Lantern Pharma Inc. 10-Q Summary
Business context and reporting period
Lantern Pharma is a clinical-stage biotechnology company using its RADR® artificial intelligence, machine learning, and genomic-data platform to develop targeted oncology therapies. The portfolio included LP-100, LP-300, LP-184, LP-284, and an antibody-drug conjugate program. The filing covers the three and six months ended June 30, 2021; financial statements are unaudited.
Financial performance and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | $0 | $0 |
| Net loss, 2021 | $2.316 million | $4.769 million |
| Net loss, 2020 | $0.833 million | $1.311 million |
| Operating expenses, 2021 | $2.479 million | $4.931 million |
| Loss per share, 2021 | $0.21 | $0.45 |
| Cash used in operating activities | $3.870 million for the six months |
- Cash and cash equivalents were $61.354 million at June 30, 2021, compared with $19.229 million at December 31, 2020.
- Marketable securities totaled $18.235 million at June 30, 2021, with an additional $47,565 unrealized loss recorded in accumulated other comprehensive loss.
- Working capital was approximately $79.443 million, compared with $19.685 million at year-end 2020.
- Total liabilities were $2.819 million, including $276,603 of operating lease liabilities. The PPP loan was fully forgiven in April 2021; no long-term debt was outstanding.
- Net cash provided by financing activities was $64.289 million, principally from the January 2021 public offering.
- Management stated that existing cash and anticipated capital commitments should fund operating and capital requirements for at least 12 months from the filing date.
Material changes versus the prior comparable period
- Six-month net loss increased to $4.769 million from $1.311 million, primarily reflecting substantially higher research and development and general and administrative spending.
- Research and development expense increased 731% to $2.444 million for the six months, driven by manufacturing, personnel, research-study, licensing, and stock-based compensation costs.
- General and administrative expense increased 145% to $2.487 million, largely due to higher corporate insurance, business development, legal and patent, personnel, and stock-based compensation costs.
- Cash used in operations increased to $3.870 million from $1.194 million, while investing cash outflows increased to $18.294 million because the Company purchased marketable securities.
- The January 2021 offering generated approximately $69.0 million of gross proceeds and $64.167 million of net proceeds. Shares outstanding increased to 11,184,039 at June 30, 2021 from 6,220,927 at December 31, 2020.
- Interest income of $47,889 and other income of $114,723 were recorded in the six-month period. Other income primarily included approximately $110,000 of PPP loan forgiveness and approximately $5,000 of dividend income.
Guidance, outlook, risks, contingencies, and unusual items
- The Company expects operating losses and research and development expenses to increase as it advances LP-100, LP-300, LP-184, LP-284, the ADC program, and the RADR platform.
- Lantern stated that it will require substantial additional funding to complete clinical trials. Additional equity financing could dilute existing shareholders, while debt financing could increase fixed obligations and impose restrictive covenants.
- Development timelines and costs remain uncertain because of clinical-trial enrollment, regulatory requirements, manufacturing capability, competition, and the possibility that candidates may never receive approval.
- COVID-19 previously slowed research activities and LP-100 trial enrollment. The Company believed it had managed the effects through the filing date but warned that future disruption could materially affect operations and liquidity.
- On July 23, 2021, after quarter-end, Lantern agreed to reacquire global development and commercialization rights for LP-100 from Allarity Therapeutics. Consideration included a $1.0 million upfront payment, potential additional escrow payments of up to $1.0 million, up to $16.0 million of milestone payments, and low- to mid-single-digit royalties on future net sales.
- License, research, and strategic agreements generated approximately $1.123 million of research and development expense during the six months. The Company also expects additional payments under manufacturing and research agreements.
- Management reported effective disclosure controls as of June 30, 2021 and no material changes in internal control over financial reporting.
Important facts for investors to verify
- Confirm the cash runway relative to the planned clinical development schedule and projected spending increases.
- Assess the timing, design, enrollment, and funding requirements for planned or ongoing LP-100 and LP-300 trials and future LP-184 studies.
- Review dilution risk from the January 2021 equity offering, outstanding options, and 302,036 exercisable warrants.
- Evaluate the financial and regulatory obligations associated with reacquiring LP-100, including milestone payments, escrow payments, royalties, and companion-diagnostic rights.
- Monitor whether Lantern begins generating licensing or product revenue; the filing reports no revenue for either 2021 or 2020 comparable periods.
- Review COVID-19, clinical-trial, regulatory, manufacturing, intellectual-property, and financing risks, including the possibility that candidates may fail to obtain approval.