# Lantern Pharma Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Lantern Pharma Inc.](/companies/ltrn.md) (CIK 1763950)
- Form: 10-Q
- Filed: 2024-11-07
- Accepted by EDGAR: Nov 7, 2024, 21:07 ET
- Period: 2024-09-30
- Accession: 0001493152-24-044010
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1763950/000149315224044010/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1763950/000149315224044010/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $3.7m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $11.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$5.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$16.3m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$4.5m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$14.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.42 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.39 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.42 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.39 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 10,763,351 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 10,755,015 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$13.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $9.5k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $8.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $29.9m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $30.3m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $3.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $3.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $26.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,539 characters.

*You should read the following discussion and analysis of our financial condition and plan of operations together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from the plans, intentions, expectations and other forward-looking statements included in the discussion below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those factors discussed in the Risk Factors section of our 2023 Form 10-K on file with the SEC.*

### Overview

We are a clinical stage biotechnology company, focused on leveraging artificial intelligence (“A.I.”), machine learning and genomic data to streamline the drug development process and to identify the patients that will benefit from our targeted oncology therapies. Our portfolio of therapies consists of small molecules that others have tried, but failed, to develop into an approved commercialized drug, as well as new compounds that we are developing with the assistance of our proprietary A.I. platform and our biomarker driven approach. Our A.I. platform, known as RADR®, currently includes more than 100 billion data points, and uses big data analytics (combining molecular data, drug efficacy data, data from historical studies, data from scientific literature, phenotypic data from trials and publications, and mechanistic pathway data) and machine learning to rapidly uncover biologically relevant genomic signatures correlated to drug response, and then identify the cancer patients that we believe may benefit most from our compounds. This data-driven, genomically-targeted and biomarker-driven approach allows us to pursue a transformational drug development strategy that identifies, rescues or develops, and advances potential small molecule drug candidates at what we believe is a fraction of the time and cost associated with traditional cancer drug development.

We now have active clinical programs for our three lead small molecule drug candidates: LP-300, LP-184, and LP-284. These programs are focused on multiple important cancer indications, including both solid tumors and blood cancers. We have established a wholly-owned subsidiary, Starlight Therapeutics, to focus exclusively on the clinical development of our promising opportunities for central nervous system (“CNS”) and brain cancers, many of which have no effective treatment options. We are also advancing an antibody-drug conjugate (“ADC”) program focused on developing highly specific ADCs with highly potent drug-payloads.

Our strategy is to both develop new drug candidates using our RADR® platform, and other machine learning driven methodologies, and to pursue the development of drug candidates that have undergone previous clinical trial testing or that may have been halted in development or deprioritized because of insufficient clinical trial efficacy (i.e., a meaningful treatment benefit relevant for the disease or condition under study as measured against the comparator treatment used in the relevant clinical testing) or for strategic reasons by the owner or development team responsible for the compound. Importantly, these historical drug candidates appear to have been well-tolerated in many instances, and often have considerable data from previous toxicity, tolerability and ADME (absorption, distribution, metabolism, and excretion) studies that have been completed. Additionally, these drug candidates may also have a body of existing data supporting the potential mechanism(s) by which they achieve their intended biologic effect, but often require more targeted trials in a stratified group of patients to demonstrate statistically meaningful results. Our dual approach to both develop de-novo, biomarker-guided drug candidates and “rescue” historical drug-candidates by leveraging A.I., recent advances in genomics, computational biology and cloud computing is emblematic of a new era in drug development that is being driven by data-intensive approaches meant to de-risk development and accelerate the clinical trial process. In this context, we intend to create a diverse portfolio of oncology drug candidates for further development towards regulatory and marketing approval with the objective of establishing a leading A.I.-driven methodology for treating the right patient with the right oncology therapy.

