Lantern Pharma(LTRN) - 2020 Q4 - Annual Report

Part I Business Lantern Pharma uses its RADR® A.I. platform to streamline oncology drug development by identifying patient-specific genomic signatures - The company's core strategy is to leverage its A.I. platform, RADR®, to rescue and develop small molecule oncology drugs by identifying patient populations with specific genomic biomarkers that predict a positive response[17][18] - The RADR® platform integrates over 1.2 billion data points, using machine learning to uncover genomic signatures correlated to drug response, aiming to de-risk and accelerate the clinical trial process[17][19] Drug Candidate Pipeline Overview | Drug Candidate | Generic Name | Development Stage | Target Indication(s) | | :--- | :--- | :--- | :--- | | LP-100 | Irofulven | Phase II (Out-licensed to Allarity) | Metastatic Castration-Resistant Prostate Cancer (mCRPC) | | LP-300 | Tavocept | Planning Phase II | Non-Small Cell Lung Cancer (NSCLC) in never-smokers | | LP-184 | Hydroxyureamethylacylfulvene | Preclinical | Solid tumors (Prostate, Pancreatic, Ovarian), Glioblastoma | | ADC Program | LP-184 based | Research Optimization | Select Solid Tumors | Our Drug Candidate Pipeline The company's pipeline includes LP-100 (out-licensed), LP-300 (Phase II prep), and preclinical LP-184, plus new ADC and CNS programs - The company is building its pipeline by in-licensing clinical-stage drug candidates that were previously discontinued and using its RADR® platform to identify patient subgroups for targeted development[41] - An antibody drug conjugate (ADC) program was initiated in early 2021, leveraging the LP-184 molecule for select solid tumors, supported by an Evaluation Agreement with Califia Pharma, Inc[22][48][49] - The company is increasing its focus on Central Nervous System (CNS) cancers, including Glioblastoma (GBM) and Atypical Teratoid Rhabdoid Tumor (ATRT), based on promising preclinical data showing LP-184 can cross the blood-brain barrier[50][51] Our RADR Platform The proprietary RADR® A.I. platform analyzes over 1.2 billion oncology data points to identify predictive biomarkers with high accuracy - The RADR® platform has analyzed over 1.2 billion oncology-specific data points from more than 140 drug-cancer interactions and 55,000 patient records to enhance its predictive power[68] - The platform's workflow reduces approximately 18,000 genetic features to a targeted set of less than 50 candidate biomarkers predictive of a patient's response to a specific drug molecule[66] - Validation studies demonstrated high accuracy, with external retrospective analysis of 10 clinical studies achieving over 80% response prediction accuracy, and internal analysis of 120 drug-tumor interactions achieving over 85% accuracy[68] Our Strategy The company's strategy focuses on advancing its pipeline, expanding through drug rescue, and enhancing the RADR® platform data - Key growth strategies include advancing LP-184 and LP-300, expanding the pipeline by rescuing other failed drug candidates, and identifying novel combination therapies using the RADR® platform[73] - The company plans to increase the number of data points in its RADR® A.I. platform from over 1.2 billion to approximately three billion by the end of 2021[73] - A core objective is to continue developing and patenting intellectual property related to precision therapies, patient stratification, and genomic/biomarker signatures[76] Intellectual Property The company protects drug candidates with over 70 patents and its RADR® A.I. platform via trade secrets and confidentiality agreements - As of March 2021, the company owns or controls over 70 active patents and patent applications across 14 patent families[40][208] Patent Portfolio Expiration Outlook | Drug Candidate | Patent Expiration Range | | :--- | :--- | | LP-100 | Patents expire in August 2026 | | LP-184 | Patents expire in August 2026; new applications could extend to May 2040 | | LP-300 | Patents expire in March 2028; new applications could extend to March 2040 | - The RADR® platform is protected by trade secrets and confidentiality agreements, focusing on proprietary A.I. methodologies, data curation, and algorithmic models of biological processes[213][215] Competition The company faces intense competition from major pharmaceutical and biotech firms, and A.I. drug development companies - The company faces competition from major pharmaceutical and biotech companies that have significantly greater financial resources and expertise in R&D, manufacturing, and marketing[226] - In the A.I.-driven drug development space, competitors include AI Therapeutics, Atomwise, and Benevolent AI for drug discovery, and Adaptive Biotechnologies and Concerto HealthAI for biomarker development[229] - For its prostate cancer programs (LP-100, LP-184), key competitors include approved drugs like Astellas/Pfizer's Xtandi and Johnson & Johnson's Zytiga[231] Government Regulation The company's drug development is subject to extensive FDA regulation, requiring rigorous approval processes and compliance with various healthcare laws - Drug candidates must undergo a rigorous approval process with the FDA, starting with an IND application for clinical trials and culminating in an NDA submission for marketing approval[236][237] - The FDA's Orphan Drug Act provides incentives for developing drugs for rare diseases (affecting fewer than 200,000 people in the U.S.), including seven years of market exclusivity upon approval[251][253] - Post-approval, the company is subject to ongoing FDA regulation, including monitoring, adverse event reporting, and restrictions on off-label promotion, with non-compliance potentially leading to fines, recalls, or approval withdrawal[259][262] Risk Factors The company faces significant risks including limited operating history, net losses, funding needs, drug development failures, and reliance on third parties - The company has a limited operating history, has never generated revenue