the attendees are in a listen-only mode. I am Nicole Leber with Finance and Administration at Lantern Pharma and I will be your host for today's call. I will be joined by our CEO, CFO and CSO. We will open the call for questions-and-answers after the presentation which will be managed by our CEO, Panna Sharma; our CSO, Kishor Bhatia; and our CFO, David Margrave. A press release was issued today after market close, with Lantern's third quarter 2021 financial results that management will be discussing during the call today as well as providing a corporate update. Following the Safe Harbor statement, Panna will provide an overview of Lantern's highlights, after which, David will overview Lantern's quarterly financial results and Dr. Bhatia will provide an update on our R&D sector. Panna will then offer closing comments, after which we will answer questions. You may also note that we've provided a link on the Investor Relations website for the slide that management referenced in today's earnings call and webinar. I would also like to remind everyone that remarks about future expectations, claims 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 in the forward-looking statements including the impact of the COVID-19 pandemic, results of clinical trials and the impact of competition. Additional information concerning factors that could cause actual results to differ materially can be found in our quarterly report on Form 10-Q for the third quarter of 2021 and in the Risk Factors section in our annual report on Form 10-K for the year ended December 31, 2020. Both documents are on file with the SEC and available on our website. The webcast replay of the conference call and webinar will be available on the Lantern 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, CEO