A key component of our strategy is to target specific cancer patient populations and treatment indications identified by leveraging our RADR® platform, a proprietary A.I. enabled engine created and owned by us. We believe the combination of our therapeutic area expertise, our A.I. expertise, and our ability to identify and develop promising drug candidates through our collaborative relationships with research institutions in selected areas of oncology gives us a significant competitive advantage. Our RADR® platform has been developed and refined over the last five years and integrates billions of data points immediately relevant for oncology drug development and patient response prediction using artificial intelligence and proprietary machine learning algorithms. By identifying clinical candidates, together with relevant genomic and phenotypic data, we believe our approach will help us design more efficient pre-clinical studies, and more targeted clinical trials, thereby accelerating our drug candidates’ time to approval and eventually to market. Although we have not yet applied for or received regulatory or marketing approval for any of our drug candidates, we believe our RADR® platform has the ability to reduce the cost and time to bring drug candidates to specifically targeted patient groups. We believe we have developed a sustainable and scalable biopharma business model by combining a unique, oncology-focused big-data platform that leverages artificial intelligence along with active clinical and preclinical programs that are being advanced in targeted cancer therapeutic areas to address today’s treatment needs.

Our current portfolio consists of three lead drug candidates that are in clinical phases (known as LP-300, LP-184 and LP-284) and an Antibody Drug Conjugate (ADC) program that is in preclinical research optimization. In January 2023, we formed a wholly owned subsidiary, Starlight Therapeutics Inc. (“Starlight”), to develop drug candidate LP-184’s central nervous system (CNS) and brain cancer indications – including glioblastoma (GBM), brain metastases (brain mets.), and several rare pediatric CNS cancers. Following the formation of Starlight, we may also refer to the molecule LP-184, as it is developed in CNS indications, as “STAR-001”. All of these drug candidates and our ADC program are leveraging precision oncology, A.I. and genomic driven approaches to accelerate and direct development efforts.

We are currently conducting a targeted phase 2 trial (the Harmonic™ trial) for LP-300 in never smoking patients with advanced non-small cell lung cancer (“NSCLC”) in combination with chemotherapy, under an existing investigational new drug application. Our candidate LP-184 has shown promising *in-vitro* and *in vivo* anticancer activity in multiple solid tumor indications (including pancreatic, glioblastoma and triple negative breast cancer), and it is advancing in a Phase 1A clinical trial that commenced in mid-2023. Our candidate LP-284 has shown promising *in-vitro* and *in vivo* anticancer activity in multiple hematological cancers, which are distinct from the indications targeted by LP-184. LP-284 is advancing in a Phase 1A clinical trial that commenced in the fourth quarter of 2023.

Our ADC program has also continued to advance. In 2023, we entered into a research collaboration with Bielefeld University in Germany focused on development of ADCs utilizing cryptophycin as the ADC drug-payload. Cryptophycins are promising antitumor molecules that have demonstrated potency at ultra-low, picomolar, concentrations. In a broad range of preclinical studies, the cryptophycin-ADC synthesized as part of the Bielefeld collaboration demonstrated promising picomolar level potency and anti-tumor activity in multiple solid tumor cell lines, including breast, bladder, colorectal, gastric, pancreatic and ovarian.

In addition to our lead drug candidates and ADC program, we also have an additional drug candidate, LP-100, that we believe has potential for future development in combination with the class of anticancer agents known as PARP inhibitors (PARPi). For LP-100, as well as our lead drug candidate LP-300, we are leveraging data from prior preclinical studies and clinical trials, along with insights generated from our A.I. platform, to target the types of tumors and patient groups we believe will be most responsive to the drug. Both LP-100 and LP-300 showed promise in important patient subgroups, but failed pivotal Phase 3 trials when the overall results did not meet the predefined clinical endpoints. We believe that this was due to a lack of biomarker-driven patient stratification.