from drug sales, and incurred significant operating losses of $5.9 million in 2020, with continued losses expected[295][297] - Substantial additional funding will be required to advance clinical trials and operations, and failure to raise capital could force delays, reductions, or elimination of drug development programs[302] - The company's 'drug rescue' strategy for candidates that previously failed clinical trials involves unique risks, such as shorter patent terms and potential skepticism from partners and regulators[316][318] - The business is highly dependent on third parties for conducting clinical trials (CROs) and manufacturing drug supplies, and any failure by these parties could substantially harm development programs[405][410] Properties The company's Dallas office is under a month-to-month lease, with reduced commitment due to remote work during the COVID-19 pandemic - The principal executive office is in Dallas, Texas, under a month-to-month lease, with the lease commitment significantly reduced in August 2020 due to remote work during the COVID-19 pandemic[495] Legal Proceedings The company is not currently a party to any legal proceedings and is unaware of any pending or threatened litigation that could materially affect its business - The company is not currently a party to any legal proceedings and is unaware of any pending or threatened litigation that could have a material adverse effect on its business[496] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock began trading on Nasdaq in June 2020, has never paid dividends, and used $4.57 million of IPO proceeds by year-end 2020 - The company's common stock began trading on the Nasdaq Capital Market under the symbol "LTRN" on June 11, 2020[500] - The company has never paid cash dividends and does not plan to in the foreseeable future, retaining all funds for business development[502] - From the June 2020 IPO, which raised net proceeds of $23.4 million, approximately $4.57 million was used by December 31, 2020, for drug development, the RADR® platform, and general corporate purposes[509][510] Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a $5.9 million net loss in 2020, driven by increased G&A and R&D expenses, with liquidity boosted by its 2020 IPO and 2021 offering Financial Performance Summary (2020 vs. 2019) | Metric | 2020 ($) | 2019 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $0 | $0 | N/A | | General & Administrative Expenses | $3,664,965 | $1,475,000 | +149% | | Research & Development Expenses | $2,243,225 | $953,185 | +135% | | Net Loss | $(5,908,190) | $(2,428,185) | +143% | - The increase in G&A expenses was primarily due to higher corporate insurance ($1.08 million), stock compensation ($604 thousand), and labor costs ($512 thousand)[531] - The rise in R&D expenses was driven by increased labor ($489 thousand), stock compensation ($470 thousand), and research study costs ($194 thousand)[532] - The company's cash position increased significantly from $1.2 million at year-end 2019 to $19.2 million at year-end 2020, mainly due to the IPO, with a subsequent offering in January 2021 raising an additional $69 million in gross proceeds[538] Financial Statements and Supplementary Data Audited financial statements show a $5.9 million net loss in 2020, with $19.2 million cash and $20.4 million total assets as of year-end 2020 Consolidated Balance Sheet Highlights (As of Dec 31, 2020) | Account | Amount ($) | | :--- | :--- | | Assets | | | Cash | $19,229,232 | | Total Current Assets | $20,236,922 | | Total Assets | $20,359,634 | | Liabilities & Equity | | | Total Current Liabilities | $552,339 | | Total Liabilities | $660,839 | | Total Stockholders' Equity | $19,698,795 | Consolidated Statement of Operations Highlights (Year Ended Dec 31, 2020) | Account | Amount ($) | | :--- | :--- | | General and administrative | $3,664,965 | | Research and development | $2,243,225 | | Total operating expenses | $5,908,190 | | Net Loss | $(5,908,190) | - As of December 31, 2020, the company had federal net operating loss (NOL) carryforwards of approximately $11.5 million to offset future taxable income, with a full valuation allowance recorded against deferred tax assets due to a history of losses[685] Controls and Procedures Management concluded disclosure controls were effective as of December 31, 2020, having remediated prior material weaknesses in internal controls - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[692] - Material weaknesses in internal controls identified prior to the IPO (related to financial closing processes and oversight) were remediated during 2020 through hiring a CFO, adding resources, and implementing new procedures[690][691] - As an emerging growth company, a formal management report on internal control over financial reporting is not required until the Annual Report for the fiscal year ending December 31, 2021[693] Part III Directors, Executive Officers, Corporate Governance, Compensation, and Security Ownership Information for Items 10-14, covering governance, compensation, and ownership, is incorporated by reference from the forthcoming 2021 proxy statement - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, and principal accountant fees is incorporated by reference from the forthcoming 2021 proxy statement[697][698][699] Part IV Exhibit and Financial Statement Schedules This section lists all financial statements and exhibits filed with the Form 10-K, including corporate governance documents and material contracts - This section contains the list of financial statements and exhibits filed with the annual report, with all financial statement schedules omitted as the information is included in the financial statements or notes[704][705] - Exhibits include the company's certificate of incorporation, by-laws, material contracts such as the Technology License Agreement with AF Chemicals and the Drug License and Development Agreement with Allarity Therapeutics, and executive employment agreements[706]