Lantern Pharma Inc.
Q1 2022 Earnings Call Transcript

Published: 3 May 2022

[Nicole Leber:]

Good evening, everybody. I am Nicole Leber with Investor Relations here at Lantern Pharma. And welcome to our First Quarter 2022 Earnings Call. I will be your host for today's call. As a reminder, this call is being recorded and all attendees are in a listen-only mode. We will open up the call for questions and answers after management's presentation. Webcast replay of today's conference call will be available on our website at lanternpharma.com after the call. We issued a press release after the market closed today, summarizing our financial results and progress across the company for the first quarter of 2022. A copy of this release is available through our website where you can also find a link to the slides that management will be referencing on today's call. I would like to remind everybody about that remarks about future expectations, claims and prospectus 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 versus the impact of COVID-19 pandemic, 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, 2021 which is on file with the SEC and available on our website. Forward-looking statements made on this conference call are as of today, Tuesday, May 3, 2022 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. On today's webcast, we have CEO, Panna Sharma; CFO, David Margrave and joining us by audio is Chief Scientific Officer, Kishor Bhatia. Panna will begin with an overview of Lantern's operational highlights, after which Dr. Bhatia will provide additional scientific and clinical updates on our portfolio and programs and then David will discuss our financial results and other corporate events. This will be followed by concluding comments from Panna and then we'll open up the call for questions and answers. And I'd now like to turn the call over to Panna Sharma, CEO and President of Lantern Pharma. Panna, please go ahead.

[Panna Sharma:]

