Lantern Pharma Inc.
Q1 2021 Earnings Call Transcript

Published: 4 May 2021

[Company Representatives:]

Panna Sharma - President, Chief Executive Officer David Margrave - Chief Financial Officer Dr. Kerry Barnhart - Vice President of Clinical Development Marek Ciszewski - Investor Relations

[Operator:]

Good afternoon and welcome to Lantern Pharma’s First Quarter 2021 Conference Call. As a reminder, 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, Marek Ciszewski with Investor Relations at Lantern Pharma. Marek, please go ahead.

[Marek Ciszewski:]

Thank you, Jim, and thank you for joining us for Lantern Pharma’s first quarter 2021 conference call. On the call today are Panna Sharma, Lantern's President and CEO; David Margrave, Lantern’s CFO and Dr. Kerry Barnhart, Lantern's Vice President of Clinical Development. A press release was issued today with our first quarter financial results that we will be discussing in our call today.

[Panna Sharma:]

Marek, thank you, and good afternoon to everyone on the call today. Thank you for joining us for our first quarter 2021 conference call. We've got a number very important progress points over the past quarter and over the past month, very notably as many of you probably read this morning; we announced a collaboration with Actuate Therapeutics, where we will be leveraging our AI engine RADR to help them advance their drug candidate. As you know Lantern Pharma is an oncology biopharma company that leverages the power of our internally developed AI Machine Learning platform called RADR, to develop oncology therapeutics. We believe that we are transforming the development of oncology drugs by changing the pace, the cost, the risk of drug development and opening up new doors to rescue and repurpose drugs by using our data driven machine learning enabled approach.

[David Margrave:]

Thank you, Panna, and good afternoon everybody. I'm now going to share some of the financial highlights from our first quarter of 2021. For the quarter ended March 31, 2021, we had a net loss of approximately $2.45 million or $0.24 per share, compared to a net loss of approximately $477, 000 or $0.24 per share for the quarter ended March 31, 2020. Research and development expenses were approximately $1.3 million in the first quarter of 2021, compared to $137,000 for the first quarter of 2020. The increase was primarily attributable to increases in research studies, 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 further advance our portfolio and recently initiated ADC program, and move towards commencement of additional clinical trials and research studies. General and administrative expenses were approximately $1.2 million for the first quarter of 2021, compared to approximately $340,000 for the first quarter 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. Our team has also continued to grow. We currently have 16 employees, 12 full time and four part time, who are primarily focused on leading and advancing our drug development biology and data science efforts. We expect to operate in a hybrid work environment, working back in the office and remotely for the near year. We look forward to moving towards a post COVID environment and improving our productivity even more. As of March 31, 2021, we had 11,181,447 shares of common stock outstanding. This amount includes 4,928,571 shares that were issued in our January 2021 follow-on offering. At March 31, 2021 we also had warrants to purchase 305,294 shares and options to purchase 823,826 shares. These outstanding shares of common stock, together with warrants and options combined give us a total, fully diluted shares outstanding of 12,310,567 shares. Our cash position at March 31, 2021 with $81.4 million. As a result of our 2020 development and operational progress as Panna discussed, we were able to significantly strengthen our balance sheet in the first quarter with the closing of a $69 million follow-on public offering in January. This additional cash extends our anticipated cash runway through mid-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. Thank you, and I'll now hand the call back to Panna. Panna.

[Panna Sharma:]

David, thank you very much. I would now like to invite Dr. Kerry Barnhart, our colleague and our Vice President of Clinical Development to provide everyone an update on our LP-300 program. As many of you know or for those of you that are new, LP-300 is a small molecule, a disulfide bond disrupting agent, which we believe can play an important role in the treatment of non-small cell lung cancer in never smokers. Kerry, welcome to the call and please go ahead.