LP-300 has been studied in multiple randomized, controlled, multi-center non-small cell lung cancer, or NSCLC, trials that included administration of either paclitaxel and cisplatin and/or docetaxel and cisplatin. LP-100 has previously been in a genomic signature guided phase 2 clinical trial in Denmark for patients with metastatic castration resistant prostate cancer (mCRPC). 9 patients (out of a targeted enrollment of 27) were treated in the trial. The median overall survival (OS) for the initial group of 9 patients was approximately 12.5 months, which is an improvement over other similar fourth-line treatment regimens for mCRPC. Based on our evaluation of the synergies of LP-100 with PARP inhibitors, the decision was made in the first quarter of 2023 to close the phase 2 clinical trial in Denmark, to allow the focus of LP-100-directed resources on positioning the molecule for development in earlier lines of therapy with potentially larger market opportunities. LP-100 was previously out-licensed by us to Allarity Therapeutics A/S. In July 2021, we entered into an Asset Purchase Agreement to reacquire global development and commercialization rights for LP-100 from Allarity.

Our development strategy is to pursue an increasing number of oncology focused, molecularly targeted therapies where artificial intelligence and genomic data can help us provide biological insights, reduce the risk associated with development efforts and help clarify potential patient response. We plan on strategically evaluating these on a program-by-program basis as they advance into clinical development, either to be done entirely by us, or with licensing partners, to maximize the commercial opportunity and reduce the time it takes to bring the right drug to the right patient.

To date, except for a prior research grant, we have not generated any revenue, we have incurred net losses and our operations have been financed primarily by sales of our equity securities. Our net losses were approximately $14,906,000 and $11,776,000 for the nine months ended September 30, 2024 and 2023, respectively.

Our net losses have primarily resulted from costs incurred in licensing and developing the drug candidates in our pipeline, planning, preparing and conducting preclinical studies and clinical testing, and general and administrative activities associated with our operations. We expect to continue to incur significant expenses and corresponding increased operating losses for the foreseeable future as we continue to develop our pipeline. Our costs may further increase as we conduct additional preclinical studies and clinical trials and potentially seek regulatory clearance for and prepare to commercialize our drug candidates. We expect to incur significant expenses to continue to build the infrastructure necessary to support our expanded operations, preclinical studies, clinical trials, and commercialization, including manufacturing, marketing, sales and distribution functions. We have experienced and will continue to experience substantial costs associated with operating as a public company.

### Components of Our Results of Operations

### Revenues

We did not recognize revenues for the three and nine-month periods ended September 30, 2024 and 2023.

### Expenses

Our research and development expenses by project category for the three and nine months ended September 30, 2024 are as follows:

|  | Three Months Ended September 30, 2024 | Nine Months Ended September 30, 2024 |
| --- | ---: | ---: |
| LP-300 | $914,266 | $2,977,561 |
| LP-184 | 1,772,428 | 5,775,257 |
| LP-284 | 392,248 | 1,400,289 |
| LP-100 | 16,679 | 47,079 |
| ADC Program | 42,961 | 121,383 |
| RADR® Platform | 305,113 | 892,903 |
| Other | 272,951 | 641,697 |
| Total research and development expenses | $3,716,646 | $11,856,169 |

We expect that our research and development expenses will continue to increase as we progress our clinical trials for LP-300, LP-184, and LP-284, and advance our other drug candidates and programs. We expect this increase to include additional expenses associated with research and service provider agreements for the advancement of our drug candidates and research and development efforts.

Because of the numerous risks and uncertainties associated with product development, we cannot determine with certainty the duration and completion costs of these or other current or future clinical trials of LP-300, LP-184, LP-284 or our other drug candidates. We may never succeed in achieving regulatory approval for LP-300, LP-184, LP-284, LP-100, or any of our other drug candidates. The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rates, significant and changing government regulation, and geopolitical risk, including in Taiwan where we are pursuing clinical testing of LP-300. In addition, the probability of success for each drug candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability.