Thank you, Nicole. Good afternoon, everyone and welcome to our first quarter 2022 earnings call. Thank you for joining us today and we hope you have some questions for us and our team. Right now, we're at a very exciting inflection point at Lantern as we evolve and mature many of our initial AI-driven insights and drug candidates into human clinical trials. We're continuing to make significant and meaningful progress in turning our ideas that have been generated by our AI platform RADR into advancing our clinical programs and generating new preclinical compounds. At Lantern, our mission is to use AI, machine learning and big data to understand the genomics, biomarkers and biology of cancer better, faster and greater precision. We then leverage those understandings and insights to develop targeted oncology therapies that dramatically reduce costs with an improved risk profile for targeted patient populations in a compressed manner. We think that this approach of using AI and data can fundamentally change the lives of more cancer patients faster and with reduced risk. When I joined the company, we had one active drug program. When we took the company public in June of 2020, we had three drug programs. Today, we have nine programs for targeted indications with three FDA-granted orphan designations and one rare pediatric disease designation. I'm very proud of that accomplishment by our talented team and that would not have been possible in the traditional drug development process. The short amount of time that I've been at Lantern, we've done this because of data and, more importantly, with AI and with growing our library of algorithms. Right now, we are living in the cusp of the golden age of medicine. And because of AI, cloud computing and the growing availability of relevant biologic, genomic and clinical data, we're able to generate insights into the development of new compounds and medicines at a much faster pace. With large-scale technologies now at our disposal and also cost effective, it's allowing Lantern to bring drugs to market at a fraction of the time and cost of product shippable drug development models. Today, we have two Phase II clinical trials -- two Phase I clinical trials that we'll be launching later this year and several very exciting preclinical programs in cancer indications where there are often no therapies. This first quarter was marked by several operational highlights across almost all of our programs which I'd like to briefly touch on in the early part of this call. First, the launch of the HARMONIC clinical trial for our drug candidate LP-300 is intended for never smokers with non-small cell lung cancer is progressing. We submitted an amendment to the IND application to the FDA in mid-April and are anticipated to trial launch this summer of 2022. We also made significant progress with LP-184 into the Phase I trial, where we're now completing the IND-enabling studies and anticipate that we'll be able to submit them to the FDA in Q3 with the potential to launch trials first in human in Q4. At the 2022 AACR conference, we presented a poster showing that our drug candidate, LP-184, was effective against brain metastases, especially those from lung, skin, breast and colon cancers. In the U.S., brain mets occurred in about 10% to 30% of all cancers and are diagnosed in over 100,000 people per year. Globally that number may be closer to 300,000. This is a significant opportunity to meet patient needs and, at the same time, leverage the unique nature of the insights we're generating from our RADR data platform to going after very specific indications. Also now to accelerate the clinical development of LP-184 and our other programs, while also being very cost efficient, we established a Lantern subsidiary in Australia. We will be able to take advantage of their R&D Tax Incentive program, where we'll earn dollars back for specific R&D spend that we do in Australia. Our Australian subsidiary will allow us to remain capital efficient, while also accelerating clinical development and open the avenue for new collaborations with cancer centers in Australia. Our RADR AI platform also this past quarter surpassed 20 billion data points. And its insights continue to accelerate objectives for our drug development programs, including those that led to our newest indication, brain mets and ATRT. Additionally, we are also expanding the functionality of the platform and of the algorithms so that we can better predict new concepts such as synthetic lethality and improve potential combination regimens. Again, we also filed patents around these novel ideas. This past quarter, we filed an additional patent application for a RADR covering an ensemble approach towards automated algorithm creation for drug sensitivity prediction. In our newest collaboration which is a fundamental part of our business model, is with the Greehey degree Children's Cancer Research Institute which we announced in February. In this research collaboration, we are expanding our focus on rare pediatric cancers. This research has initially focused on advancing LP-184 into child with cancer indications using models developed by Dr. Peter Houghton at the Greehey Children's Cancer Institute at the University of Texas Health Science Center in San Antonio. So far, we've launched early studies and we'll have a briefing on our findings later this quarter but LP-184 has demonstrated very promising efficacy in a number of pediatric cancer models. Now, the volatility in the biotech markets continues, especially among micro cap and small cap companies and we continue to feel that our valuation is hyper attractive for investors. With a valuation near our cash position, our Board announced in March that they had approved an extension of our existing share repurchase program through the end of July 31. This authorized us to purchase up to an additional $3.6 million worth of the company's stock. My colleague David next will give you more details on that in the financial section. I'd like to spend some additional time giving you an update on our upcoming Phase II trial, the HARMONIC trial. At the HARMONIC clinical trial which is intended for never smokers and advanced non-small cell lung cancer and this disease is molecularly very different from lung cancer in smokers. The genomic profile of patients is also significantly different. The HARMONIC trial will be a 90-patient two-arm randomized open-label trial and will include 15 to 20 sites all in the U.S., several of which are already being set up. In mid-April, we submitted an amendment to the IND application for the HARMONIC trial to the FDA and are targeting enrolling patients later this summer. For the HARMONIC trial, our primary endpoints are progression-free survival and overall patient survival. My colleague Kishor will tell you a little bit more about the mechanisms behind LP-300 later in his section. In regards to LP-184, very excited to tell you that we're getting closer to human trials as we progress on our IND-enabling studies. We anticipate the first in human Phase I clinical trial in Q4 of this year. We've completed several of the IND-enabling studies and we believe that will be completed by Q3 and then submit our IND to the FDA at that point. Kishor will speak more toward this later in the call. Our latest drug program, LP-184 which I mentioned in brain mets is in a very unique area that has high clinical need. We announced at the AACR conference in March our findings in brain metastases. Initial findings have been very exciting since we've demonstrated antitumor activity in multiple cell models of brain mets in lung, skin and breast with some very high sensitivity. Currently, there is a real need for a new approach because many of the existing therapies currently had brain mets really don't cross the blood brain barrier and, most importantly, have not shown a significant improvement to overall survival. Again, we believe that 10% to 30% of cancer cases metastasized the brain and are diagnosed in about 100,000-plus patients just in the U.S. and globally that number is closer to 300,000. Due to LP-184's favorable blood-brain barrier permeability, here with its observed preclinical efficacy in brain mets, we think we're very well positioned for rapid progress and potential success in the brain mets market. In January, we also announced receiving rare pediatric disease designation and orphan designation for another form of CNS cancer. ATRT which is aggressive and rapidly grows primarily in children in the central nervous system. We also got the rare pediatric disease designation which underscores the critical value of our growing focus on rare pediatric oncology indications. We think this is a significant opportunity for Lantern and our investors but, most importantly, for children where there've only been four new approvals over the last 15 years. In September, as we established an Australia subsidiary, Lantern Pharma Australia Limited, to take advantage of the research and development tax incentives, this allows us to be more capital efficient and give us greater flexibility by generating cash from tax assets for our eligible R&D expenditures. We think this will give us more flexibility for our upcoming drug programs and many other studies already are underway. So we think that will improve our capital efficiency going forward. In addition to our clinical programs, we also reached a significant milestone for our RADR AI platform which earlier in the quarter reached over 20 billion data points. Applying data and machine learning, algorithms and RADR allows us to uncover new opportunities in cancer, opportunities that are underserved, unmet or overlooked. RADR allows us to do several very powerful things

[Kishor Bhatia:]