Thank you, Nicole. Good afternoon, everyone, and welcome to our third-quarter earnings call. We appreciate you joining us today. We are also live-streaming this call for the Zoom webinar at the request of many investors, as we think this format can provide more information and insights about our business. We value your feedback and requests and will continue to improve our operations and communications with investors. The third quarter has been an exhilarating and busy time for Lantern, with significant advancements across various areas, including clinical developments, operations, and our RADR platform, which you might have read about earlier today along with our ongoing discovery efforts. I want to emphasize that we have surpassed our growth expectations for our proprietary AI platform, RADR. We reached over 10 billion data points this past month, which is a tenfold increase since November of last year and a 37-fold increase since our IPO in June 2020. This growth in data is vital, providing management with a long-term competitive advantage. It accelerates our drug development timelines by offering insights into communications and feasibility in specific locations, enabling us to identify new therapeutic opportunities and pursue novel or expanded applications for our existing drug portfolio. It also facilitates the development of combination therapy programs involving our drugs and approved therapeutics, which we'll discuss further today. Most importantly, it enhances our capability to collaborate with additional biopharma partners. We believe the platform is now positioned to be utilized not only for our current portfolio but also for numerous other drug development efforts within oncology. The RADR platform utilizes extensive data from various curated sources, including transcriptome, genome, and drug sensitivity data from human and animal cell lines. We continuously analyze and update this data to achieve our goal: to lower costs, mitigate risks, and expedite drug development by revealing mechanistic insights into drug-tumor interactions and deriving companion diagnostic biomarker signatures. These biomarker signatures significantly improve the probability of drug approval by an average of five times compared to those developed without them. Ultimately, our aim is to benefit and select patients who would respond optimally to our therapies, particularly within combination treatment contexts. Coordinating with this data growth, we have directed our resources toward enhancing our library of algorithms, which are crucial for correlating data, automating analysis, and swiftly identifying critical correlations for cancer drug development decisions. This library of algorithms has embedded machine learning capabilities, allowing us to evaluate their performance collectively, known as an ensemble-based approach. This method enhances the precision of our predictions regarding patient responses to our drug candidates. All of this is essential for defining our strategy to successfully bring our drugs to market while developing promising combination strategies likely to gain approval. We intend to continue expanding our data. Some have asked how much data is sufficient; the reality is there is no limit. Reaching 10.4 billion data points is a significant milestone, but there are still tens of billions of additional data points to gather, with hundreds more cancer types to explore and fresh data sets emerging monthly. Our priority is to acquire these data sets, evaluate them, and automate this process to refine the RADR platform while focusing on the growth of our algorithm library. Lantern plans to continue adding to our 10.4 billion data points, particularly in specific areas. One focus area last quarter was hematologic cancers, which significantly contributed to our growth, especially as we looked into 2022. In the coming year, we will shift towards immuno-oncology studies and trials, incorporating antigen, immunomics, and protein data, along with robust multi-omic analyses. We are aware of various methods and algorithms being developed for predicting responses to immuno-oncology drugs and for creating drug response combinations. Our team plans to evaluate, enhance, and integrate these to strengthen our platform. We view this as a long-term strategic advantage as we improve our capabilities in antibody-drug conjugate development and combinations involving immune-oncology agents. We've found reason to believe that certain immune-oncology agents, particularly those that demonstrate high sensitivity in tumors with a high tumor mutation burden, may synergize with LP-184 or LP-284, especially in tough-to-treat tumors. Regarding biomarker signatures, it's a critical area of focus. A recent study by Professor Dr. Jason Parker from the University of Toronto evaluated over 10,000 clinical trials from 1998 to 2017 across four solid tumors and found that trials based on biomarkers had success rates 4 to 12 times higher than those without. Dr. Parker's findings suggest that incorporating biomarker status significantly boosts the chances of drug approval, showing an average fivefold increase across the indicated solid tumors. Specifically, in breast cancer, melanoma, and non-small cell lung cancer, the improvements reached 12 times, 8 times, and 7 times, respectively, all driven by biomarker analysis. His research indicated that trials with exploratory biomarkers outperform those without them by a significant margin. This reinforces the value of adopting biomarker-driven signatures early in oncology clinical trials, which is a cornerstone of our development strategy. It also highlights the uniqueness of our RADR platform's integration with our drug candidates and its ability to derive biomarker signatures, presenting significant potential in the expansive $200 billion global oncology drug market. This platform holds a sustainable role in the future of drug development and discovery in cancer therapy. We are witnessing increasing industry interest in innovative solutions that enhance the development of precision and combination therapies while reducing associated risks and costs. This demand will likely lead to new partnerships and create substantial value for investors. We remain committed to building the world's largest AI platform for precision oncology drug development, and we believe we are making significant strides towards that goal. For the coming year, we aim to surpass 20 billion data points, further concentrate on blood cancers, incorporate additional rare cancers, and enhance our data supporting immuno-oncology and antibody-drug conjugate development. We believe our AI platform is critical for revealing potential new therapeutic opportunities both independently and with third-party collaborators. Moving to our drug candidates, we reported positive preclinical results for LP-184 in pancreatic cancer and glioblastoma multiforme. We also progressed LP-300 towards a Phase II clinical trial for never smokers with non-small cell lung cancer. Preparations