Lantern Pharma Inc. — Q1 2022 Form 10-Q Summary
Business Context and Reporting Period
Lantern Pharma is a clinical-stage biopharmaceutical company using its RADR® artificial intelligence, machine-learning and genomic-data platform to develop targeted oncology therapies. The filing covers the unaudited three months ended March 31, 2022, and was filed May 3, 2022.
The pipeline included LP-100 in a Phase II prostate-cancer trial, LP-300 being prepared for a targeted Phase II non-small-cell lung cancer trial, LP-184 in preclinical development, LP-284 in research optimization, and an antibody-drug conjugate program.
Financial Position and Key Metrics
| Metric | Q1 2022 | Q1 2021 or prior period |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expense | $1.406 million | $1.173 million |
| Research and development expense | $2.660 million | $1.279 million |
| Total operating expenses | $4.066 million | $2.452 million |
| Net loss | $4.122 million | $2.452 million |
| Loss per share, basic and diluted | $0.38 | $0.24 |
| Cash used in operating activities | $3.328 million | $2.144 million |
| Cash, cash equivalents and restricted cash, March 31 | $47.193 million | $81.374 million |
At March 31, 2022, cash and cash equivalents were $46.652 million, marketable securities were $18.565 million, working capital was approximately $64.589 million, and total assets were $68.403 million. Total liabilities were $3.087 million, consisting primarily of accounts payable, accrued expenses and operating lease liabilities. The company reported no long-term debt.
Comprehensive loss was $4.341 million, including $218,780 of unrealized securities and foreign-currency losses. No revenue-based margins are meaningful because the company has not generated operating revenue.
Material Changes Versus the Prior Comparable Period
- Net loss increased 68% to $4.122 million from $2.452 million.
- Research and development expense increased 108% to $2.660 million, primarily due to higher manufacturing, research-study and consulting costs and a $459,000 nonrecurring escrow payment released to Allarity under the LP-100 asset purchase agreement.
- General and administrative expense increased 19.9% to $1.406 million, reflecting higher professional fees, rent, travel, payroll, legal and patent costs, and stock-based compensation.
- Operating cash use increased to $3.328 million from $2.144 million.
- Financing cash flow changed from $64.289 million provided in Q1 2021, primarily from the January 2021 equity offering, to $2.182 million used in Q1 2022, primarily because of share repurchases.
- The company repurchased 353,667 shares for approximately $2.482 million at an average price of $6.86 per share. Approximately $3.637 million remained authorized under the repurchase program at March 31, 2022.
- Shares outstanding declined to 10,830,947 from 11,088,835 at December 31, 2021, despite the issuance of 95,779 shares from warrant exercises.
Guidance, Outlook, Risks and Unusual Items
Management expects research and development and general and administrative expenses, operating losses and cash requirements to increase as the company advances LP-300, LP-184 and LP-100, conducts additional studies, expands its platform and prepares for potential future commercialization. Management believes existing cash as of March 31, 2022, together with anticipated expenditures and commitments, will fund operations and capital requirements for at least 12 months from the filing date.
The company expects to need substantial additional funding to complete clinical trials. Potential equity financing could dilute existing holders, while debt financing could create fixed obligations and restrictive covenants. If financing is unavailable, the company may delay, reduce or discontinue programs or seek earlier and potentially less favorable collaborations.
COVID-19, supply-chain constraints and staffing issues affected manufacturing timelines for LP-300 and LP-184 and delayed planned clinical and IND-enabling activities. Enrollment in the LP-100 Phase II trial had also slowed during the pandemic. Clinical, regulatory, manufacturing, competition and commercialization risks remain significant, and no drug candidate has received regulatory or marketing approval.
Marketable securities had $581,869 of unrealized losses at March 31, 2022. Management did not consider these losses to represent credit losses. The company also maintains cash balances above federally insured limits and has foreign-currency exposure from its Australian subsidiary.
Subsequent to quarter-end, the company extended the employment agreements of its chief scientific officer and chief financial officer through July 30, 2024 and approved proposed base-salary increases, subject to further Board approval.
Investor Verification Checklist
- Verify the timing, enrollment and clinical results for the LP-100 Phase II trial and the planned LP-300 Phase II trial.
- Verify the status, manufacturing readiness and regulatory milestones for LP-184 and LP-300.
- Assess whether the stated cash runway remains adequate given rising research and development spending and the need for future trial funding.
- Monitor additional share repurchases, warrant exercises, dilution and the remaining repurchase authorization.
- Review license, research, manufacturing and clinical-trial commitments, including potential milestone, royalty and escrow payments.
- Track the effect of COVID-19, supply-chain delays, inflation and staffing constraints on trial and manufacturing schedules.