[Kerry Barnhart:]

Thank you, Panna, and good afternoon everyone. On last Tuesday April 27, Lantern Pharma submitted to the FDA its plans for the further clinical development of LP-300 in never smoker patients with long adenocarcinoma, building upon earlier clinical results from an international Phase 3 Trial conducted by BioNumerik partner that showed a clinically and statistically significant survival benefit from adding LP-300 to standard chemotherapy in this unique patient population. Lantern’s plans to conduct a new trial, where never smoker patients who have relapsed disease after being treated with either tyrosine kinase or immune checkpoint inhibitors, but having not been previously treated with standard chemotherapy will now be treated with either standard of care chemotherapy or standard of care chemotherapy plus LP-300. This trial which we believe can best further confirm the attitude survival benefit of LP-300 will enroll approximately 40 patients in each of the two treatment arms. In addition to providing the FDA with a full description of our clinical development plan, we also submitted supportive preclinical data from a bridging study that we conducted during the first quarter of this year that showed the tolerability of LP-300 added to standard of care chemotherapy. Lantern also requested a meeting with the FDA to discuss these plans and the FDA has granted that meeting requests. That meeting has been scheduled now for the third week of June. And finally, I’ll just a comment that new LP-300 drug manufacturing is ongoing currently and we anticipate having final drug product available for use in the clinical trial in the second half of this year. And I'll be happy during the Q&A session to answer anybody's questions about our clinical development plans for this molecule. And with that Panna, I’m turning it back to you.

[Panna Sharma:]

Kerry, thank you. Before we open the call to questions, a few closing comments. Moving forward we will continue to strategically grow RADR to become among the world's largest AI platforms for oncology drug discovery and development. We are confident that not only are we entering a new era of drug discovery, what I call the golden age of medicine, but the growth of RADR and the growth of the algorithm will continue to present additional opportunities for R&D collaborations such as the agreement we announced this morning with Actuate Therapeutics. While we are excited – we are excited to soon begin our LP-300 trial in non-small cell lung cancer among never smokers, a very unique and needed operation population. We also anticipate updates in our various collaborations and development plans with LP-184 and LP-284. Likewise our Antibody Drug Conjugate program continues to advance and we’re working on refining the conjugation and chemistry with that molecule, and we plan on getting it to clinical trials in 2022. Our data driven genomically targeted and biomarker business approach allows us to pursue a transformational drug development strategy that identifies, rescues or develops potential drug candidates at what we believe is a fraction of the time and cost associated with traditional cancer drug development. Our dual approach to both develop de novo biomarker guided drug candidates such as LP-184 and LP-284 and also rescue historical drug candidates such as LP-300 by leveraging the data sets in our RADR AI platforms, along with the continued advances in genomics and computational biology. We believe this is emblematic of a new era in drug discovery and development and one that Lantern as a leader has. In this context we are focused on building a portfolio all quality, potentially high value oncology drug candidates, each of which can be potentially partnered for pivotal registration directed trials who were potentially out-licensed, and we believe this provides a clear and defined path for potential high value creation for our shareholders or perhaps even brought to market directly concerning their ultra-rare indications. We are focused on establishing Lantern as the leading AI driven oncology drug discovery and development brand and franchise. We are building a company that can deliver enduring and significant value for our shareholders. There are potentially every decade, many thousands of discarded or otherwise de-prioritized therapeutic candidates across the industry and academia. We aim to bring at least one of these into our pipeline every 12 to 18 months. We are laser focused in the quality of rescue and the quality of new drug candidates and our aim is to build a franchise with significant long term value. It's also worth mentioning that the board and management collectively own well over 25% of Lantern’s Pharma. We believe the golden age of AI drug discovery and development is here and that Lantern is the leading – one the leaders in this paradigm shift and this paradigm shift will bring a change in the pace, width and cost of oncology drug discovery and development. We believe that we're proving that significant efficiency in the time and cost of oncology drug discovery and development are possible, such as time to new indication, time to be generating a signature, time to uncovering combinations and most importantly, bringing those insights into an actual number of products into the pipeline. As our history has shown, we have more than doubled our number of candidates that we are pursuing in programs, through this rapid identification and validation or understand the molecular drivers of cancer and perhaps the molecular drivers of response to a specific compounds in a much more targeted away and one that we believe can be more effective for oncology drug patient – oncology patients. Crucially, as our RADR AI platform grows over the coming year to perhaps exceed 10 billion data points, we anticipate the discovery of additional high value targets and indications as monotherapy, combination therapy, the worst part of our antibody drug conjugate platform. We look forward to sharing our ongoing progress with you in future updates and we would like to answer any questions that investors and analysts have on this call. So with that, I'd like to open up the call to questions.

