Lantern Pharma (NASDAQ:LTRN) Q2 2022 Earnings Call

0:00 Good afternoon, everyone. I am Nicole Lieber with Investor Relations here at Lantern Pharma. And welcome to our second quarter 2022 earnings call. I will be your host for today's call. As a reminder, this call is being recorded and all attendees are in a listen-only mode. We will open the call for questions and answers after management's presentation. A webcast replay of today's conference call will be available on our website at lanternpharma.com shortly after the call. We issued a press release after market closed today, summarizing our financial results and progress across the company for the second quarter of 2022. Copy of this release is available through our website at lanternpharma.com, where you will also find a link to the slides that management will be referencing on today's call.

0:48 I would like to remind everyone that remarks about future expectations, performance estimates and prospectus constitute forward-looking statements for purpose of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Lantern Pharma cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated by forward-looking statements including the impact of the COVID-19 pandemic, results of clinical trials, and the impact of competition. Additional information concerning factors that would cause actual results to differ materially from those in the forward-looking statements can be found in our annual report on Form 10-K for the year ended December 31, 2021, which is on file with the SEC and available on our website.

1:38 Forward-looking statements made on this conference call are as of today, Monday, August 8th, 2022, and Lantern does not intend to update any of these forward-looking statements to reflect from circumstances that occur after today unless required by law. The webcast replay of the conference call and webinar will be available on Lantern's website. Today's webcast, we have Lantern Pharma CEO, Panna Sharma, and CFO, David Margrave. Panna will start things off in a minute with an overview of Lantern's operational highlights and business activity, after which David will discuss our financial results. This will be followed by some concluding comments from Panna, and then we'll open up the call for Q&A.

2:23 I'd now like to turn the call over to Panna Sharma, President and CEO of Lantern Pharma. Panna, please go ahead. Peter Nara, Panna Sharma, Kishor Gopaldas Bhatia, Marc Chamberlain, David Margrave Thank you very much. We're using this platform to uncover significant opportunities in cancer, opportunities that are either underserved, unmet or often overlooked.

3:26 Thank you for joining us. Our unique AI platform is powered today by more than 21 billion data points and nearly 200 algorithms and computational models that can help us understand, predict and model questions that are fundamental to oncology drug development. Core to our business is our IP, not only on our drug products and the insights in how to best manufacture, utilize and direct them, but also relating to our AI platform and the methods and automation that drive the precision and growing power of radar.

4:25 Lantern Pharma has entered into a major period of transformation as we evolve and mature many of our initial AI driven insights and advance our drug candidates into human clinical trials. We're continuing to make significant and meaningful progress in turning the observations and correlations generated by our AI platform radar and then validated in the lab oftentimes labs of top tier academic and research partners into actual advancements for cancer patients and potentially breakthrough or first in human clinical programs. When we went public, we had three drug programs. Today, we have nine named programs in our pipeline and several additional programs in consideration and undergoing assessment. This level of early discovery and productivity with our cash utilization and headcount is largely unheard of in biopharma companies.

5:20 Today, we have several notable advancements to share with you, including updates about the launch of our phase two trial, for LP300 and lung cancer, the harmonic trial, the pathway towards phase one first in human clinical trials for LP184 and LP284, updates on the expansion of radar, as well as several operational and financial highlights. In July, we announced FDA authorization for the initiation of our harmonic trial, a phase two clinical trial evaluating our drug candidate LP300 in combination with chemotherapy for never smoker patients with advanced non-small cell lung cancer. The CDC defines never smoker as an adult who has never smoked or has smoked less than 100 cigarettes in his or her lifetime.

6:13 Thank you very much. Thank you for joining us. Thank you for joining us.

7:18 We're also engaging in global partnering discussions for regions of the world where there's a higher prevalence of never-smokers and non-small-cell lung cancer. This includes parts of Asia, South America, and Europe. Based on the present timeline, we anticipate initial interim analysis of trial results in late 2023 or early 2024, with trial completion by late 2024. Thank you for joining us. never smoker patients with non-small cell lung cancer represent a potential market size of 1.5 to 2 billion as nearly 200,000 patients worldwide are diagnosed with this cancer annually and 20 to 30,000 of those patients are in the U.S.