### General and Administrative

General and administrative expenses consist primarily of salaries and related costs for employees in executive, finance and administration, corporate development and administrative support functions, including stock-based compensation expenses and benefits. Other significant general and administrative expenses include accounting and legal services, insurance, the cost of various consultants, occupancy costs, investor relations and information systems costs.

We expect increased administrative costs resulting from our existing and anticipated clinical trials and the potential commercialization of our drug candidates. We believe that these increases will likely include increased costs for hiring additional administrative personnel to support future market research and future product commercialization efforts and increased fees for outside consultants and other administrative service providers.

### Summary Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)

| Operating expenses: | Three Months Ended September 30, 2024 | 2023 | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $1,462,930 | $1,313,727 | $4,463,869 | $4,679,128 |
| Research and development | 3,716,646 | 2,209,894 | 11,856,169 | 8,321,058 |
| Total operating expenses | 5,179,576 | 3,523,621 | 16,320,038 | 13,000,186 |
| Loss from operations | (5,179,576) | (3,523,621) | (16,320,038) | (13,000,186) |
| Interest income | 191,352 | 246,394 | 580,962 | 497,999 |
| Other income, net | 482,527 | 115,777 | 833,063 | 726,574 |
| NET LOSS | $(4,505,697) | $(3,161,450) | $(14,906,013) | $(11,775,613) |

### Comparison of the Three Months Ended September 30, 2024 and 2023

### General and Administrative Expenses

General and administrative expenses increased approximately $149,000, or 11%, from approximately $1,314,000 for the three months ended September 30, 2023 to approximately $1,463,000 for the three months ended September 30, 2024. The increases are primarily attributable to increased professional fees of approximately $134,000, increased patent and legal fees of approximately $42,000 and increased business development costs of approximately $8,000, offset in part by reductions in travel costs of approximately $21,000 and reductions in salaries and benefits of approximately $17,000. General and administrative expenses for the three months ended September 30, 2024 and 2023 included administrative expenses relating to our wholly-owned subsidiaries, including Starlight Therapeutics Inc., which was formed in January 2023.

### Research and Development Expenses

Research and development expenses increased approximately $1,507,000, or 68%, from approximately $2,210,000 for the three months ended September 30, 2023 to approximately $3,717,000 for the three months ended September 30, 2024. The increase is primarily attributable to increased research study and material costs of approximately $1,189,000 relating to the conduct and support of our clinical trials, increased salaries and benefits of approximately $263,000, and increased consulting expenses of approximately $88,000, offset in part by reductions in product candidate manufacturing expenses of approximately $33,000.

### Interest and Other Income, Net

Interest income decreased approximately $55,000, or 22%, from approximately $246,000 for the three months ended September 30, 2023 to approximately $191,000 for the three months ended September 30, 2024. Other income, net increased approximately $367,000 from a gain of approximately $116,000 for the three months ended September 30, 2023 to a gain of approximately $483,000 for the three months ended September 30, 2024. This increase was primarily attributable to net appreciation in the fair value of our mutual funds and common stock of approximately $224,000 during the three months ended September 30, 2024, as opposed to a net depreciation of approximately $45,000 in the fair value of our investment securities during the three months ended September 30, 2023. We also recognized a gain on foreign currency remeasurement of approximately $79,000 during the three months ended September 30, 2024, as opposed to a loss on foreign currency remeasurement of approximately $79,000 during the three months ended September 30, 2023. These increases in other income, net were offset, in part, by a decrease in research and development tax incentives related to our Australia subsidiary of approximately $33,000 and declines in dividend income of approximately $27,000.