are underway for the next phase of our LP-100 program in metastatic castration-resistant prostate cancer and possibly other cancers we will address later. Additionally, we are gearing LP-284 for further exploration in blood cancers, with promising data expected later this quarter. LP-284 will be a focal area for us in 2022. Encouraging results from LP-184 in glioblastoma multiforme and pancreatic cancer have led to its orphan drug designation. This designation presents various benefits, including market exclusivity, tax credit eligibility for qualifying clinical trials, waivers for marketing registration application fees, reduced annual product fees, and support for clinical product calls and reviews. These advantages lessen our development burdens and enhance our market protection. Investors should take note of two significant areas: early positive validation and the importance of orphan designation as a key milestone in our AI-driven approach. We've submitted an abstract with Dr. Igor Astrosoft, co-leading the Marvin and Kanchana Greenberg Pancreatic Cancer Institute at Fox Chase Cancer Center, which has been accepted for presentation at the AACR Virtual Conference on pancreatic cancer. The data from the abstract indicates that LP-184 has significant efficacy as a synthetically lethal agent in pancreatic cancers with DNA damage repair deficiencies. Our Chief Scientific Officer, Kishor Bhatia, will give more details on this shortly. We are advancing our research to potentially create first-in-class solutions or significantly improve existing standard care outcomes. LP-184 has the potential to be best-in-class for pancreatic cancer, with a unique action mechanism. Our studies indicate its effectiveness against pancreatic cancers resistant to standard drugs. Using CRISPR and gene editing, we've identified biomarkers predicted through RADR that correlate directly with the antitumor efficacy of LP-184, particularly the PTGR1 biomarker, which exhibited significant effectiveness when present but virtually none when absent. We believe this biomarker mechanism can extend its application across various tumor types beyond pancreatic cancer. We are currently in discussions to design our first-in-human clinical studies for LP-184 in partnership with Fox Chase and other key opinion leaders in pancreatic cancer treatment, preparing to initiate IND-enabling studies that will inform our Phase I human trials next year after finalizing the IND application. We are excited to announce a virtual key opinion leader event on LP-184 in pancreatic cancer with Dr. Igor Astrosoft and Kishor Bhatia on November 18, coinciding with World Pancreatic Cancer Day. Details will be shared later this week. We also made significant progress concerning a multi-billion-dollar indication targeting intractable GBM cancers. LP-184 showed meaningful survival improvements in our animal models, with the study conducted in collaboration with Kennedy Krieger and Johns Hopkins University, and we anticipate these results directing our clinical focus for this drug candidate. The next steps with Johns Hopkins and Kennedy Krieger will involve assessing LP-184’s effectiveness in GBM based on the encouraging results obtained in lab mice, with plans for human trials next year. We believe LP-184 can offer effective treatment for GBM, regardless of MGMT status, which is crucial for this type of cancer and informs its response to TMZ. This potential advancement could provide vital treatment options in GBMs that overexpress MGMT, constituting about 50% of GBM cases. Developing a treatment that is effective regardless of MGMT status marks an essential progress, suggesting a molecular strategy applicable in other contexts. Current analyses indicate that LP-184 should remain effective regardless of MGMT status, while intriguing results show increased sensitivity in many MGMT-positive cancers. Further studies regarding our ADC program are also set for Q4, with data expected in the second quarter of 2022 on specific indications. Unlike traditional cytotoxic treatments that can harm healthy cells, ADCs are designed to deliver therapeutic agents directly to specific cancer cells through targeted connections, and we are actively refining our approach. We see our ADC program as a significant market opportunity, given that two of the four largest oncology licensing deals last year involved ADCs. ADCs are set to be a vital part of cancer therapy strategies, highlighting the relevance and strength of our AI platform. For our LP-300 candidate, we have formed a strategic alliance with Deep Lens, a digital health company focused on expediting the recruitment of ideal cancer patients that fit our protocol. We are utilizing their AI clinical trial technology, Viper, to create a unique end-to-end solution combining drug development with AI-powered patient identification. Their platform meticulously scans through numerous records to match suitable patients to our protocol, specifically targeting never smokers with non-small cell lung cancer who are either chemotherapy-naive or relapsing from TKI. We have encountered supply chain challenges stemming from COVID-19 that have extended our timeline in finalizing our manufacturing but are targeting to launch a 90-patient Phase II clinical trial in the U.S. soon, either by the end of this quarter or early Q1, focusing on the never-smoker demographic. This niche has not been addressed by other trials, and we believe our unique protocol will facilitate successful patient selection. Our current AI platform allows for drug outcome predictions, and the Viper platform helps us pinpoint suitable patient candidates, aiming to reduce timelines and costs in the upcoming year. We are eager to pursue collaborations with companies that align with our vision, like Code Ocean, a leading computational research environment that facilitates secure sharing of scientific discoveries. This partnership is advantageous for both patient outcomes and internal operations, as it streamlines the sharing of scientific results within our organization and with collaborators at prominent research institutions. Our advancements this quarter have been remarkable in several areas. We are excited about these developments, which we believe are crucial for revolutionizing cancer therapy development. I am also glad to share that H.C. Wainwright Investment Bank has initiated coverage of Lantern, and we are dedicated to raising Lantern's profile in the investment community, especially with numerous milestones ahead. We have made significant progress in our ATRT program, along with advancements in our IND-enabling studies for the ADC program, and we are set to present results for LP-184 across various indications, including pancreatic cancer and glioblastoma, in the forthcoming months. We are ready to share considerable data, further demonstrating our commitment to financial discipline. With that, I will now turn the call over to David Margrave, our CFO, to outline our third-quarter financial results.