8:24 alone. A novel and very exciting aspect of Harmonic is that we'll be collecting and analyzing liquid biopsies from patients at four points during the trial, initially at enrollment prior to treatment, and then during treatment after three treatments and six treatments and at completion of treatment. This is a very unique study since the liquid biopsies will be analyzed for both genomic and transcriptomic data. And we believe this will represent one of the largest and most comprehensive biomarker studies done on the never smoker non-small cell lung cancer population. Importantly, data from these biopsies will also provide key biomarker data for radar to help generate insights for a potential pivotal phase three trial and to further understand the response biology of never smokers with non-small cell lung cancer.

9:19 In addition to the Phase 2 trial for LP300, we continue to advance multiple preclinical programs, and we also expect to launch three first-in-human Phase 1 trials over the next 12 months for our drug candidates, LP184 and LP284. Let me go into some details. For LP184, it's a unique asset that we believe can have a multi-billion dollar potential for Lantern and our shareholders. We are working on the preliminary trial design for a phase one trial of LP184 targeted for Q2 of 2023 in genomically defined pancreatic bladder cancers and other solid tumors in collaboration with Fox Chase Cancer Center and several other prestigious centers. We have also established a pathway towards a second phase one trial for LP184 in CNS cancers, including high-grade gliomas and GBN in collaboration with Johns Hopkins, which is targeted for Q2 of 2023.

10:16 Conducting two Phase I trials with LP184 will allow us to maximize the potential of a compound for these different cancer types and, very importantly, generate sufficient data for partnering or licensing interest in these clinically distinct cancers. We're also planning to advance LP184 for the treatment of CNS tumors in at least two disclosed indications, GBM and brain mints. Historically, these CNS indications have very low survival rates and have few or no approved therapies. For brain mints in particular, our indications in lung and breast cancer have shown superior sensitivity, even in brain mints from HER2 positive breast cancer and also from triple negative breast cancers.

11:02 Our preclinical studies have also revealed several molecular and bioavailability properties of LP184 that make it an exciting and uniquely promising agent for CNS cancers. Panna Sharma, Panna Sharma, Panna Sharma, Peter Nara, Peter Gopaldas Bhatia, Marc Chamberlain, David Margrave Thank you very much.

12:23 Thank you for joining us. Our CNS indications for LP184, including GBM, ATRT, and other pediatric CNS indications represent a market potential we believe in excess of over $4 billion annually. This is something we're really excited about and investors should also be as we advance this drug candidate into phase one trials with the potential to make a significant difference in a range of CNS cancers. Moving on to LP284, Thank you for joining us. Lantern is developing LP284 for non-Hodgkin's B-cell lymphomas, where LP284 has shown nanomolar potency in cell lines and also in vivo studies, specifically in mantle cell and double-hit lymphomas.

13:43 In addition to our exciting clinical developments, the radar team has been focused on making substantial improvements to our radar infrastructure, increased automation capabilities, and further refinement and improvement of algorithms. These advances will not only streamline radar insights for Lantern, but will also facilitate future commercial partnering opportunities. When we went public in the summer of 2020, radar consisted of 275 million data points, all in solid tumors. Today, we are more than 21 billion and remain on track to reach our 2022 year-end target of 25 billion. and this is across CNS cancers, pediatric cancers, solid tumors and also hematologic cancers. As we mentioned in our press release earlier this afternoon, Lantern entered into a collaboration with Actuate Therapeutics.

14:32 This collaboration was penned in Q2 of 2021. That collaboration leverages radar to accelerate the identification and development of actionable clinical biomarkers for Actuate's drug candidate L-reglucid, also known as 99G41. Using advanced machine learning, ensemble-based algorithms, and other radar-aided computational approaches, we have been successful in identifying candidate predictive biomarkers. Additionally, we've been able to model clinical response to L-reglucid. These insights are being used to inform the development of L-reglucid and the design of Phase II randomized trials. These methods will be further applied to future biomarker validation, and will be expanded to incorporate modeling with additional forms of patient data in the future, including RNA, ctDNA, soluble biomarkers, and other key genomic features. Lantern has received equity in actuate therapeutics and has the potential to receive additional equity upon meeting development milestones and the application of computational models to L-raglucid based on future development efforts. and to the Actuate team, if I've mispronounced L-reglucid, I'm sorry. It's a tough word. In September, which is Childhood Cancer Awareness Month, we'll be hosting a key opinion leader webinar on LP184 in the treatment of pediatric cancer. This will feature Dr.