### Comparison of the Nine Months Ended September 30, 2024 and 2023

### General and Administrative Expenses

General and administrative expenses decreased approximately $215,000, or 5%, from approximately $4,679,000 for the nine months ended September 30, 2023 to approximately $4,464,000 for the nine months ended September 30, 2024. The primary cause in the decline in general and administrative expenses relates to reductions in salaries and benefit costs of approximately $285,000, reductions in insurance costs of approximately $211,000, and reductions in office and administrative expenses of approximately $86,000, offset, in part, by increased professional fees of approximately $169,000, increased patent and legal costs of approximately $159,000, and increased business development expenses of approximately $37,000. General and administrative expenses for the nine months ended September 30, 2024 and 2023 included administrative expenses relating to our wholly-owned subsidiaries, including Starlight Therapeutics Inc., which was formed in January 2023.

### Research and Development Expenses

Research and development expenses increased approximately $3,535,000, or 42%, from approximately $8,321,000 for the nine months ended September 30, 2023 to approximately $11,856,000 for the nine months ended September 30, 2024. The increase is primarily attributable to increased research study and material costs of approximately $3,457,000 relating to the conduct and support of our clinical trials, increased salaries and benefits costs of approximately $674,000, and increased consulting expenses of $344,000, offset in part by reductions in product candidate manufacturing costs of approximately $939,000.

### Interest and Other Income, Net

Interest income increased approximately $83,000 from approximately $498,000 for the nine months ended September 30, 2023 to approximately $581,000 for the nine months ended September 30, 2024. Other income, net increased approximately $106,000 from a gain of approximately $727,000 for the nine months ended September 30, 2023 to a gain of approximately $833,000 for the nine months ended September 30, 2024. This increase was primarily attributable to net appreciation in the fair value of our mutual funds and common stock of approximately $229,000 during the nine months ended September 30, 2024, as opposed to a net depreciation of approximately $94,000 in the fair value of our investment securities during the nine months ended September 30, 2023. We also recognized a gain on foreign currency remeasurement of approximately $28,000 during the nine months ended September 30, 2024, as opposed to a loss on foreign currency remeasurement of approximately $130,000 during the nine months ended September 30, 2023. Dividend income increased by approximately $58,000 for the nine months ended September 30, 2024. These increases in other income, net were offset, in part, by a decrease in research and development tax incentives related to our Australia subsidiary of approximately $432,000 for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

### Cash Flows

The following table summarizes our cash flow for the periods indicated:

*(Unaudited)*

|  | For the Nine Months ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash flows used in operating activities | $(13,841,414) | $(10,961,198) |
| Net cash flows used in investing activities | (77,886) | (1,186,391) |
| Net cash flows provided by financing activities | 66,710 | - |
| Effect of foreign exchange rates on cash | 17,660 | (23,649) |
| Net decrease in cash and cash equivalents | $(13,834,930) | $(12,171,238) |

### Operating Activities

For the nine months ended September 30, 2024, net cash used in operating activities was approximately $13,841,000 compared to approximately $10,961,000 for the nine months ended September 30, 2023. The increase in net cash used in operating activities was primarily due to the increase in the net loss for the nine months ended September 30, 2024, offset in part by an increase in accounts payable and accrued expenses during the nine months ended September 30, 2024, which reduced the use of cash.

### Investing Activities

For the nine months ended September 30, 2024, net cash used in investing activities was approximately $78,000 compared to approximately $1,186,000 of net cash used in investing activities for the nine months ended September 30, 2023. The decrease in cash used in investing activities is primarily related to a reduced level of net investments in marketable securities during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

### Financing Activities

Net cash provided by financing activities was approximately $67,000 during the nine months ended September 30, 2024, which is attributable to proceeds from warrant exercises. No cash was provided by or used in financing activities during the nine months ended September 30, 2023.

