Earnings Call Transcript - LTRN Q3 2022

Panna Sharma, CEO

Thank you, Nicole. Good afternoon, everyone, and welcome to our third quarter 2022 earnings call. We appreciate your presence this afternoon to discuss our third quarter results and Lantern’s corporate progress. Lantern Pharma is at the forefront of utilizing artificial intelligence and machine learning to enhance oncology drug discovery and development by reducing costs, shortening timelines, and minimizing risks. We are employing our RADR AI platform to identify significant cancer opportunities that have been neglected or are underserved. We have successfully advanced and revitalized compounds to Phase 2 clinical trials, while also developing entirely new drug candidates for first-in-human trials next year, achieved at a fraction of the cost and timeline associated with traditional drug development. Our AI platform has access to over 25 billion data points and more than 200 algorithms, forming the basis for understanding the crucial questions in oncology drug development. We have two drug candidates currently in Phase 2 clinical trials and anticipate launching two additional candidates early next year, specifically LP-184 and LP-284, targeting distinct cancer types. We're making strides with our rescued drug candidates, LP-100 and LP-300, aiming for precise treatment indications in unique patient populations. Our approach has allowed us to expand our portfolio from three to 11 programs within just 15 months, creating high-value opportunities for investors and potential transformative therapies for cancer patients. Our intellectual property is central to our business, focusing not only on drug products but also on optimizing their manufacturing and utilization, alongside the AI platform and its methodologies. We are enhancing RADR’s functionality and plan to share more details in an upcoming tech and platform day expected in early Q1 of 2023. Recently, we published a paper highlighting our collaboration with the National Cancer Institute, which revealed a new DNA damage mechanism for LP-148 and a new indication for an ultra-rare brain cancer, ATRT. Lantern is undergoing a transformative phase as we further develop our AI-driven insights and advance drug candidates into clinical trials. Our 11 programs have been developed with a level of cost efficiency and resource allocation that is highly unusual, primarily due to our AI-driven framework. We foresee many programs partnering with larger biopharma companies as the development progresses, achieving substantial milestones with significantly lower costs than traditional methods. In Q3, we made notable advancements, particularly with the Harmonic clinical trial for LP-300 aimed at never-smokers with non-small cell lung cancer, while also updating on IND statuses for LP-184 and LP-284. The Harmonic trial, a Phase 2 study, will enroll 90 patients to evaluate LP-300 combined with standard chemotherapy. We have already activated our first two clinical sites and plan to add more in the U.S. A significant aspect of the Harmonic trial involves collecting and analyzing liquid biopsies from patients, which we believe could lead to comprehensive biomarker studies for never-smokers. Additionally, we are in discussions for global partnerships in regions with higher prevalence of non-small cell lung cancer among never-smokers, spanning parts of Asia, South America, and Europe. In Q3, we announced the issuance of a new patent related to LP-300, extending its commercial protection through late 2032, focusing on survival times for specific patient populations. We're also developing LP-184 for major cancer types, including solid tumors and central nervous system cancers, with significant market potential. Our proposed LP-184 trials may have separate Phase 1 studies to address differing clinical needs across these cancers, with both adult and pediatric indications being explored. Lantern is actively engaging with key opinion leaders for trial designs and presented promising preclinical data at a recent conference. We are also advancing LP-284 for non-Hodgkin's lymphomas and have observed its potential against resistant cell lines, indicating it could serve as a therapeutic option for patients experiencing relapse. We prioritize insight and transparency around our research with ongoing webinars and have exciting plans to host a KOL webinar focusing on synthetic lethality, featuring an expert in the field. Despite some challenges, we exceeded our target of 25 billion data points ahead of schedule and upgraded RADR’s computational systems and machine learning capabilities. This growth is crucial as we continue our collaboration with Actuate Therapeutics for their drug candidate, and insights derived from RADR have furthered their development processes. I will now turn the call over to our CFO, David, for a financial overview of the quarter.