15:59 Peter Howden, renowned professor and PI at Greedy Children's Cancer Center at UT Health Science Center, Additional details about the KOL webinar and pediatric cancer, which is currently being planned for September 22 next month, and how to participate in it will be announced in the coming weeks. I'll now turn the call over to our CFO, David Margrave, who will provide an overview of our second quarter financial results. David? Thank you, Panna, and good afternoon, everyone. I will now share some of the financial highlights from the second quarter. Our R&D expenses for the quarter ended June 30, 2022 were approximately $3 million up from approximately $1.2 million for the second quarter of 2021.

16:51 This increase was primarily attributable to increases in product candidate manufacturing related expenses and increases in research studies. General and administrative expenses were approximately $1.4 million for the second quarter of 2022, up from $1.3 million in the prior year period. We recorded a net loss of approximately $4.5 million for the quarter ended June 30, 2022, or 41 cents a share. This compares to a net loss of approximately $2.3 million for the quarter ended June 30, 2021, or 21 cents per share. As of June 30, 2022, we had approximately 10.8 million shares of common stock outstanding and outstanding warrants to purchase 177,998 shares and outstanding options to purchase 939,940 shares.

18:00 These warrants and options combined with our outstanding shares of common stock give us a total fully diluted shares outstanding of approximately 11.9 million shares as of June 30, 2022. Our cash position, which includes cash equivalents and marketable securities as of June 30, 2022, was approximately $62.2 million. This balance is expected to carry us into 2025. Importantly, We believe our solid financial position will fuel continued growth and evolution of our radar AI platform, accelerate the development of our portfolio of targeted oncology drug candidates, and allow us to introduce additional targeted products and collaboration opportunities in a capital efficient manner.

18:59 As mentioned on prior calls, we have migrated to a hybrid work environment and I'm proud to say our team continues to be very productive under this operating model. This hybrid model removes geographic restrictions to our hiring initiatives, which gives us the ability to recruit extremely high caliber team members that otherwise might not be available in a smaller local talent pool. We currently have 18 employees who are primarily focused on leading and advancing our research and drug development efforts. We see this number expanding slightly in coming quarters as we add additional experienced and talented individuals to help advance our mission.

19:44 I'll now turn the call back over to Panna for some final comments. Panna. Thank you, David. We're well positioned today and we're executing on our mission to leverage AI and data and also in a highly cost-effective manner to generate clinically needed programs in cancer therapy. We continue to have very strong fiscal discipline with our cash utilization rate mostly focused externally on research, manufacturing, and clinical trials and not on internal infrastructure development. Our focus remains on leveraging our intellectual knowledge capabilities around our scientific and AI strategy and then working with world-class partners in research and in clinical trials and also with experienced CROs to execute on our needs.

20:34 This is important because it enables us to dial up or dial down the work and cash burn as needed and rapidly adjust it as our data or the markets dictate. Peter Nara, Panna Sharma, Kishor Gopaldas Bhatia, Marc Chamberlain, David Margrave, David Margrave will also be presenting at the Society for Hematologic Oncology, the tenth annual meeting in Houston. That will be focused on LP284. We have several others also that are developing.

21:19 We'll announce more conference details in the coming weeks. will also be attending the MicroCap Rodeo Investor Conference in Chicago on October 12th and 13th and at the Think Equity Conference in New York on October 26th. I will also be hosting a panel on how established emerging biopharma companies are using AI specifically in drug discovery and development at the Think Equity Conference on the morning of October 26th. Ultimately, we believe many of our programs, as they further develop, can be partnered out for several hundred million or potentially even billions of dollars. In addition to providing multiple shots on goal, our maturing pipeline with two phase two assets, the upcoming launch of multiple phase one trials, and several preclinical studies underway should provide a steady flow of news, catalysts, and results. The ability to attract increasing levels of interest from the investment community.

22:17 Last year, we launched a major initiative internally to generate totally new molecules. We forecasted launching one to two programs in the first 12 months of this initiative. To date, about 18 months later, we launched six programs. Much of this was made possible by our radar platform and its rapidly growing data points and algorithms pointing to specific types of correlations. Peter Nara, Panna Sharma, Kishor Gopaldas Bhatia, Marc Chamberlain, David Margrave, David Margrave As I mentioned in our last call, it's not just data we're adding, we're also adding algorithms.