### Operating Capital and Capital Expenditure Requirements

As of September 30, 2024, we had total assets of approximately $30.3 million and working capital of approximately $26.3 million. As of September 30, 2024, our liquidity included approximately $28.1 million of cash, cash equivalents and marketable securities. We believe that our existing cash, cash equivalents, and marketable securities as of September 30, 2024, and our anticipated expenditures and capital commitments, will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the date this quarterly report is filed. We expect to continue to incur significant and increasing operating losses at least for the next several years as we continue our clinical trials for LP-300, LP-184 and LP-284, advance our other drug candidates and programs, and seek potential future marketing approval for our drug candidates, which could be several years in the future, if at all. We do not expect to generate revenue, other than possible license and grant revenue, unless and until we successfully complete development and obtain regulatory approval for our therapeutic candidates. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our existing and planned clinical trials and our expenditures on other research and development activities.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. We anticipate that our expenses will increase substantially as we:

- continue the development, including preclinical studies and clinical trials, of our drug candidates;
- initiate preclinical studies and clinical trials for any additional indications for our current drug candidates and any future drug candidates that we may pursue;
- continue to build our portfolio of drug candidates through the acquisition or in-license of additional drug candidates or technologies;
- continue to develop, maintain, expand and protect our intellectual property portfolio;
- pursue regulatory approvals for those of our current and future drug candidates that successfully complete clinical trials;
- ultimately establish a sales, marketing, distribution and other commercial infrastructure to commercialize any drug candidate for which we may obtain marketing approval;
- hire additional clinical, regulatory, scientific and accounting personnel;
- incur additional legal, accounting and other expenses in operating as a public company; and
- continue to develop, maintain, and expand our RADR® platform.

We expect that we will need to obtain substantial additional funding in order to complete our clinical trials. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interests of our existing stockholders may be materially diluted and the terms of these securities could include liquidation or other preferences that could adversely affect the rights of our existing stockholders. In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we are unable to raise capital when needed or on attractive terms, we could be forced to significantly delay, scale back or discontinue the development or commercialization of LP-300, LP-184, LP-284, and/or our other drug candidates and programs, seek collaborators at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available, and relinquish or license, potentially on unfavorable terms, our rights to LP-300, LP-184, LP-284, and/or other drug candidates and programs that we otherwise would seek to develop or commercialize ourselves.

### Critical Accounting Estimates

There have been no changes to our critical accounting estimates during the nine months ended September 30, 2024.

### Quantitative and Qualitative Disclosure About Market Risk

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Accordingly, our future investment income may fluctuate as a result of changes in interest rates, or we may suffer losses in principal if we are forced to sell securities that decline in market value as a result of changes in interest rates.

Historically, we have raised capital through the issuance of equity securities. We had no long-term debt outstanding as of September 30, 2024 and December 31, 2023.

We do not believe that our cash and cash equivalents have significant risk of default or illiquidity. Our cash and cash equivalents consist primarily of cash and money market funds. Our exposure to market risk relating to cash and cash equivalents due to changes in interest rates is limited because our cash and cash equivalents have a short-term maturity and are used primarily for working capital purposes. Our marketable securities have had and may in the future have their market value adversely affected due to rises in interest rates. While we believe our cash, cash equivalents and marketable securities do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits. Interest bearing and non-interest bearing accounts we hold at banking institutions are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Substantially all of our cash balances held at banking institutions are in excess of FDIC coverage. We consider this to be a normal business risk.

We formed a wholly owned subsidiary, Lantern Pharma Australia Pty Ltd, in Australia in September 2021 and experienced foreign currency gains of approximately $28,000 for the nine months ended September 30, 2024 and foreign currency losses of approximately $130,000 for the nine months ended September 30, 2023 in connection with this subsidiary. We will remain subject to the risk of foreign currency losses in future periods, although we do not expect the impact of any foreign currency losses to be material. We do not participate in any foreign currency hedging activities, and we do not have any other derivative financial instruments.

Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation has had a material effect on our results of operations during the periods presented. Inflation has increased substantially in recent periods and could have a greater impact on our future results of operations if it remains at current levels or increases further.

## Controls and procedures

As filed, 3,773 characters.

### Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures, as defined above, are effective.

### Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Inherent Limitations on Effectiveness of Controls.

Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Filed Nov 7, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-044010. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.