[Operator:]

Gentlemen, thank you. Our first question today ladies and gentlemen is going to come from John Vandermosten at Zacks SCR. Please go ahead.

[John Vandermosten:]

Hi, good afternoon. I wanted to start off with a question on the data points and what's behind the exponential growth of them? It seems like if you look at the chart it just keeps on accelerating. How is that – how is that done?

[Panna Sharma:]

Great question. You know partly when we went public the team is much smaller, so we’ve added some great team. We’ve give them good resources, but we've also invested the time from the infrastructure side, largely driven by our Chief – Principal Architect to focus on automation. So in any task that we try to do, we try to automate it, and so we can get a lot done. More importantly we are able now to scour data sources internally and externally with a lot more precision and we can prioritize the pipeline as we've gotten more experience with tucking in data and understanding what problems we have, what the quality of data issues are and where we scoop up the data. Again, we put all that insight back into the automation procedures and so as we tuck in more data we understand where the exceptions are and where the exceptions are not, and that's allowed us to tuck in more and more data faster. So that's kind of been the process and as I mentioned we’re you know planning our next campaign and we believe our next campaign should get us very close to 10 billion, you know whether it takes three months or six months you know we're not sure, but for the process of trying to obviously be the last campaign where we tucked in all of the 3 billion data points. So yeah, it's – a lot of it is automation, a lot of its learning, what goes right, what goes wrong, understanding how to handle and manage the exception and then building that into pipelines that are more self-aware.

[John Vandermosten:]

Okay, and next question is on LP-284. I wanted to make sure I understand that molecule. It’s the mirror image of 284, is that right?

[A - Panna Sharma:]

It’s the mirror image or the stereoisomer as we called the 184.

[John Vandermosten:]

Okay, okay, so they are not – I mean I guess the orientation of 184 and 284 is distinct?

[A - Panna Sharma:]

Correct, yeah.

[John Vandermosten:]

Yeah, okay. It sounds like we can mix together, the enantiomers are mixed, so I guess they are distinct. And I guess has there been a lot of pre-clinical work done that you're using in your AI work to look at the effectiveness and side effects of both of these enantiomers.

[A - Panna Sharma:]