Thank you, Panna. I'd first like to update everyone on the study's directly relevant to clinical trials of both LP-300 and LP-184. The HARMONIC trial which is investigating the efficacy of LP-300 when used in combination with the standard of care carboplatin and pemetrexed continues to move forward. The retrospective analysis of a multicenter Phase III trial showed that LP-300, given in combination with chemotherapy, increased the two year and overall survival by 125% and 91% in a subset of patients who turned out to be never smokers. What an LP-300 mechanism action may help explain the survival benefits observed in lung cancer in never smokers. Well, one of LP-300's mechanism of action is to covalently modify the systems of certain proteins potentially inactivating them. Previous and ongoing multi or mixed data clearly signify that lung cancer in never smokers has distinct gene and protein expression profile when compared to lung cancer in smokers. For example, some recent data published in the International Journal of Cancer identify fewer somatic mutations and lesser chromosome instability but confirm higher frequency of mutations in EGFR and ErbB2. These features that distinguish lung cancer in never smokers are also the proteins that are potential targets of LP-300 in studies that involve the assessment of the direct interaction of LP-300 and some of those sketches are shown on this slide of the interaction of LP-300 and drivers of lung cancer in never smokers like the tyrosine kinase ALK or EGFR, LP-300 modified cysteine residues supporting that LP-300 can inactivate tyrosine kinase proteins that are primarily involved with lung cancer in never smokers. LP-300 has been previously shown to act as a chemosensitizer by decreasing the activity of redox protein, thioredoxin and glutaredoxin which are often overexpressed in lung cancer in never smokers. Exposure to LP-300 thus has the potential to restore the tumor cells' redox balance sensitizing the cancer cells to chemotherapy. We have designed the HARMONIC trial to prospectively assess the direct survival impact of including LP-300 with standard of care chemotherapy in lung cancer and never smokers. And as Panna stated earlier, we expect to initiate enrollment in the coming months this summer. Moving now to our molecule, LP-184 which has shown promise in multiple cancer types. Our progress has been focused on moving towards a first in Phase I human clinical trial later this year. In preparation for this, the non-GLP portion of the required studies have been completed and the GLP portion will be completed by the third quarter of 2022. In parallel, we'll also have the CMC report to include in our IND application. Based on our current understanding of these time lines, we are well positioned to initiate the human clinical trial before the end of the year. For the Phase I clinical trial of LP-184, we have identified four sites and discuss the trial designed with clinical investigators. Parallel to activities that directly enable our clinical trials, we also continue to obtain very exciting and encouraging data on LP-184 that identify additional properties of the molecule, making it relevant in the treatment of tumors with clinical needs. An example of this was mentioned by Panna earlier, where we recently presented results at the AACR Annual Meeting, describing the preclinical efficacy of LP-184 in cancers that metastasize to the brain. This is important because brain metastasis occur in approximately 10% to 30% of all cancer cases and represent a much larger proportion of pain-related cancers than primary brain cancers. These brain mets are difficult to treat due to the lack of standard of care treatments that can cross the blood-brain barrier. Given the excellent blood-brain barrier penetration of LP-184, coupled with the broad preclinical activity in diverse tumor types, it was obvious that LP-184 be assessed for activity in brain mets. Our results presented at AACR provide the foundational evidence that LP-184 is equally effective in brain mets of tumors from lung, breast and melanoma as it is in the primary cells of these tumor types. Our next steps towards developing LP-184 for treating patients with pain meds includes assessment of LP-184 in animal models of brain mets. The CNS pharmacokinetic clearly supports the availability and exposure of the drug in brain tissues. This, therefore, gives us ample confidence in advancing LP-184 in this important indication that impacts over 100,000 patients in the U.S. annually. I'm now going to now touch upon some exciting observations of LP-184 that relate to a new concept, the concept of synthetic lethality. Synthetic lethality is gaining greater recognition as a mechanism to specifically target tumor cells. In multiple studies, LP-184 has demonstrated a novel synthetically lethal relationship in tumors deficient in nucleotide excision repair, tumors we call NERDs and also in tumors deficient in homologous recombination of pathway, tumors we call HERDs. NERDs and HERDs occur because of mutations in genes in these pathways. And these are the genes that play a role in DNA repair. As many as 10% to 20% of tumors are NERDs or HERDs. Our preclinical data using the response of various tumor cell lines as well as ex vivo patient-derived PDXs confirm the synthetic lethal relationship between LP-184 and tumor such mutations. In fact, robust responses in vivo are also evident in tumors that are resistant to either PARP inhibitors and other synthetic lethal agent or to DNA damaging agents such as a platin. We continue to use RADR and other data-driven approaches to identify mutations in various genes that enhance the sensitivity of LP-184. The information on specific genetic mutations that cooperate to elicit the synthetic vitality of LP-184 is important to allow the preferential killing of tumors but not normal cells. We are in the process of developing a mutational response signature of tumors that will allow us to best select highly sensitive tumors for our drug candidates. It's also important to mention in this context that LP-100 also has a scientific relationship in NERDs and we have initiated in silico and targeted vet lab studies, assessing the potential of LP-100 in combination with PARP inhibitors in a clinical setting. We believe that the results from this study can help further derisk and pinpoint the use of LP-100 in cancer patients. I will now turn the call over to David Margrave, our CFO, who will provide an overview of our first quarter financial results. David?