David Margrave, CFO

Thank you, Panna, and good afternoon, everyone. I will share some of the financial highlights from our third quarter of 2021, which ended on September 30, 2021. We had a net loss of approximately $4.1 million or $0.36 per share for the quarter ended September 30, 2021, compared to a net loss of $1.7 million or $0.27 per share for the quarter ended September 30, 2020. Research and development expenses amounted to approximately $2.96 million for the third quarter of 2021 versus approximately $0.6 million for the third quarter of 2020. This increase was primarily due to heightened manufacturing-related expenses and expenditures aimed at advancing and expanding the company's product portfolio. General and administrative expenses were around $1.2 million for the third quarter of 2021, compared to approximately $1.1 million for the same period last year. The modest increase was primarily linked to increased business, corporate development expenses, legal and patent-related fees, and general administrative stock option expenses. Our R&D expenses for the third quarter of 2021 were approximately 2.5 times our G&A expenses for the same timeframe, reflecting our ongoing focus on advancing and broadening our product pipeline. Our team has been exceptionally productive, especially as we transition to a hybrid work environment, with 16 employees primarily focused on leading and enhancing our drug development biology and data science efforts. We expect to slightly expand this number in the coming quarters as we add high-caliber multifaceted individuals to support our mission. To date, we have effectively managed the impact of the COVID-19 pandemic on our operations. However, the timing of manufacturing for our LP-300 and LP-184 candidates has been impacted by supply chain delivery issues, as noted by Panna, which has delayed the launch of the Phase II clinical trial for LP-300 and the commencement of IND-enabling studies for LP-184. Nevertheless, we are continuing to make progress despite these challenges. As of September 30, 2021, we had approximately 11.2 million shares of common stock outstanding. This includes approximately 4.9 million shares issued in our January 2021 follow-on offering. We also had outstanding warrants to purchase 298,204 shares and options to purchase 801,588 shares. These combine with our outstanding shares of common stock to total approximately 12.3 million fully diluted shares as of September 30, 2021. Our cash position, including cash equivalents and marketable securities at September 30, 2021, was $73.8 million. This balance is projected to sustain us into 2025. We are confident our solid financial position will support the continued growth and evolution of our RADR AI platform, accelerate the development of our oncology drug portfolio, and enable us to deploy additional targeted products and collaboration opportunities efficiently. Thank you. Now I'll hand the call back to Panna.

Panna Sharma, CEO

David, thank you very much. I'd like to invite our Chief Scientific Officer, Dr. Kishor Bhatia, to provide some detail on the growing data and the exciting early-stage programs we have. We will also share data for the first time in several of our programs during this call. Kishor, please go ahead.