There has been some non-significant. Since 284 is referred to as a new molecule, there really is no historical work that we can rely on when we're doing the work. But we can learn from kind of other precedents, we can learn from similar pile situations, but it's a new module, so there's really not much work done at all on this kind of module since it’s newly patented. So this is, like we said it has some surprising, distinct properties and hematologic for blood cancers where 184 does not. So we're actually quite excited by it, because our initial – to be honest our initial thought – and this is kind of rewinding, but it’s a little more delayed. When we first hit 184 as a molecule, it was created somewhat synthetically, which led us to this mixed negative and positive enantiomer mix, because of the semi synthetic it occurs naturally that way. When we found the results of that semi synthetic molecule, there was an underlying thesis or belief that we needed the fix that we saw and many of the cancers was because that there was different binding between the positive and negative enantiomer, and this actually had been observed in other anti-cancer drugs, and so many drugs are separated based on an enantiomer like bendamustine and I believe that's one of the case studies, and so there was a chemists that perhaps we need to purify and really get to the negative enantiomer or the positive enantiomer and that's actually the one that has the stronger potency as predicted by the AI engines. And we thought, ‘okay, that makes sense.’ This is one of actually the very first things from when we were a private company that we looked at and started working on, and there were a lot of debates about whether this molecule wasn't different and unique or whether we were accessing the potency that we should have seen, and so the enantiomer pieces made some sense and we chased that down. We made then, we invested significantly in creating a fully synthetic route of 184, not starting from eluding fungal cultures, so starting purely from pure synthetic chemistry, and we found that in fact 184 was super potent as we know it, nanomolar potency and many of the solitude is actually better than what was expected and of course what we saw as the needed effect was because of the positive enantiomer not having the same kind of binding strength in property and actually kind of muting the effect of the negative enantiomer. So we parked the positive enantiomer for a while, and decided we have to really characterize this negative enantiomer, and so as you’ve seen we have more money and capability after we went public. We characterized 184 to-death, which generated sequences with sub types of cancer, we did CRISPR editing to figure out which PTGR1 was the driver. We really characterized the molecule. And there was a thought from some of our team members that perhaps you should benchmark 284 verses 184 and some more studies. And as part of those studies, we found that in fact 284 was very potent in certain Hematology cancers. It’s still very early and we still have to take this to the right, more relevant physiological models in small animals, etc., and the PDX, but what we're finding is that in fact the blood cancers in which 184 really doesn't have much an effect because PTGR1 is not present as a driver and many of the other genes that are required for 184 to have its potency, those are not hallmarks of any of these cancers and so we believe 284 does work in a very different way. And so what seen as potentially a weakness in solid tumors has turned out to actually be a strength in certain hematologic cancers. And so as we grew the team we had the bandwidth and the time to really pursue that indication in fact now we have some ideas as to why we have more data and we filed IP and so it's really, it’s very, very interesting you know. But it's still early and we hope we will get more data as we pursue 284 in blood cancers.

[Operator:]

Thank you. Our next question today will come from the line of Kyle Bauser at Colliers Securities. Please go ahead.

[Kayla Hostetler:]

Hi! This is Kayla Hostetler on for Kyle, Thanks for taking the question.

[Panna Sharma:]

No problem, thank you Kayla.

[Kayla Hostetler:]

Yeah, we were just wondering about cash potential and potential acquired acquisition. I think you mentioned that cash should be positioned through 2025, but does that consider kind of your offsetting investments to supplement the current pipeline and how should we think about your appetite for acquiring additional assets to develop?

[Panna Sharma:]

That’s a wonderful question. I’ll let David talk a little about our cash position, cash usage and we’ll talk of where we are in the BD pipeline.

[David Margrave:]

Thanks Panna. So we had $81.4 million at March 31 and you see our expenses growing as we move through this year. We had a net loss of $2.45 million for Q1. We expect that will grow from current levels during the remainder of 2021. We see R&D growing at a higher rate than G&A. As we look to ‘23 where we’ll have multiple trials in progress, our expenses will grow then further than that. Our operating plan has the potential for bringing in new candidates as part of our plans, so that's built into our estimate with respect to our runway. We always want to be on the lookout for those sorts of opportunities and I'll turn it back Panna to drill down a little bit more on that.

[Panna Sharma:]

Thanks. We have a fairly disciplined way to look at asset. In fact one of our programs that we have internally, that isn't quite early RADR, but somewhat eventually I think it would feed into RADR. It’s also a data driven approach to look at all the oncology drug assets. We have an internal database called T4. It’s called transforming trash to treasure, that looks at every single oncology trial over the last 12 to 15 plus years by drug class, by failure, by category, by drug type and then characterizes those drug and the trials and reasons of failure and the molecular weight and the indications, and also new combinations or new ideas in those drug classes. So we looked at thousands and thousands of oncology, drugs and prioritized the ones that we think are of interest. And we go after some of those proactively and we get many, many, many opportunistically in literally every few weeks. But you know we have a disciplined process and we’ll deploy capital in a disciplined way, but I don't think it will be anything that will take a meeting or significant portion of our cash position. But yeah, we have a good appetite. We are a very good, but very well informed appetite for new drug assets.