[David Margrave:]

Thank you, Kishor and good afternoon, everyone. I will now share some of the financial highlights from the first quarter. Our R&D expenses were $2.7 million for the first quarter of 2022, up from $1.3 million in the first quarter of 2021. The increase in R&D expense was primarily attributable to increases in manufacturing-related expenses for product candidates, research studies and an escrow payment released to Allarity under the Allarity asset purchase agreement which payment was a non-recurring expense. General and administrative expenses were $1.4 million in the first quarter of 2022, up from $1.2 million for the prior year period. We recorded a net loss of approximately $4.1 million for the first quarter of 2022 or $0.38 per share. As of March 31, 2022, we had approximately 10.8 million shares of common stock outstanding and outstanding warrants to purchase approximately 891,000 shares and outstanding options to purchase approximately 178,000 shares. These warrants and options, combined with our outstanding shares of common stock, give us a total fully diluted shares outstanding of approximately 1.9 million shares as of March 31, 2022. Panna mentioned our share repurchase program and, through March 31, 2022, the company has repurchased a total of 475,157 shares. Of those, 353,667 shares were purchased in the first quarter of 2022. Our cash position, including cash equivalents and marketable securities at March 31, '22, was $65.2 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. Consistent with our focus on capital efficiency, in September 21, as Panna mentioned, we created an Australian subsidiary with the objective of enabling Lantern to take advantage of Australia's R&D Tax Incentive program which provides tax offsets for eligible R&D expenditures. We see this program as providing us with the opportunity to conduct selected upcoming preclinical and clinical studies and trials with increased financial flexibility and capital efficiency. As Kishor previously discussed, we've already initiated preclinical and IND-enabling studies through our subsidiary in Australia. As mentioned on prior calls, we're migrating to a hybrid work environment and I'm proud to say our team continues to be very productive under this operating model. This hybrid model removes geographic restrictions to our hiring initiative which also gives us the ability to recruit extremely high-caliber team members that otherwise might not be available. We've maintained discipline in managing our headcount and we currently have 60 employees who are primarily focused on leading and advancing our research and development efforts. We see our number of employees expanding slightly in coming quarters as we add additional experienced and talented individuals to help advance our mission. At the end of April, we announced that Dr. Maria Maccecchini was nominated for election to our Board of Directors. He is the current CEO, President and a Director of Annovis Bio Inc., a biopharma company focused on developing therapies for neurodegenerative diseases. And if elected, she will bring decades of experience in progressing drug candidates through late-stage clinical trials. Dr. Maccecchini will be presented alongside a slate of five existing directors at Lantern's upcoming annual meeting to be held on June 2022. I'll now turn the call back to Panna for some final comments. Panna?

[Panna Sharma:]

Thank you, David. I believe we're very well positioned today. We will continue to have a very strong fiscal discipline, strong balance sheet and great oversight of our programs. Our focus is on leveraging our intellectual knowledge and our unique capabilities around scientific strategy and clinical trial design and on AI platform development. While we work with CROs and leading cancer centers to accelerate our trials and our studies. This model enables us to keep our company lean and mission-focused while allowing us the flexibility to increase or decrease the studies, the trials, the wet lab work as they're needed and also as results dictate. During the year, we expect to bring multiple assets into focused clinical trials in 2022, where there's demonstrated patient need or where there's really no proven therapy, for example, brain mets or ATRT, while remaining focused on capital efficiency. We'll continue to take initiatives this year to make our dollars go further such as the Australia subsidiary, potentially looking at additional partnerships, focusing on nondilutive funding through grants and other mechanisms. Additionally, our AI platform RADR will continue to grow significantly across all measures, data, analytical rigor, generation of new publishable insights and new functionality. As data and I continue to drive changes in cost, speed and efficiency of drug discovery development, out team at Lantern will remain at the forefront of transforming oncology therapeutic development. So with that, now I'd like to open up the call to any questions.