David Margrave, CFO

Thank you, Panna, and good afternoon, everyone. I will now share some of the financial highlights from the third quarter. Our R&D expenses for the quarter ended September 30, 2022 were approximately $0.7 million compared to approximately $2.96 million for the third quarter of 2021. A substantial portion of this decrease in expenses relates to a $935,000 payment we received in July 2022 from one of our service providers in connection with the resolution of a difference of views regarding the service provider agreement. This payment we received contributed to an approximately $1.6 million reduction in product candidate manufacturing-related expenses during the three months ended September 30, 2022. In addition, we made a $1 million upfront payment to Allarity Therapeutics during the three months ended September 30, 2021, which was nonrecurring, so that expense did not occur again in the quarter ended September 30, 2022. General and administrative expenses were approximately $1.4 million for the third quarter of 2022, up slightly from $1.2 million in the prior year period. We recorded a net loss of approximately $2.3 million for the quarter ended September 30, 2022 or $0.21 a share. This compares to a net loss of approximately $4.1 million for the quarter ended September 30, 2021 or $0.36 per share. As of September 30, 2022, we had approximately 10.86 million shares of common stock outstanding and outstanding warrants to purchase approximately 178,000 shares and outstanding options to purchase 1,000,953 shares. These warrants and options, combined with our outstanding shares of common stock, give us a total fully diluted shares outstanding of approximately 12.04 million shares as of September 30, 2022. Our cash position, which includes cash equivalents and marketable securities as of September 30, 2022, was approximately $57.8 million. This balance is expected to carry us into 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 products and collaboration opportunities in a capital-efficient manner. Lantern currently has 17 employees who are primarily focused on leading and advancing our research and drug development efforts. We see this number expanding slightly in the 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 some final comments.

Panna Sharma, CEO

Thank you, David. As David mentioned, we're well positioned and are executing on our ambition to leverage AI and data in a highly cost-efficient manner to generate clinically needed programs in cancer therapy. We continue to have strong financial discipline with our cash utilization, most of which is spent on external research, manufacturing and trials. Our focus remains on leveraging our intellectual knowledge capabilities around scientific strategy in the AI platform and then working with world-class partners and CROs to execute on those needs. This enables us to scale the work as needed and rapidly adjust as our data or the markets dictate. We believe this nimble model can be a hallmark of future drug development that's both efficient and derisked. Later this quarter and this year, Lantern will be presenting new preclinical data at several scientific conferences, including the Society of Neuro-Oncology’s Annual Meeting in Tampa from the 16th through the 20th, the San Antonio Breast Cancer Symposium in early December, where we’ll be presenting some exciting new data and the American Society of Hematology, ASH in New Orleans in mid-December, where we'll be talking more about LP-284. We’ll also be attending the BioFuture Conference this week in New York and the Disruptive Growth Conference in New York also in early December. Ultimately, we believe many of our programs, as they further develop, can be partnered out for several hundred million or potentially even billions of dollars. In addition to providing multiple shots on goal, our maturing development pipeline with two Phase 2 assets, the upcoming launch of multiple Phase 1 trials and additional assets under development, should provide a steady flow of catalysts, news and data moving forward to track an increasing level of interest from both investment communities and biopharma companies. With the extraordinary potential ahead of us, we continue to believe our current market cap and price does not accurately reflect the true value of our development programs and our AI technology platform for oncology drug development. We're actively pursuing and continue to pursue activities to increase our visibility at Lantern Pharma with the right sets of investors and also to engage with larger global biopharma companies to explore partnering one or several of our programs. I believe we've crossed an important inflection point in our business with our platform. And now having repeatedly proven its capabilities of delivering important insights to expand our pipeline and to aid in the development of others' pipeline, we've ushered in a new era for the company. We are now leveraging AI-driven insights to get to cancer patients in a more effective and efficient manner. I want to thank everyone for their time today and interest in Lantern on this call. And I'll now open up the call to questions.

Operator, Operator

We have a few questions coming in here. One from John Vandermosten. Do we need an entirely new IND for each indication for LP-184?

David Margrave, CFO

No, we're not expecting that. We think we can develop this under the same IND.

Panna Sharma, CEO

Well, different protocols potentially for the trials for the IND would be one.

Operator, Operator

And I see here, Michael King is raising his hand. Michael, go ahead and ask your question.

Michael King, Analyst

Several questions, I'll try to keep it brief. Just in general, could you talk a bit about LP-184 since it's got so many potential indications? How do you foresee making specific go/no-go decisions for the various indications in the CNS, including pediatric? How are you going to prioritize the different indications?

Panna Sharma, CEO

We are planning to conduct a multi-tumor trial for LP-184. Based on the data from Phase 1 or Phase 1a, we will target the most responsive tumors for Phase 1b or 2. During this trial, we will collect significant data on the DNA damage response profile and PTGR1 levels. We aim to enhance our trials from the initial phase to more focused Phase 1b and 2 trials. I anticipate that we will enroll many patients with solid tumors, which will give us valuable dosing information and the safety data we need. Following this, we are likely to initiate a Phase 1 trial for CNS cancers. Similar to the solid tumor Phase 1, we will probably include mostly recurrent CNS cancers and then focus on glioblastoma multiforme and other aggressive gliomas that have shown higher responsiveness. We intend to use patient and clinical data to inform our selection process. However, we already have strong ideas about which tumors are likely to be most responsive, and we will prioritize those based on their responsiveness, clinical need, and the feasibility of conducting trials quickly. That’s why we are so enthusiastic about LP-184.