23:08 Looking back at the history of the company, we began with about three or four algorithms focused on very specific problems around differential gene expression. Algorithms, as many of you know, are generated to solve a workflow or to create an answer or a solution to a question that we may or may not fully understand or have today. Peter Nara, Panna Sharma, Panna Sharma, David Margrave Thank you very much. We're actively pursuing activities to increase the visibility of lantern pharma with investors and also to engage with larger global biopharma companies to explore partnering one or several of our programs.

24:20 I believe we have crossed an important inflection point in our business with our platform and now have repeatedly proven its capability of delivering important insights to drive the ongoing expansion of our pipeline. We believe we're ushered in a new era for our company focused increasingly on changing patient outcomes in cancer clinical trials. We are now leveraging our AI driven insights, not only to develop compounds, but actually improve the lives of cancer patients. I want to thank everyone for their time today and their interest in Lantern Pharma as we continue our focus to transform cancer drug development for the betterment of patients and to change the cost and timeline involved in developing new cancer therapies. With that, I'd like to now open up the call to any questions.

25:10 Great, thank you, Panna. If you would like to ask a question, you can do so in one of two ways. You can either use the raise hand tool if you wish to speak directly to management, and I will enable you to speak, or you can also just type in your question using the Q&A tool. So we have one coming in here from John Vander Mosten. What is your sense of the capacity of CROs and trial sites to take on clinical trials? That's a great question, John. It kind of sounds like you're doing some additional homework for your CRO coverage. So, as you know, I ran a pretty large CRO in the past, but I think I have an investor calling me directly now. It's crazy.

26:02 Okay. Okay. All right. The capacity, I think the capacity is fairly limited. I think the CROs are taking on a lot of work and projects and really delaying the launch. Part of that is driven because of the lack of available healthcare workers and staff at the sites to take on new trials. So it really becomes a lot of pushing and a lot of, unfortunately, personality that will drive trial sites to engage. But I think CROs are hungry for revenue.

26:48 So they, I think, are overestimating their capacity. I think there are a lot of overutilized teams across too many projects in CROs. And I think that's going to be quite challenging for certain trials, especially later stage trials, unless the what's also beginning to happen is that you're seeing increasing usage of other geographies. So that's also positive. But I do think that CROs are have kind of over over promised or slow to deliver, not not delivery, but slow to deliver. And so that focuses on pharmas like us and sponsors like us becoming more involved in what I call greater patient awareness. And we're doing that with the harmonic trial.

27:34 So if we can drive greater patient engagement and patient awareness, especially in these unique populations, that allows us to then drive the clinical sites to want to participate more actively. That's definitely an issue. We have a couple of other questions coming in here. One from Michael King. With the increase in data points, does your processing power not have to increase commensurately so as to not create a knowledge bottleneck? So great question, Michael. Wonderful question. So if you notice, we got to 20 billion data points in Q1, late Q1, which is a big increase. But we only got to a little over 21 in Q2. That's because our attention quickly focused to this very issue.

28:20 So we've done things to increase the speed of our pipeline. increased parallelization. So right now we solve some of those challenges by going massively parallel with simultaneous pipeline management and also tweaking the algorithms to perform faster using certain languages, switching them from R to Python or switching them even from Python to parallel Python and other things. So yeah, that's... that's something we're acutely aware of. So we've been able to address that head on. We continue to address that through greater automation so that our focus is on the actual runtime. The runtimes are going highly parallel and they're going through more nodes. So we haven't, we've seen the bottleneck, we've addressed the bottleneck and actually in some cases we've improved the output by 70 plus percent.

29:11 So I think we're ahead of the curve again and we're going to go back to sucking in more data. Another question coming in here from John Vandermosten. I noticed that you highlighted combination therapy using PARP inhibitors with LP100. Do you have any additional detail here? Yes, John, we do have additional detail, and we'll be sharing that, I think, in the coming weeks and months, but we have... Thank you so much for joining us. Peter Nara, Panna Sharma, David Margrave, David Margrave More adverse reaction than toxicity. And so we can give a smaller dose of PARP with 100. So that's our thesis. And that's what we're most likely going to re-engage with for that drug. But we'll be sharing additional details on our studies and the impact as a result of that.

