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 reported unaudited results for the three months ended March 31, 2021, compared with the three months ended March 31, 2020.
The pipeline included LP-100, out-licensed to Allarity Therapeutics and 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 initiated in early 2021. RADR® included more than 4.6 billion data points.
Financial Metrics
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No change |
| General and administrative expense | $1.173 million | $0.340 million | Up approximately 245% |
| Research and development expense | $1.279 million | $0.137 million | Up approximately 833% |
| Total operating expenses | $2.452 million | $0.477 million | Up approximately 414% |
| Net loss | $2.452 million | $0.477 million | Loss increased approximately 414% |
| Basic and diluted loss per share | $0.24 loss | $0.24 loss | Per-share amount unchanged |
| Cash used in operating activities | $2.144 million | $0.703 million | Use increased approximately $1.441 million |
| Cash provided by financing activities | $64.289 million | $0.105 million | Primarily January 2021 equity financing |
| Cash and cash equivalents at period end | $81.374 million | $0.634 million | Up from $19.229 million at December 31, 2020 |
There was no operating revenue or gross margin because the company has not generated revenue from operations. The company remained unprofitable, with an accumulated deficit of $15.112 million at March 31, 2021.
Research and development spending comprised $534,585 for LP-300, $463,950 for LP-184, $141,578 for the RADR® platform and $138,924 for other programs, including LP-284 and the ADC program.
Total assets were $82.505 million and total liabilities were $0.773 million at March 31, 2021. The company reported working capital of approximately $81.820 million. The only reported debt was a $108,500 PPP loan; in April 2021, the SBA authorized full forgiveness.
Material Changes Versus the Prior Comparable Period
- G&A expense increased primarily due to higher corporate insurance, labor, business-development, legal and patent, professional-fee and stock-based compensation costs.
- R&D expense increased primarily due to higher product-candidate manufacturing, employee, research-study, licensing and stock-based compensation costs.
- Operating cash use increased as the company expanded development activities.
- On January 20, 2021, the company completed a public offering of 4,928,571 common shares at $14.00 per share, generating approximately $69.0 million of gross proceeds and $64.167 million of net proceeds.
- Shares outstanding increased from 6,220,927 at December 31, 2020 to 11,181,447 at March 31, 2021, creating material equity dilution for existing holders.
- The company initiated its ADC program in early 2021 and entered into a January 2021 agreement with Piramal Pharma Solutions for LP-300 fill-and-finish manufacturing.
Guidance, Outlook, Risks and Unusual Items
Management expects significant and increasing operating losses for at least the next several years as it advances LP-300, LP-184 and other programs. R&D and G&A expenses are expected to rise as clinical trials, manufacturing, regulatory, public-company and infrastructure activities expand. The company does not expect meaningful product revenue unless and until candidates are successfully developed and receive regulatory approval.
Management believes cash on hand at March 31, 2021 will fund operating expenses and capital requirements for at least 12 months from the filing date. However, the company expects to require substantial additional funding to complete clinical trials. Additional equity financing could dilute existing stockholders; debt financing could create fixed obligations and restrictive covenants.
- LP-300 is being prepared for a Phase II trial in non-smoking or never-smoking NSCLC patients, but timing and trial costs remain uncertain.
- Allarity has indicated that LP-100 is a lower-priority program, and Lantern cannot forecast when the associated Phase II trial will be completed.
- The company has not obtained regulatory or marketing approval for any drug candidate and may never achieve approval or profitability.
- Clinical-trial enrollment, regulatory requirements, competition, manufacturing capability, intellectual-property matters and commercial viability could materially affect results.
- COVID-19 slowed certain research activities and LP-100 enrollment during 2020. Future disruptions, research delays, staffing issues or reduced access to capital could adversely affect operations.
- License, strategic-alliance and research agreements generated approximately $658,000 of R&D expense and approximately $1.033 million of payments in Q1 2021. Additional milestone, manufacturing, research and licensing payments are expected.
- In May 2021, after the reporting period, Lantern entered into a collaboration with Actuate Therapeutics involving RADR®; consideration includes potential Actuate stock subject to conditions. A Lantern director also serves as an Actuate director.
- In April 2021, the company entered into a 24-month flexible office lease at approximately $12,900 per month.
Most Important Facts to Verify
- Whether the $81.374 million cash balance and stated 12-month liquidity assessment remain adequate as clinical and manufacturing spending increases.
- The timing, enrollment status, financing needs and regulatory path for the planned LP-300 Phase II trial and the development path for LP-184.
- Allarity’s continued commitment to LP-100 and the likelihood of completing its Phase II trial.
- The company’s future capital requirements, potential equity dilution and terms of any additional financing.
- Whether R&D spending translates into clinical progress, meaningful biomarker validation and eventual regulatory approvals.
- The scope and financial impact of license royalties, milestone obligations, manufacturing commitments and other research-service agreements.
- The conditions, valuation and potential benefits of the post-period Actuate collaboration.