Kishor Bhatia, CSO

Thank you, Panna. I am excited to announce the initiation of our IND-enabling studies for LP-184. Our first animal dog and rat toxicity studies are expected to begin in the next couple of weeks and are projected to be completed by April, allowing us to take LP-184 to the clinic. We continue to build on evidence supporting the uniqueness of our molecule, LP-184. During the previous quarter, we demonstrated its efficacy in pancreatic cancers, and we now have direct evidence of heightened efficacy in pancreatic cancers with specific mutations affecting the transcription-coupled nucleotide excision repair pathway. Our drug exhibits heightened sensitivity to cancers that have damage in such genes part of the nucleotide excision repair pathway. What you can see is that if a cell is wild type, meaning it has no mutations in the pathways depicted by a blue horizontal line on the top, these cells survive well. If there are mutations in specific genes in the pathway—here we interrogated three genes—PD, ERCC1, and CSP—the presence of LP-184 makes the cells synthetically lethal to those with mutations. Recently, using a CRISPR-based ERCC 4 model on cell lines, we observed a doubling of the efficacy of LP-184 in these tumors. This correlates well with the data I will show you regarding prostate cancers. We have taken prostate cancer models and downregulated BRCA2 using shRNA. In these models, downregulation of BRCA2 enhances the potency of LP-184 tenfold. This significantly exceeds the effect olaparib has on these cells, where the increase is only about 1.7-fold. The uniqueness of LP-184 lies in this dual targeting of both the nucleotide excision repair deficiency and homologous recombination deficiency pathways. We are very optimistic this will offer utility across various tumor systems. During this quarter, we further strengthened LP-184's positioning in connection with a rare central nervous system tumor called atypical teratoid/rhabdoid tumor (ATRT). The RADR data suggested LP-184 would be very effective in cell lines with a deficiency of SMARC. ATRT is driven by the loss of SMARCB1, a chromatin protein. Following these leads has yielded remarkable data, showing tumor growth in the presence or absence of LP-184 in mice. The blue line indicates a scenario without treatment—they grow to about 1.5 to 2 centimeters—while red and green lines demonstrate regression with LP-184 treatment, achieving significantly smaller tumors, much less than 0.2 centimeters. Our GPM story continues to gain momentum. We are excited to report that LP-184 compares favorably with TMZ regarding CNS bioavailability. This holds great promise, allowing us to move forward with LP-184 clinically. The data obtained on GBM led us to receive orphan drug designation for both GBM and pancreatic cancer indications. We are also now exploring orphan drug designation and pediatric rare disease drug designation for ATRT indications. Further delineation from in vitro studies has led us to identify exciting LP-184 combinations based on RADR and lab study clues. We will also advance discussions regarding a new molecule, LP-284, as we begin collaborations with a recognized hemato-oncologist from Duke University, where we will initiate studies across a range of hematological cancers, including mantle cell lymphoma and diffuse large B-cell lymphomas, to determine the most promising cancers for LP-284. Concurrently, our LP-184 also received accolades this quarter, as results were accepted at numerous scientific conferences, including the AACR Pancreatic Cancer Conference. We're planning to present GBM data at the Society of Neuro-Oncology later in November and our 284 data at ASH early in December. Panna?

Panna Sharma, CEO

Thank you, Kishor. Before I open the floor to questions, I would like to provide a brief recap and discuss some anticipated milestones. We are highly confident in the launch of multiple human clinical trials over the next 12 months for LP-184, LP-300, and LP-100. We are also observing the ongoing growth of our RADR platform as well as our commitment to advancing the ADC programs further through IND-enabling studies. Additionally, we anticipate generating new data and programs via licensing opportunities with our network of strategic collaborators. We believe 2022 will be a transformative year for Lantern. We expect growth in our platform, initiation of trials, and expansion of our experienced team focused on delivering these therapies efficiently. With that, I would like to open the call to any questions.

Operator, Operator

Thank you, Panna. We received some questions from analysts. Our first question comes from Kyle Bauser with Colliers. What are your new goals for RADR in terms of number of data points and what sort of visual demonstration might we see during the upcoming Investor Day?

Panna Sharma, CEO

Thanks, Kyle from Colliers. Great question. We had set out to achieve 1.2 billion data points when we entered 2021, expecting to reach 5 or 6 billion by year-end. We revised expectations mid-year to 8 to 10 billion. Now that we have achieved 10.4 billion, we aim to surpass 20 billion next year. We're also looking to explore new data types and enhance our algorithm complexity. We have some exciting visualizations of the platform's output that we internally call RADR insights, which we regularly review. We plan to hold an Analyst Day in December or January to showcase these insights along with our development environment. Thank you for the question.

Operator, Operator

Next question. Are you still evaluating new partnerships that you can take equity stakes in? And how is the Actuate Therapeutics partnership progressing?