[Operator:]

And our next question from our phone audience today will come from Daniel Carlson at TW Research Group. Please go ahead, your line is open sir.

[Daniel Carlson:]

Thanks Panna. Question for you on – a question on the LP-300 trial. I wonder if you can provide some more details on that trial and also it seems like it might be right for a partnership at one point, and if you are looking to further monetize that or accelerate that trial somehow.

[Panna Sharma:]

Sure. I’ll let Kerry talk about some of the details on the trial and the process to the extent that we can, and then I will answer the questions about kind of further monetizing that asset, some of the ideas around that. Kerry.

[Kerry Barnhart:]

Sure. So as I described, this is going to be a Phase 2 randomized two arm trial, in which we will be looking at never smoker lung adenocarcinoma patients who have failed the initial therapies designed to target their tumors, whether they're tyrosine kinase inhibitor therapy or immune checkpoint inhibitor therapy. Those therapies actually do a fairly good job in many patients of showing initial responses, but unfortunately virtually all of those patients will eventually relapse and those therapies will not work for them. And the standard of care to treat those patients is now commonly a platinum based chemotherapy doublet, which is similar to what historically LP-300 showed, statistically, significant, survival benefits for. So we will be treating these patients after they fail their initial therapy with either standard of care chemotherapy or standard of care chemotherapy with the addition of LP-300, and we are in the process right now of talking to sites. We have a small handful of sites that have indicated additional interest in participating in the trial. We are interviewing CROs to bring onboard a trial management and operations team and I think we'll be releasing more details in the coming months about all of that, but Panna I'll turn it back to you if you wanted to comment on partnership.

[Panna Sharma:]

Yeah, so one of the things we want to do is get through and scale up the trial, because that will open up opportunities to potentially partner the asset. As I mentioned 20% or approximately 20% of the non-small cell lung cancer cases seem to be occurring in never smokers, and these never smoker tend to be predominantly female 66% at least in the U.S. and U.K. In fact there’s 70%; in some parts of Asia it’s closer to 80%, and there's not a lot of good options. But many of the big pharma companies; AstraZeneca, Merck, Roche have wonderful IO programs that have blossomed over the last few years and those IO drugs worked really well on smokers that have high tumor mutation burden. Interestingly enough, non-smokers and never smokers actually have a very low tumor mutation burden, a very quiet, very subtle mutation, very different profiles. They don't respond well to IO therapy or even IO plus chemo, and so we believe that there is a great way to monetize this by partnering with some of the larger players who have good storied franchises and non-small cell lung cancer, and so we’ll be, we’ll be planning on having some of those discussions as the Phase 2 trial launches and goes under way. The way we are currently planning for it as Kerry mentioned in the multi arm trial, is we have seen historically that they've become kind of a separation of the survival curves in the LP-300 treated arm versus the standard of care arm at around 10 to 12 months. You start seeing this kind of separation begin. So as we have further discussions, you know we're thinking about kind of a peak in or a review at around that time, you know based on how many people we've got enrolled. So I think you know in terms of monetizing, like how we monetized it in or after that event around 12 months after the launch, maybe it really depends on enrolment, but I definitely think that the heels of the end of the first 12 to 18 months of enrolment, I think there will be a lot of big pharma that have franchises in lung cancer that actually had tried to go after non-smokers in the past, that would have a lot of interest in this asset. Hope that answers your question, Dan.

[Operator:]

Certainly, thank you. Gentlemen, our next question comes from Keith Gill at Connor Cherry and Company.

[Unidentified Analyst:]

Good Afternoon. Panna, how are you?

[Panna Sharma:]

Good, thank you Keith.

[Unidentified Analyst:]

Congratulations on all your .

[Panna Sharma:]

Jim? – Operator, I think…

[Operator:]

Hello Keith, are you still there? I believe we may have lost you sir. .