Michael King, Analyst

And can you remind me, Panna, you're not going to prescreen patients for their PTGR expression, right, but you'll do some kind of a post hoc analysis, or how’s that actually going to work?

Panna Sharma, CEO

We currently believe that we won't initially select based on PTGR1 levels, but we are still engaging in discussions with key opinion leaders and evaluating their feedback. However, we may consider preselecting based on DNA damage response mutation profiles. For instance, if a patient has homologous repair deficiency or nucleotide excision repair deficiency, that could become the selection criteria for all solid tumors.

David Margrave, CFO

And in later stage trials, we very well could use the PTGR1 as a selection eligibility criteria as well.

Michael King, Analyst

And then just one more quick question. Just as far as strategic imperatives are concerned, you said in the formal remarks and in the press release that you're in start introducing perhaps some more novel compounds or new compounds into the pipeline and novel combinations. I just wonder, how much can you keep filling up the front of the funnel, so to speak? Because are you going to get limited on bandwidth? You could potentially have five different trials on LP-184 alone, then you've got 284, 300, 100. So is filling up the front end of the funnel at this point in time really the priority, or would you rather see some flow through into the clinical advancement of the pipeline compounds?

Panna Sharma, CEO

Yes, advancing our clinical efforts is definitely our top priority. We have numerous new ideas and advancements that we will likely announce in collaboration with partners. While we can only manage a limited number of trials on our own, we do have some exciting projects that we aim to develop, likely in partnership for faster progress. Our primary focus right now is on the clinical advancement of the compounds we have previously discussed. I want to emphasize to investors that this is also a platform, and the volume of new content is increasing, becoming more precise and expansive. This evolution was part of our plan as we developed the platform, and it appears we are at a point where it presents partnership opportunities, which is why we raised funds. The clinical advancement of our existing compounds remains our foremost priority.

Operator, Operator

We have another question coming in here. What are the first observations on screening success for the Harmonic trial?

Panna Sharma, CEO

We're in the process of screening, probably half a dozen to a dozen patients. So we won't know until we've started the dosing process. But yes, we've got probably six to twelve patients that are being screened.

David Margrave, CFO

That are in the likely stage.

Panna Sharma, CEO

No observations yet.

Operator, Operator

I see John Vandermosten is raising his hand. John, you can go ahead and ask your question.

John Vandermosten, Analyst

I thought it was really interesting that you had noted about taking the liquid biopsies over the course of the trial, and wonder if there was any precedent for that? And if so, any observations and then might that also be useful for conducting some kind of adaptive trial design in the future?

Panna Sharma, CEO

Yes, like I said in the comments, the liquid biopsy will probably be one of the largest longitudinal studies on the same patients in never-smokers. What happens now in these never-smoking populations is that typically, if they have an actionable mutation, they're given a range of TKIs. Some stop responding in a few months, some take two or three years. If they're EGFR, they might mutate to T970M, which you can be on that drug also for a year or two. My expectation is that the cancer genome will be pretty different across these never-smokers. There’ll likely be some subtle variations based on the drug treatment history that they’ve had. I think that we may expect different levels of response to the LP-300 plus chemotherapy doublet based on the clinical treatment history. This will allow us to pinpoint who's going to be the most responsive. If there's a signature that emerges from it, we can use that signature regardless of never-smoking status, and we may then have a pivotal Phase 3 based on that signature. It'll advance our understanding of never-smoking cancer biology in general, and I think it will be very helpful in creating a more focused and even narrower trial while helping us with pharma partners, as they often ask the same question about the variability in response.

David Margrave, CFO

And I think, a very exciting aspect of this is that the de-identified data will then be included and incorporated in RADR, making it even more powerful.

Panna Sharma, CEO

And just to add on to that, we will be conducting liquid biopsy at enrollment and multiple time points wherever possible in all of our trials. So it'll be pretty standard. We’ll perform them in the GBM trial, on the solid tumor trial for LP-184, and we'll be conducting it on the LP-284 trial, because there's a wealth of data, the costs for liquid biopsy have become much more reasonable. If patients are amenable to it, which many cases they are, it gives us a lot of very clear ideas of how to advance the molecule.

Operator, Operator

That is all the questions I see that we have for today. So thank you, everyone, for joining and have a great rest of your day.

Panna Sharma, CEO

Nicole, thank you. David, thanks.

David Margrave, CFO

Thanks a lot. I appreciate it. Bye-bye.