30:32 But we're pretty excited by that. Okay, I have another question here. Can you tell us when you expect the clinical trial for LP300 to increase the burn rate? Yes, I expect it this quarter. So yeah, so as you know, we just made some major payments to manufacturers and to clinical trial sites to get them up and running. And so the logistics definitely took, we'll take a big chunk out this quarter or next quarter, but anything you want to add to that, David? Okay. I think it's consistent with the progress we're making towards advancing the clinical trials, and we will see it increase, not dramatically, but we will see it increase as we move into clinical trials and ramp those up.

31:21 Another question here is, what is the next outcome if the harmonic trial is successful? A conference call with analysts, probably. If the harmonic trial is successful, it's very likely that we would use the data to then refine the pivotal trial or partner it out in a pivotal trial with a big pharma. It's very interesting to note that pharma companies have wonderful programs in PD-L1 where tumor mutation burden is high. We talked about that earlier. In never smokers, tumor mutation burden is low. And so if the harmonic trial is successful, I think it would be a great compliment to many of the Non-Small Cell Lung Cancer Programs that big biopharma companies have today.

32:06 So that's most likely the outcome is that we'd use the data, refine and design a pivotal phase three in collaboration with a much larger partner. And again, it's a $1.5 to $2 billion plus opportunity. So I think it would attract a lot of attention from the better commercially equipped biopharma companies. It's a very interesting indication. Another question coming in here from John. Will radar be applied to a drug candidate after every phase trial to further refine patients and trial protocol? Yes, radar will be applied. The key will be to make sure that we have the anonymized data and that we've gathered the data, but we will probably... Peter Nara, Panna Sharma, David Margrave, David Margrave over the time of the trial so you can actually see some of the evolution of the therapy.

33:14 So yeah, that's something that will be a center of excellence at Lantern will be the use of liquid biopsies to monitor and to design further refinement approaches because it'll tell us how to refine the future trial, but also it might give us new insights into where the drug can be used. Peter Nara, Panna Sharma, Kishor Gopaldas Bhatia, Marc Chamberlain, David Margrave Another question coming in here. I've been noticing that the FDA is requiring more development companies to perform dose finding studies.

34:01 Have you observed this and will it impact your program design? Yeah, so most of our phase one is for dose finding and finding the maximum tolerated dose. So that's definitely true with some of these more potent agents. And we're reviewing those kind of considerations as part of our trial design. Some others coming in here. You have several CNS indications now. Can you give us highlights of why you're excited in that area? Sure. I mean, CNS indications have, you know, there historically have been, there's a huge unmet clinical need. There's some of the most aggressive cancers, both in children as well as in adults.

34:46 As a percentage, they cause massive amounts of, you know, heartache and grief, and there's a lot of spend in that area. The last drug was approved 17 years ago, TMZ. There was a more recent drug, but it was only approved in Japan by Daiichi Sankyo and it was an oncolytic virus and it's not used very much. Tumor treating fields have somewhat mixed results, although positive for patients. So it's an area where there's huge need. Thank you for joining us. For those reasons, I'm particularly excited about it.

35:53 On that topic, what's the next pediatric milestone? We plan on having a KOL webinar with Dr. Peter Houghton later this quarter, I believe in September. And then we'll have some additional data to talk about from our pediatric program and also some of the other work that we've done in radar. But we expect that we'll open up some near pediatric indications potentially as a result of that work. That's why we're engaged in it. The next question is, have you started to speak with larger pharma companies and where are we with that? That's a great question. hired someone specifically to help us with corporate development activities with larger biopharma companies. We've started having active discussions with a few of them. We've had debriefings, we've signed NDAs.

36:51 And so, yeah, I think that's a big part of our strategy over the next six and 12 months is to get in front of the pharmas, let them know about our programs, let them know which ones are We'd like to partner, share all the details of the initial data under CDA or NDAs as needed, and then have them probably watch and wait and look at our great data and partner. I mean, it takes a while to do these deals, and they want to see progress. So I think phase one, get the attention, get our programs into their mindset, show them how we're uniquely positioned versus all the other programs that are out there, demonstrate those results in ongoing studies, publications, and clinical trials. and then partner those assets out. Great question.

37:37 That is all the questions I see coming in here today. And with that, we'll end the call. So thank you everyone for attending and have a great rest of your day. Thanks everybody. Thank you.