[Unidentified Analyst:]

Hello!

[Operator:]

Mr. Gill can you hear us?

[Unidentified Analyst:]

Can you hear me okay?

[Operator:]

Yes, please go ahead.

[Unidentified Analyst:]

Well, I’m sorry. So again, congratulations on the Actuate Therapeutics agreement. Now it is a model of future deals. Could there be possibly cash milestone, royalty payments and how many or how often can Lantern do these type of deals? Thank you.

[Panna Sharma:]

Great, thank you Keith. As you know we are not a service company or services company. We are going to continue focusing on developing innovative or high value oncology therapies. We will do it with partners where we believe we can get an interest in therapy or the company, and which actually it happens to be a very like-minded group, where they think that AI and biomarker driven approaches can accelerate their process and help them get to an exit, and more importantly, help them to find the right responder group which is very valuable. So I think those kind of efforts we plan on taking, you know collectively knowing that we are going to be taking potentially equity or deferred cash or equity plus milestones based on success. So I think the cash will come down a line. I don't think we're going to try to build a franchise. We’re just doing this just purely for cash or services. I think the bigger upside is in doing this and drugs where we have a higher likelihood of succeeding in getting into the pipeline and then taking a percentage of that company or taking a percentage of that drug asset. I think we'll see many of those types of deals hopefully over the coming quarters.

[Operator:]

Next well take a follow up gentlemen from Daniel Carlson at TW Research Group.

[Daniel Carlson:]

Sorry guys, I had the same question, so no need. Thank you.

[Operator:]

Very good, thank you. . We'll hear from Steve Popovich at Builders Inc.

[Steve Popovich:]

Hello! Firstly Panna, I’d like to congratulate you and your team on the tremendous progress you've made over this last year. So really satisfying for me to be an investor in your company.

[Panna Sharma:]

Steve, thank you.

[Steve Popovich:]

Sure, I thought you said, I heard you say that the trial on the LP-300 was going to start on the second half of this year and there was going to be approximately 40 patients involved in that. Will they all be women and will there be an age limit on that, on men?

[Panna Sharma:]

Wonderful question Steve, I’ll let actually Kerry clarify. I think there will be two arms. Kerry, do you want to go ahead and clarify that?

[Kerry Barnhart:]

Absolutely! So there will two arms with 40 patients in each arm and they will not be exclusively women. They will be exclusively never smokers. We may in fact have a higher percentage of women, just because there are a greater percentage of never smokers that are women that get lung adenocarcinoma. But we will be stratified in each individual clinical site for both age and gender, so that in each individual clinical site there won’t be an over balance of age or gender. And there is not at this point in time a specific age limit. There will be typical inclusion criteria for life expectancy and performance status, but we do not have an upper limit of age. There is a lower limit, 18 or older, but there is not an upper limit of age.

[Panna Sharma:]

To note the upper limit of age mostly, Steve as you probably know will be covered by many of the comorbidities rather conditions so, but yes. Does that answer your question?

[Operator:]

And gentleman the line has been returned to the audience. We have no further questions coming from audience today. I'd like to turn the floor over to Mr. Sharma for any clothing or additional remarks.

[Panna Sharma:]

Thank you, Jim, and thank you for all of your great questions. We hope that in the future that we’ll be able to meet many of you in person, share some of our progress of our team. We expect to be even more productive in the coming quarters and continue to have a discipline, both on our investments and on our balance sheet, but focus on developing and innovating the drug development process in oncology. We believe our AI platform is unparalleled in terms of the size and scale. We will continue to grow through the year even more and more rapidly, and as our drug programs continue to progress in pre-clinical trials and clinical development, we believe any one of these opportunities can represent exit in value points that are several times our existing market cap. So with that, I’d like thank you for your questions and look forward to talking with many of you face-to-face in the future.

[Operator:]

Ladies and gentlemen, this does conclude today's program. Thank you for your participation and you may disconnect at any time.