Leap Therapeutics(LPTX) - 2025 Q1 - Quarterly Report

FORM 10-Q Filing Information This section provides essential identification details for the company's Quarterly Report on Form 10-Q Registrant Information This section details Leap Therapeutics, Inc.'s identification for the Form 10-Q, covering its incorporation, address, trading symbol, and filing status - Registrant: LEAP THERAPEUTICS, INC.[2] - Filing Type: Quarterly Report (10-Q) for the period ended March 31, 2025[2] Trading Symbol and Exchange Information | Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | | :------------------ | :---------------- | :--------------------------------------- | | Common Stock, par value $0.001 per share | LPTX | Nasdaq Capital Market | - Filing Status: Non-accelerated filer and Smaller reporting company[5] - Outstanding Shares as of May 9, 2025: 41,439,529 shares of common stock[5] Table of Contents This section provides an organized list of all chapters and their corresponding page numbers within the report Special Note Regarding Forward-Looking Statements and Industry Data This section provides important disclaimers regarding forward-looking statements and the use of industry data within the report Forward-Looking Statements Disclaimer This section warns that the report contains forward-looking statements subject to risks and uncertainties, which are not guarantees of future performance - Forward-looking statements reflect current views on operations and financial performance, subject to risks and uncertainties[9] - Key factors that could cause actual results to differ include ability to develop and commercialize sirexatamab (DKN-01), clinical trial status and results, regulatory approval, financial estimates, and market acceptance[9] - Readers are advised to refer to 'Risk Factors' in this and the Annual Report on Form 10-K for a discussion of important factors[12] - Sirexatamab (DKN-01) is an investigational drug, not yet approved by the FDA, and statements should not be deemed promotional[13] Introductory Comment This section provides introductory remarks and clarifies terminology used throughout the report References to Leap This section clarifies that terms like 'Company' and 'we' refer to Leap Therapeutics, Inc. and its consolidated subsidiaries - References to 'Company,' 'Leap,' 'Leap Therapeutics,' 'we,' 'us,' and 'our' refer to LEAP THERAPEUTICS, INC. and its consolidated subsidiaries[16] PART I — FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and related management discussion and analysis Item 1. Financial Statements This section presents Leap Therapeutics, Inc.'s unaudited condensed consolidated financial statements and related notes Condensed Consolidated Balance Sheets This section presents the company's financial position at specific dates, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Assets | | | | Cash and cash equivalents | $32,713 | $47,249 | | Total current assets | $33,870 | $48,039 | | Total assets | $34,879 | $49,124 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $14,039 | $14,076 | | Total stockholders' equity | $20,840 | $35,048 | | Total liabilities and stockholders' equity | $34,879 | $49,124 | - Cash and cash equivalents decreased by $14.5 million from December 31, 2024, to March 31, 2025[19] - Total stockholders' equity decreased by $14.2 million, primarily due to the net loss incurred[19] Condensed Consolidated Statements of Operations This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net loss Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $12,911 | $11,299 | | General and administrative | $3,006 | $3,526 | | Total operating expenses | $15,917 | $14,825 | | Loss from operations | $(15,917) | $(14,825) | | Interest income | $437 | $775 | | Australian research and development incentives | $55 | $246 | | Net loss | $(15,435) | $(13,820) | | Net loss per share (Basic and diluted) | $(0.37) | $(0.51) | | Weighted average common shares outstanding | 41,268,894 | 27,014,100 | - Net loss increased by $1.6 million (11.7%) from ($13.8 million) in Q1 2024 to ($15.4 million) in Q1 2025[21] - Research and development expenses increased by $1.6 million (14.3%) YoY, while general and administrative expenses decreased by $520 thousand (14.7%) YoY[21] - Net loss per share improved from ($0.51) to ($0.37) despite a higher net loss, due to a significant increase in weighted average common shares outstanding[21] Condensed Consolidated Statements of Comprehensive Loss This section presents the company's comprehensive loss, including net loss and other comprehensive income or loss items Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(15,435) | $(13,820) | | Foreign currency translation adjustments | $7 | $(226) | | Comprehensive loss | $(15,428) | $(14,046) | - Comprehensive loss increased from ($14.0 million) in Q1 2024 to ($15.4 million) in Q1 2025[25] - Foreign currency translation adjustments shifted from a loss of ($226 thousand) in Q1 2024 to a gain of $7 thousand in Q1 2025[25] Condensed Consolidated Statements of Stockholders' Equity This section details changes in the company's stockholders' equity over specific periods, including stock issuance and net loss Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) | Item | Balances at Dec 31, 2024 | Issuance of common stock upon exercise of stock options | Issuance of common stock upon exercise of prefunded warrants | Issuance of common stock upon vest of restricted stock units | Foreign currency translation adjustment | Stock-based compensation | Net loss | Balances at Mar 31, 2025 | | :----------------------------------- | :----------------------- | :-------------------------------------- | :----------------------------------------- | :------------------------------------------ | :-------------------------------------- | :----------------------- | :------- | :----------------------- | | Common Stock Shares | 38,329,894 | 6,667 | 2,921,041 | 181,927 | — | — | — | 41,439,529 | | Common Stock Amount | $38 | $0 | $3 | $0 | $0 | $0 | $0 | $41 | | Additional Paid-in Capital | $502,501 | $16 | $(3) | $0 | $0 | $1,204 | $0 | $503,718 | | Accumulated Other Comprehensive Income (Loss) | $(120) | $0 | $0 | $0 | $7 | $0 | $0 | $(113) | | Accumulated Deficit | $(467,371) | $0 | $0 | $0 | $0 | $0 | $(15,435) | $(482,806) | | Total Stockholders' Equity | $35,048 | $16 | $(3) | $0 | $7 | $1,204 | $(15,435) | $20,840 | - Total stockholders' equity decreased from $35.0 million at December 31, 2024, to $20.8 million at March 31, 2025, primarily due to the net loss of ($15.4 million)[33] - Common stock shares outstanding increased by over 3 million shares, mainly from the exercise of prefunded warrants (2,921,041 shares)[33] - Stock-based compensation contributed $1.2 million to additional paid-in capital during Q1 2025[33] Condensed Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(14,480) | $(15,516) | | Net cash provided by (used in) financing activities | $(61) | $29 | | Effect of exchange rate changes on cash and cash equivalents | $5 | $(235) | | Net decrease in cash and cash equivalents | $(14,536) | $(15,722) | | Cash and cash equivalents at end of period | $32,713 | $54,921 | - Net cash used in operating activities decreased by $1.0 million, from ($15.5 million) in Q1 2024 to ($14.5 million) in Q1 2025[36] - Cash and cash equivalents at the end of the period decreased to $32.7 million in Q1 2025 from $54.9 million in Q1 2024[36] - Financing activities shifted from providing $29 thousand in Q1 2024 to using ($61 thousand) in Q1 2025, primarily due to principal payments of insurance financing[36] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. Nature of Business, Basis of Presentation and Liquidity This note describes Leap Therapeutics as a biopharmaceutical company, its financial statement basis, and highlights liquidity challenges raising going concern doubts - Leap Therapeutics is a biopharmaceutical company developing novel biomarker-targeted antibody therapies for cancer, with sirexatamab (DKN-01) as its lead clinical stage program for colorectal cancer[44] - The company has not yet generated product sales revenue or achieved profitable operations, and expects to continue generating operating losses[47][48] - As of March 31, 2025, the company had cash and cash equivalents of $32.7 million and an accumulated deficit of ($482.8 million), raising substantial doubt about its ability to continue as a going concern for the next 12 months[48] - Future operations are dependent on raising additional capital through equity financings, government programs, or collaboration agreements[49] 2. Summary of Significant Accounting Policies This note outlines the significant accounting policies used in preparing the condensed consolidated financial statements, covering consolidation, estimates, R&D incentives, and fair value measurements - The company recognizes Australian research and development incentives as other income when there is reasonable assurance of receipt, based on eligible R&D expenses incurred by its Australian subsidiary[52][53] - The R&D incentive percentage was 43.5% for the three months ended March 31, 2025, and the receivable was $766 thousand as of March 31, 2025[54][55] Research and Development Incentive Receivable (in thousands) | Item | Amount | | :----------------------------------- | :----- | | Balance at January 1, 2024 | $771 | | Foreign currency translation | $(67) | | Balance at December 31, 2024 | $704 | | Australian research and development incentive income | $55 | | Foreign currency translation | $7 | | Balance at March 31, 2025 | $766 | - Cash equivalents of $13.0 million (March 31, 2025) and $23.3 million (December 31, 2024) are classified as Level 1 fair value assets, consisting of overnight investments and money market funds[62] - The company accounts for operating leases by recognizing right-of-use assets and lease liabilities, electing to treat lease and non-lease components