Business Context and Reporting Period
Lantern Pharma Inc. is a clinical-stage biopharmaceutical company using its RADR® artificial intelligence, machine-learning and genomic-data platform to develop targeted oncology therapies. The company’s portfolio included LP-100, LP-300, LP-184, LP-284 and an antibody-drug conjugate program. The report covers the three and nine months ended September 30, 2021, and was filed November 1, 2021. The interim financial statements are unaudited.
Financial Performance and Liquidity
| Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $2.964 million | $0.601 million | $5.408 million | $0.895 million |
| General and administrative expense | $1.184 million | $1.101 million | $3.672 million | $2.117 million |
| Total operating expenses | $4.149 million | $1.701 million | $9.080 million | $3.012 million |
| Net loss | $4.054 million | $1.701 million | $8.823 million | $3.012 million |
| Loss per share | $0.36 | $0.27 | $0.82 | $0.82 |
| Cash used in operating activities | Not separately provided | Not separately provided | $8.553 million | $4.084 million |
Margins are not meaningful because the company has not generated operating revenue. Comprehensive loss was $4.109 million for Q3 2021 and $8.925 million for the first nine months, including unrealized investment losses of $55,000 and $103,000, respectively.
- Cash and cash equivalents were $54.669 million at September 30, 2021, compared with $19.229 million at December 31, 2020.
- Marketable securities totaled $19.164 million, and restricted cash was $1.000 million. Total current assets were $76.337 million and working capital was approximately $74.551 million.
- Total liabilities were $1.878 million, primarily accounts payable, accrued expenses and operating lease liabilities. The PPP loan was fully forgiven in April 2021; the company reported no long-term debt at September 30, 2021.
- January 2021 equity financing generated approximately $64.167 million of net proceeds. The common-share count increased to 11,186,999 from 6,220,927 at December 31, 2020.
- Net cash provided by financing activities was $64.289 million for the first nine months of 2021, while investing activities used $19.297 million, principally for purchases of marketable securities.
Material Changes Versus the Prior Comparable Period
- Q3 research and development expense increased 393% to $2.964 million; the increase primarily reflected higher manufacturing costs, increased program activity and a $1.000 million nonrecurring payment to reacquire LP-100 rights from Allarity Therapeutics.
- Nine-month research and development expense increased 504% to $5.408 million, while general and administrative expense increased 73% to $3.672 million.
- Q3 net loss increased to $4.054 million from $1.701 million. The nine-month net loss increased to $8.823 million from $3.012 million.
- The company invested $19.282 million in marketable securities during the first nine months of 2021, compared with no such purchases in the prior-year period.
- In July 2021, Lantern reacquired global development and commercialization rights for LP-100, including a clinical protocol for certain bladder and prostate cancer patients. The transaction included a $1.000 million upfront payment expensed in research and development, up to an additional $1.000 million in escrow-based milestone payments, future milestone obligations and low- to mid-single-digit royalties on net sales.
- Lantern formed a wholly owned Australian subsidiary in September 2021 and entered into an agreement for multiple preclinical studies supporting an IND-enabling program for LP-184.
Guidance, Outlook, Risks and Unusual Items
- Management expects operating losses and research and development expenses to increase as it advances LP-100, prepares the LP-300 Phase II trial, progresses LP-184 toward IND-enabling studies and develops other programs.
- Management believes existing cash will fund operating expenses and capital requirements for at least 12 months from the filing date. However, it expects to require substantial additional funding to complete clinical trials and may pursue equity, debt, grants or collaborations.
- Future financing could dilute existing shareholders or impose repayment obligations and restrictive covenants. Insufficient funding could delay, reduce or terminate development programs or require unfavorable licensing or collaboration arrangements.
- Supply-chain and manufacturing delays related to COVID-19 affected the planned LP-300 Phase II launch and LP-184 IND-enabling studies. COVID-19 also slowed LP-100 trial enrollment and could continue to disrupt research, staffing, liquidity and clinical development.
- None of the drug candidates had received regulatory or marketing approval, and the company has no established product revenue. Clinical, regulatory, manufacturing, competitive and commercial risks remain substantial.
- In October 2021, after quarter-end, Lantern engaged Translational Drug Development as lead CRO for the LP-300 Phase II trial. Expected payments were approximately $6.5 million to $7.5 million over 18 to 24 months.
- The company recognized approximately $110,000 of PPP loan-forgiveness income during the first nine months and recorded $102,689 of accumulated unrealized losses on available-for-sale securities at quarter-end.
Important Facts for Investors to Verify
- Confirm the timing, design, enrollment and funding requirements of the planned LP-300 Phase II trial and the status of LP-100’s Phase II trial.
- Assess whether the reported cash and marketable securities balance is sufficient for the company’s expanding clinical and preclinical commitments, including the $6.5 million to $7.5 million LP-300 CRO commitment.
- Review the terms and likelihood of the additional LP-100 escrow, milestone and royalty obligations.
- Monitor operating cash burn, increasing research and development costs and the timing and terms of any future capital raise.
- Evaluate the clinical, regulatory and manufacturing risks associated with LP-100, LP-300, LP-184, LP-284 and the ADC program, including COVID-19 and supply-chain effects.