Panna Sharma, CEO

Great question. The $10 billion announcement emphasizes our plan to develop the platform for broader use beyond our own. We believe now is the right time to pursue aggressive partnerships. Our experience with Actuate Therapeutics has proven valuable and provided insight into how we approach additional partnerships. We are actively exploring RADR-driven biopharma collaborations where we can negotiate equity or milestone arrangements as part of our growth strategy.

Operator, Operator

The next question is how much faster do you anticipate enrolling the Phase II trial now that you've inked the collaboration agreement with Deep Lens?

Panna Sharma, CEO

That's a great question. While I won’t commit to any specific numbers, we found that teams using the Deep Lens technology report enrollment rates that are twice as fast as expected. If we consider an 18-month enrollment period, we could potentially reduce it to 9 months, or for a 12-month enrollment, down to 6 or 7 months. Given the specialized patient population of never smokers, I believe we could see good acceleration once awareness increases about our trial. Thank you.

Operator, Operator

Next question comes from Michael King with H.C. Wainwright. What day is Lantern presenting the poster at ASH? Or what will be the topic?

Panna Sharma, CEO

That's a good question, Michael from H.C. Wainwright. We're not allowed to disclose the date and title yet, as they are still under embargo. We will provide details later this week once the embargo is lifted. Thank you.

Operator, Operator

Next question. Any progress on resuming the LP-100 clinical trial after the buyback?

Panna Sharma, CEO

Yes, great question. We have promising data from the LP-100 trial, particularly regarding median overall survival improvements observed in the nine patients that received LP-100. Additionally, we have published findings that support the role of LP-100 in DNA damage repair pathway-deficient tumors like bladder cancer. We are considering modifications to enhance the trial while exploring bringing the drug to the U.S. for further indications, including bladder cancer. We should have more timing on that by Q1 next year.

Operator, Operator

Last question from me. Any progress on the trial for LP-300?

Panna Sharma, CEO

Yes. We aim to submit the protocol and final manufacturing documents concurrently. Due to the manufacturing delays, we will submit both together. We anticipate clarity regarding the submission within the next 30 to 45 days, and have started evaluating clinical trial sites and patient types, though supply chain issues have delayed final submission to the FDA. I believe we will complete this during this quarter or early January at the latest.

Operator, Operator

Thank you. Our next question comes from John with Goldman Sachs. How will Code Ocean be used to improve R&D progress?

Panna Sharma, CEO

That's a great question. Code Ocean provides a development environment that encapsulates code, data, and the environment used, whether it’s R, Python, or others. It offers a secure package that timestamps all activities, allowing us to monitor contributions effectively. This eases collaboration and enhances reproducibility across our analyses and standards. We expect both internal and external efficiency improvements through this environment. By handling the complexities of the development environment, we free our team to concentrate on analysis and coding. This significant upgrade is expected to enhance our machine learning reproducibility, which can be challenging to maintain under traditional setups. Thank you.

Operator, Operator

Thank you. This concludes our question-and-answer session. I will turn the call back to Panna for closing remarks.

Panna Sharma, CEO

Thank you, Natalya, for the insightful questions. We are optimistic about Lantern's outlook and anticipate significant progress in the coming quarter and year. We have substantial data to be shared at several upcoming conferences, including the Society of Neuro-Oncology and ASH, specifically concerning our ATRT program. We believe our data and progress will generate new biopharma partnerships, enabling us to partner or license our portfolio valued at several hundreds of millions or billions. Ultimately, this strategy enhances investor value. We look forward to providing further updates as developments unfold and to meeting many of you in person soon. Thank you all. I'll now turn it over to our host, Nicole, in Finance.

Nicole Leber, Host

This concludes today's earnings call and webinar. We look forward to hosting you on our next corporate webinar on Thursday, November 18, World Pancreatic Cancer Day. This webinar will be co-hosted by Dr. Igor Astrosoft from Fox Chase Cancer Center and Kishor Bhatia from Lantern Pharma. We will release additional details later this week. Thank you so much, everyone, for joining and have a great rest of your evening.