Lantern Pharma Inc. — FY2021 Form 10-K Summary
Business context and reporting period
Lantern Pharma is a clinical-stage biotechnology company developing precision oncology therapies using its RADR® artificial intelligence, machine-learning and genomic-data platform. The filing covers the fiscal year ended December 31, 2021; it is an annual report rather than a quarterly filing.
- Pipeline: LP-100 in Phase II, LP-300 being prepared for a Phase II trial, LP-184 in preclinical and IND-enabling development, LP-284 in research optimization, and an antibody-drug conjugate program initiated in 2021.
- RADR® included more than 18 billion oncology-related data points; management targeted approximately 25 billion by the end of 2022.
- No drug candidate had received regulatory or marketing approval as of the filing date.
Financial results and key metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No operating revenue; prior research-grant revenue was not recognized in these periods |
| Research and development expense | $7.57 million | $2.24 million | Up 238% |
| General and administrative expense | $5.02 million | $3.66 million | Up 37% |
| Total operating expenses | $12.59 million | $5.91 million | Up 113% |
| Net loss | $12.36 million | $5.91 million | Loss increased 109% |
| Basic and diluted loss per share | $1.13 | $1.37 | Per-share loss declined due primarily to higher share count |
| Operating cash flow | $(10.59) million | $(5.65) million | Higher cash burn |
| Cash and cash equivalents | $51.52 million | $19.23 million | Increased $32.30 million |
| Marketable securities | $19.20 million | — | New investment balance |
| Working capital | Approximately $70.39 million | Not clearly provided in the filing text | — |
| Total liabilities | $2.38 million | $0.66 million | Increase largely related to leases and accrued expenses |
| Long-term debt | None | None, except PPP loan before forgiveness | PPP loan fully forgiven in 2021 |
Margins are not meaningful because the company generated no operating revenue. The company reported a comprehensive loss of $12.46 million in 2021, including $92,689 of unrealized investment losses and foreign-currency translation effects.
Material changes versus the prior comparable period
- R&D spending increased substantially, primarily because of manufacturing activities, research studies, payroll and the $1.0 million upfront payment to reacquire LP-100 rights from Allarity.
- G&A expense increased because of higher business-development, corporate-insurance, legal and patent costs.
- Lantern raised approximately $69.0 million in gross proceeds, or approximately $64.17 million net, from a January 2021 public offering of 4,928,571 shares.
- The company repurchased 121,490 shares for approximately $940,000 during 2021 under a $7.0 million authorization.
- Investing cash outflows increased to $19.53 million, primarily from purchases of marketable securities.
- LP-100 global development and commercialization rights were reacquired from Allarity in July 2021. The transaction included a $1.0 million upfront payment, up to $1.0 million in escrow-based potential payments, additional milestones and future royalties.
- The company entered into a CRO arrangement for the planned LP-300 Phase II trial and expected to pay approximately $6.5 million to $8.0 million over the following 18 to 24 months, including site and pass-through costs.
- An ADC program was initiated, while the Califia evaluation agreement expired on December 31, 2021 and was not extended.
- The company formed an Australian subsidiary in September 2021 and incurred approximately $18,000 of foreign-currency losses.
Guidance, outlook, risks and unusual items
- Management expected continued significant operating losses and increasing R&D expenses as it advances LP-300, LP-184 and LP-100 and develops other programs.
- Based on anticipated expenditures and commitments, management believed cash and cash equivalents at December 31, 2021 would fund operations and capital requirements for at least 12 months from the filing date. The company also stated that substantial additional funding will be required to complete clinical programs.
- COVID-19-related manufacturing, supply-chain and staffing disruptions delayed the planned LP-300 Phase II launch, LP-184 IND-enabling work and LP-100 patient enrollment.
- LP-300 is being repositioned toward never-smoker NSCLC patients based largely on retrospective subgroup analyses from prior trials whose overall populations failed their prespecified endpoints. These historical findings are not predictive of future trial success.
- LP-184 received FDA orphan-drug designations for pancreatic cancer, glioblastoma and ATRT; designation does not assure approval or shorten the development process.
- Key risks include clinical-trial failure or delay, patient enrollment challenges for biomarker-defined populations, regulatory rejection, safety and toxicity findings, reliance on CROs and contract manufacturers, limited operating history, need for additional capital and potential shareholder dilution.
- The company relies on third-party manufacturers, has no manufacturing facilities or commercial sales infrastructure, and has no long-term or redundant supply arrangements.
- Potential contractual obligations include milestone payments and royalties to licensors, including BioNumerik, AF Chemicals and Allarity. BioNumerik-related royalties could be substantial if LP-300 is commercialized.
- As of March 1, 2022, the company had repurchased an additional 308,345 shares after year-end, bringing total repurchases under the program to 429,835 shares and approximately $3.14 million in expenditures.
- The independent auditor issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting; the auditor was not required to provide a Section 404(b) attestation because Lantern is an emerging growth company.
Important facts for investors to verify
- Cash runway after incorporating the planned $6.5 million to $8.0 million LP-300 trial commitment, ongoing R&D growth and future LP-184 and LP-100 costs.
- Timing, regulatory clearance, enrollment and funding requirements for the LP-300 Phase II trial and LP-184 Phase I program.
- Whether retrospective LP-300 subgroup results can be replicated prospectively in a biomarker-selected population.
- Progress and remaining enrollment in the LP-100 Phase II trial following the reacquisition from Allarity.
- Terms, potential amounts and timing of milestone, royalty and escrow obligations under the Allarity, AF Chemicals and BioNumerik agreements.
- Potential dilution from the 890,826 outstanding stock options, 273,777 warrants and any future equity financing.
- Manufacturing readiness, supply continuity and the effect of COVID-19 or other staffing and supply-chain disruptions on clinical timelines.
- Validation of RADR® prediction accuracy and whether platform-derived biomarkers improve clinical outcomes rather than only retrospective analyses.