as a single lease component[65][69] 3. Accrued Expenses This note details the composition of accrued expenses, primarily clinical trials, professional fees, and payroll-related costs Accrued Expenses (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Clinical trials | $4,694 | $4,798 | | Professional fees | $600 | $274 | | Payroll and related expenses | $1,698 | $3,464 | | Accrued expenses | $6,992 | $8,536 | - Total accrued expenses decreased by $1.5 million from December 31, 2024, to March 31, 2025, primarily due to a significant decrease in payroll and related expenses[75] 4. Leases This note provides information on the company's operating lease for real estate, including its expiration and associated assets, liabilities, and expenses - The company has an operating lease for real estate in the United States, expiring in July 2025[76][77] - As of March 31, 2025, a right-of-use asset of $152 thousand and a lease liability of $154 thousand are reflected on the balance sheet[78] - Rent expense was $118 thousand for the three months ended March 31, 2025, compared to $110 thousand for the same period in 2024[78] Future Operating Lease Payments (in thousands) as of March 31, 2025 | Year | Amount | | :--- | :----- | | 2025 | $156 | | Total Lease Payments | $156 | | Less: imputed interest | $(2) | | Total operating lease liabilities | $154 | 5. Warrants This note details outstanding warrants, their exercise prices, expiration dates, and cashless exercises during the quarter Outstanding Warrants as of March 31, 2025 | Description | Number of Common Shares Issuable | Exercise Price | Expiration Date | | :-------------------------- | :------------------------------- | :------------- | :-------------- | | January 23 2017 Warrants | 5,450 | $0.10 | Upon M&A Event | | 2019 Warrants | 690,813 | $19.50 | February 2026 | | March 2020 Coverage Warrants | 2,594,503 | $21.10 | Jan - March 2027 | | Total | 3,290,766 | | | - During Q1 2025, 824,718 March 2020 Pre-funded Warrants, 591,603 September 2021 Pre-funded Warrants, and 1,523,404 April 2024 Pre-funded Warrants were cashless exercised, resulting in the issuance of common shares[82][83][84] - The 2017 Warrants, which had a down round feature, expired in November 2024[81] 6. Common Stock This note outlines common stockholder rights and details a private placement completed in April 2024 - Each share of common stock entitles the holder to one vote, and common stockholders are entitled to dividends if declared, subject to preferred stockholders' rights. No dividends have been declared through March 31, 2025[87] - In April 2024, the company completed a private placement, issuing 12,660,993 shares of common stock and 1,523,404 prefunded warrants, generating aggregate net proceeds of $37.1 million[88] 7. Equity Incentive Plans This note describes the company's equity incentive plans, summarizing stock option and RSU activity, and stock-based compensation expense - As of March 31, 2025, there were 2,688,242 shares available for grant under the company's equity incentive plans[91] Stock Option Activity (as of March 31, 2025) | Item | Options | Weighted Average Exercise Price Per Share | | :-------------------------- | :-------- | :------------------------------------ | | Outstanding at Dec 31, 2024 | 6,416,744 | $8.43 | | Exercised | (6,667) | $2.40 | | Forfeited | (130,411) | $53.90 | | Outstanding at Mar 31, 2025 | 6,279,666 | $7.49 | - No stock options or RSUs were granted during the three months ended March 31, 2025[93][94] Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $634 | $627 | | General and administrative | $570 | $621 | | Total | $1,204 | $1,248 | 8. Net Loss Per Share This note details the calculation of basic and diluted net loss per share, identifying anti-dilutive securities excluded from the calculation Net Loss Per Share (in thousands, except share and per share amounts) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to common stockholders | $(15,435) | $(13,820) | | Weighted average common shares outstanding | 41,268,894 | 27,014,100 | | Net loss per share (basic and diluted) | $(0.37) | $(0.51) | Potentially Dilutive Securities Excluded from EPS Calculation (anti-dilutive effect) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Restricted stock units to purchase common stock | — | 227,500 | | Options to purchase common stock | 6,279,666 | 4,867,984 | | Warrants to purchase common stock | 3,285,316 | 3,586,373 | | Total | 9,564,982 | 8,681,857 | 9. Commitments and Contingencies This note details the company's commitments and contingencies, including manufacturing, insurance, license agreements, and legal proceedings - As of March 31, 2025, the company had $98 thousand in noncancelable commitments under manufacturing agreements for DKN-01[101] - In March 2025, the company financed $440 thousand in insurance premiums at an 8.74% fixed annual interest rate, with an outstanding principal of $363 thousand as of March 31, 2025[102] - The