Leap Therapeutics, Inc. — 2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023; filed March 15, 2024. The filing is for Leap Therapeutics, Inc. (Nasdaq: LPTX), not the company named in the request metadata.
Business context
Leap is a clinical-stage biopharmaceutical company developing antibody therapies for cancer. Its lead candidate, DKN-01, is being studied in esophagogastric, colorectal and gynecologic cancers; FL-301 is its second clinical-stage program. FL-302 and FL-501 are preclinical. No candidate is approved, and Leap reported no product-sales revenue.
Key financial metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $73.2 million | $45.0 million |
| General and administrative expense | $13.8 million | $11.8 million |
| Total operating expenses / operating loss | $87.0 million | $56.8 million |
| Net loss | $81.4 million | $54.6 million |
| Basic and diluted loss per share | $3.98 | $4.82 |
| Cash used in operating activities | $43.8 million | $49.0 million |
| Cash and cash equivalents, year-end | $70.6 million | $65.5 million |
At December 31, 2023, current assets were $71.6 million and current liabilities were $12.7 million. Total liabilities were $12.7 million, principally accounts payable, accruals and lease liabilities; the filing reports no borrowings outstanding. Gross margin and product margins are not applicable because the company had no product-sales revenue.
Changes versus 2022
- Net loss increased by $26.8 million. R&D expense rose by $28.3 million, primarily because Leap expensed $29.6 million of acquired Flame in-process R&D with no alternative future use. Clinical-trial costs and R&D headcount also increased; lower clinical-material manufacturing costs partly offset the increase.
- G&A expense increased $2.0 million, mainly from professional fees and payroll.
- Operating cash use declined by $5.3 million. Year-end cash increased by $5.1 million, including $50.4 million of cash acquired in the Flame transaction; this increase should not be read as cash generated by operations.
- Loss per share narrowed despite the larger net loss, while weighted-average shares increased to 20.4 million from 11.3 million, reflecting the substantially higher share count following the Flame merger and preferred-stock conversion.
Outlook, risks and unusual items
- Management said year-end cash was expected to fund operating expenses and capital requirements for at least 12 months from the filing date. Leap expects continuing losses and anticipates needing additional capital or collaboration funding; absent funding or cost-sharing, it may delay, reduce or eliminate programs. The runway estimate depends on assumptions that may prove incorrect.
- The randomized Phase 2 DisTinGuish study of DKN-01 in first-line gastric/GEJ cancer completed enrollment of 170 patients in December 2023. At the filing date, Leap expected initial response-rate data in mid-2024 and preliminary progression-free-survival data in the second half of 2024.
- For DeFianCe in colorectal cancer, the filing reports initial Part A results presented at ASCO GI 2024: 30% response rate among 27 evaluable patients and 93% disease-control rate. Part B had enrolled 80 patients as of March 15, 2024; Leap expected enrollment completion in mid-2024. These are interim clinical findings, not proof of efficacy or approval.
- BeiGene declined its option to license DKN-01 in March 2023 but continued the clinical collaboration and committed to supplying tislelizumab for DisTinGuish. Any failure or delay in supply could affect the trial.
- The January 2023 Flame acquisition was accounted for as an asset acquisition. Leap issued common and convertible preferred securities; the preferred shares converted into common stock after stockholder approval. A one-for-ten reverse stock split also occurred in June 2023. These transactions materially changed the share count.
- Section 382 ownership-change limits mean substantial pre-change tax attributes are expected to expire unused, including approximately $210.8 million of federal NOLs and $7.9 million of federal R&D credits, as well as state tax attributes.
- Key risks include clinical failure or delay, financing needs, competition, reliance on contract manufacturers and CROs, and dependence on collaborators. DKN-01 and FL-301 remain investigational. The filing reports no material legal proceedings and no cybersecurity incident that materially affected the company as of the report date.
Most important facts for investors to verify
- Cash runway and quarterly cash burn in subsequent filings, including the timing and terms of any new financing.
- DisTinGuish randomized results and whether the DKN-01 benefit is supported by controlled data, including in the biomarker-defined populations.
- DeFianCe enrollment, comparative efficacy and safety results, and whether interim findings persist in the randomized study.
- Availability of tislelizumab and continued support from BeiGene and other partners.
- Fully diluted share count, outstanding warrants and options, and potential dilution following the Flame transaction.