[A - Nicole Leber:]

Thank you, Panna. [Operator Instructions] We have couple of questions coming in already. One from Keith Thompson [ph]. Lantern is the only company I know of that mentions the size of its AI data bank. Why is that? Is $20 billion-plus a large or small number related to AI in the bio space?

[Panna Sharma:]

I think it's good to report how the progress of the DLAK [ph] is because it gives you a sense of what are the types of things our team is focused on? What is the velocity of the increase but cancers, what data types gives you a sense of what are the questions that we're going to be exploring and what is the road map for development. I'm sure there are other companies that talk about the numbers. I don't think many have the some kind of discipline in terms of reporting them or so might be afraid to report it. But I do see other companies in drug development. I think broadly in bio, I do see as many of the synthetic bio companies reporting similar types of metrics. So, yes, it's growing. It's definitely growing thing to report the number of kind of the data elements or data types or unique sets of data.

[Nicole Leber:]

Sure. The next question here and I see Michael Samuels [ph] is asking to raise his hand. And so, Michael, I will allow you to speak. Any worries related to your cash runway?

[David Margrave:]

I can speak to that. I think, the answer is no. I think we all recognize that focus on cash availability and your cash runway is very important for companies in our space. That's something we do constantly. As Panna recognized, this is a challenging environment. We're well aware of that. We're quite focused on maintaining capital efficiency and keeping the lean disciplined environment that we've been able to maintain at this point. We see if we do those things, we don't see cash runway as an issue for us. Anything you would add to that, Panna?

[Panna Sharma:]

No. I think we've given guidance, we've got cash into 2025 which I think there will be a lot of developments between now and then. So, we should be cognizant but we're not worried.

[Nicole Leber:]

Okay. And I see John Newman [ph] is asking to speak.

[Unidentified Analyst:]

I just had a question about the Phase II HARMONIC study for LP-300 in never smokers. Just curious if that study will be including patients with brain mets? And I'm wondering if brain mets are any more or less common in never-smoker lung cancer patients than smokers.

[Panna Sharma:]

I think, brain mets should be excluding people from the trial. Unfortunately, we won't confound the results of the study. And since brain mets is not the indication for LP-300, it probably makes sense for them to have a different care path that was the nature of your question. In terms of the -- I think there is a second part to that question, LP-300 besides the brain mets. John, what was the second part of that?

[Unidentified Analyst:]

Just curious if it's known whether brain mets are any more or less common in the never smoker patients, so perhaps never smoker patients wouldn't have as many brain mets. So there really wouldn't be any restrictions on them receiving the drug in the real world if it were approved.

[Kishor Bhatia:]

I can take that. No, I mean, even non-smokers -- in lung cancer in non-smokers, there are brain mets. There's not sufficient data that I can point to but I think there is equal risk, whether the lung cancer occurs in smokers or non-smokers. Yes, that's probably -- that's accurate from the anecdotal data but there's no comprehensive data I've seen in terms of percentage of bringing that from various smoking types.

[Unidentified Analyst:]

And can you maybe talk about any type of genetic or biomarker data that you'll be collecting from the never smoker patients?

[Panna Sharma:]

Yes, I'd love to. Kishor, do you want to give the [indiscernible].

[Kishor Bhatia:]

Yes, sure. So, we have an exploratory end point where we are looking at circulating DNA to see if we can get early indications of responses. But in addition to that, we are also going to collect already available genomic data from the archival tissues to be able to do more direct correlations in terms of the response, the patterns of response, so on and so forth. But all these are exploratory studies at this point.

[Panna Sharma:]

Yes. We'll be taking liquid biopsy at enrollment after three cycles, six cycles and at end of study. And so, we might find some unique sort of biomarkers correlated to some of the observations. But again, those are exploratory at this point but we may use in later stage phases. Very good questions from John.

[Nicole Leber:]

Okay. And I'm not seeing that we have any additional questions. So I'll give everyone a few moments if you would either like to type in your questions in the Q&A tool or if you would like to speak directly to management, feel free to use the raise hand tool. Okay. I'm not seeing any other questions coming in here. Panna, would you like to make any final remarks?

[Panna Sharma:]

No, we look forward to talking more with our investors and shareholders as the quarter continues. We plan on having several updates on not only our existing clinical trials but some of the other programs and partnerships that we'll be creating. So, thank you all for attending and we hope we found this as informative as well. Thank you.

[David Margrave:]

Thanks very much.

[Nicole Leber:]

Thank you, everyone.

[Kishor Bhatia:]

Thank you.