company has license agreements with Eli Lilly and Company and a collaboration agreement with Adimab, LLC, which may require future royalty and milestone payments upon product commercialization, though none have been paid or accrued through March 31, 2025[103][104] - The company is not currently a party to any material legal proceedings and has not incurred material costs from indemnification agreements[105][106] 10. Subsequent Events This note discloses a significant restructuring approved on May 6, 2025, to reduce cash burn and prioritize key clinical and preclinical programs - On May 6, 2025, the board approved a restructuring to reduce cash burn and prioritize clinical development of sirexatamab (DKN-01) in CRC and preclinical development of FL-501[107] - The restructuring involved a workforce reduction of approximately 50% (13 full-time employees reduced, 3 converted to part-time, plus 11 prior departures)[107] - The company expects to incur one-time costs of approximately $350 thousand to $450 thousand related to termination benefits, mostly recognized in Q2 2025[107] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's discussion and analysis of the company's financial condition, operations, and liquidity, emphasizing the need for additional funding Company Overview This section provides a high-level overview of Leap Therapeutics, Inc.'s business, focus, and operational funding - Leap Therapeutics is a biopharmaceutical company focused on developing biomarker-targeted antibody therapies for cancer, with sirexatamab (DKN-01) as its lead clinical program for colorectal cancer[109][110] - The company has no approved products or revenue from product sales, funding operations primarily through common and preferred stock sales and notes payable[111] Recent Developments This section highlights recent progress in the company's clinical programs and strategic corporate actions - Updated preliminary data from Part B of the DeFianCe Study (Phase 2) of sirexatamab (DKN-01) in combination with bevacizumab and chemotherapy in MSS CRC patients showed positive results[113] - In patients with high DKK1 levels (upper quartile, n=44), the Sirexatamab Arm showed a 32% higher ORR and 3.5 month longer PFS compared to the Control Arm - In patients who had not received prior anti-VEGF therapy (n=95), the Sirexatamab Arm had a 22% higher ORR and 2.6 month longer PFS compared to the Control Arm - These strong signals support a registrational Phase 3 clinical trial for sirexatamab (DKN-01) in second-line MSS CRC patients with high DKK1 levels or no prior anti-VEGF therapy[113] - New preclinical data for FL-501, a GDF-15 neutralizing antibody targeting cachexia, was presented at AACR 2025, demonstrating a longer half-life, reduced clearance, and effectiveness in countering cisplatin-induced weight loss in models[119] - The company announced a strategic restructuring to prioritize sirexatamab (DKN-01) in CRC and FL-501 preclinical development, resulting in approximately a 50% workforce reduction[119] Financial Overview This section provides a summary of the company's financial performance and key expense categories - Research and development expenses are expected to increase in the foreseeable future to support product candidate development, primarily sirexatamab (DKN-01)[118] - General and administrative expenses are anticipated to increase due to continued research activities and public company compliance costs[126] - Research and development incentive income is derived from the Australian government's R&D Incentive Program, providing a refundable tax offset for eligible R&D expenses[128] Critical Accounting Policies and Estimates This section discusses the company's critical accounting policies and estimates that require significant management judgment - Critical accounting policies involve significant judgment and complexity, including accrued research and development expenses, research and development incentive receivable, and stock-based compensation[132][134] Results of Operations This section analyzes the company's financial results for the reporting period compared to the prior year Summary of Results of Operations (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Research and development | $12,911 | $11,299 | $1,612 | | General and administrative | $3,006 | $3,526 | $(520) | | Total operating expenses | $15,917 | $14,825 | $1,092 | | Loss from operations | $(15,917) | $(14,825) | $(1,092) | | Interest income | $437 | $775 | $(338) | | Australian research and development incentives | $55 | $246 | $(191) | | Net loss | $(15,435) | $(13,820) | $(1,615) | - Research and development expenses increased by $1.6 million, primarily due to higher clinical trial costs for the DeFianCe Study and manufacturing costs[136] - General and administrative expenses decreased by $0.5 million, driven by a reduction in professional fees and stock-based compensation[137] - Interest income decreased by $0.3 million due to a lower average cash and cash equivalent balance[138] - Australian R&D incentive income decreased from $0.2 million in Q1 2024 to $0.1 million in Q1 2025[139] Financial Position, Liquidity and Capital Resources This section discusses the company's financial position, liquidity, capital resources, and ongoing funding needs - The company has not achieved profitable operations or positive cash flows from operations since inception and expects continued operating losses[142][143] - As of March 31, 2025, cash and cash equivalents were $32.7 million, and the accumulated deficit was ($482.8 million), leading to substantial doubt about the company's ability to continue as a going concern[143] - Additional funding is required through equity financings, government programs, or collaboration agreements; failure to obtain this could force delays or reductions in clinical trials and R&D programs[144] Cash Flows This section analyzes the company's cash flows from operating, investing, and financing activities Summary of Cash Flows (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Cash used in operating activities | $(14,480) | $(15,516) | | Cash provided by (used in) financing activities | $(61) | $29 | | Net decrease in cash and cash equivalents | $(14,536) | $(15,722) | - Net cash used in operating activities decreased by $1.0 million, primarily due to changes in working capital, partially offset by the net loss[146][147] - Net cash used in financing activities was ($61 thousand) in Q1 2025, compared to $29 thousand provided in Q1 2024, mainly due to principal payments of insurance financing[148] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section confirms no applicable quantitative and qualitative disclosures about market risk for the company - The company has no applicable quantitative and qualitative disclosures about market risk[149] Item 4. Controls and Procedures This section details the evaluation of disclosure controls and procedures, confirming their effectiveness and no material changes in internal control - Management, with the participation of the CEO and CFO (also serving as CFO), concluded that disclosure controls and procedures were effective as of March 31, 2025[151] - No changes in internal control over financial reporting materially affected, or are reasonably likely to affect, internal control over financial reporting during the three months ended March 31, 2025[152] PART II — OTHER INFORMATION This section contains other information not covered in the financial statements, including legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section confirms the company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[154] Item 1A. Risk Factors This section highlights the high investment risk, emphasizing substantial doubt about the company's ability to continue as a going concern - An investment in the company's ordinary shares involves a high degree of risk[155] - Management concluded that substantial doubt exists about the company's ability to continue as a going concern due to the need for additional capital and uncertainties in raising such funding[156] - Failure to raise sufficient additional capital could lead to inability to fund operations, develop product candidates, or realize asset value, potentially resulting in liquidation and loss of investment for stockholders[156] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities This section reports no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities to report[157] Item 3. Defaults Upon Senior Securities This section reports no defaults upon senior securities - No defaults upon senior securities to report[158] Item 4. Mine Safety Disclosures This section reports no applicable mine safety disclosures for the company - No mine safety disclosures to report[159] Item 5. Other Information This section provides additional information on a strategic restructuring, workforce reduction, and confirms no Rule 10b5-1 trading arrangements - On May 6, 2025, the board approved a restructuring to reduce cash burn and prioritize clinical development of sirexatamab (DKN-01) in CRC and preclinical advancement of FL-501[160] - The restructuring involved a workforce reduction of approximately 50%, leading to expected one-time costs of $0.35 million to $0.45 million, primarily for termination benefits[160] - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[162] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL financial statements - The exhibit index includes certifications by the CEO and CFO (Rule 13a-14(a) and 18 U.S.C. Section 1350) and XBRL formatted financial statements[166] Signatures This section contains the required signatures for the filing, certifying its accuracy and completeness Authorized Signatory This section confirms the official signing of the report by the registrant's authorized signatory - The report was signed on May 12, 2025, by Douglas E. Onsi, President, Chief Executive Officer, and Chief Financial Officer[170]