Leap Therapeutics, Inc. (NASDAQ: LPTX) is a biotechnology company dedicated to developing innovative targeted and immuno-oncology therapeutics that have the potential to transform the landscape of cancer treatment. With a focus on high-impact therapies, Leap Therapeutics has built a robust pipeline of promising drug candidates, led by its lead asset, DKN-01, which is currently in late-stage clinical trials for various cancer indications.
Business Overview Leap Therapeutics was incorporated in the state of Delaware on January 3, 2011. The company's journey began as HealthCare Pharmaceuticals Pty Ltd., a wholly owned subsidiary formed in 2015. In the same year, Leap Therapeutics entered into a merger agreement with GITR Inc., an entity under common control, which became a wholly owned subsidiary of the company.
A significant milestone in Leap's history occurred in 2016 when the company entered into a merger agreement with Macrocure Ltd., a publicly held, clinical stage biotechnology company based in Israel. This merger resulted in Macrocure becoming a wholly owned subsidiary of Leap Therapeutics. Consequently, Leap applied for and was approved to be listed on the Nasdaq Global Market, with trading in its common stock commencing on January 24, 2017, under the trading symbol LPTX. In 2020, Macrocure's name was changed to Leap Therapeutics Ltd., and the subsidiary was later dissolved in the same year.
The company continued to evolve, with the formation of Leap Securities Corp. as a wholly owned subsidiary in 2021. A major development came in January 2023 when Leap Therapeutics acquired 100% of the outstanding equity of Flame Biosciences, Inc., a privately held biotechnology corporation, in a merger transaction. This strategic acquisition allowed Leap to expand its pipeline and gain access to additional clinical and pre-clinical stage programs.
Throughout its history, Leap Therapeutics has faced various challenges in developing its pipeline of targeted and immuno-oncology therapeutics. The company has had to navigate the complexities of the drug development process, including conducting clinical trials, obtaining regulatory approvals, and managing manufacturing and supply chain logistics. Additionally, Leap has had to secure sufficient funding to support its research and development activities, which it has done through equity financings and strategic partnerships.
Leap Therapeutics' lead candidate, DKN-01, is a monoclonal antibody that targets Dickkopf-related protein 1 (DKK1), a key regulator of the Wnt signaling pathway. Aberrant activation of the Wnt pathway is a common occurrence in various types of cancer, making DKK1 a promising therapeutic target. DKN-01 is currently being evaluated in multiple ongoing clinical trials, including the DeFianCe study in colorectal cancer and the DisTinGuish study in gastroesophageal and gastric cancers.
The company's pipeline also includes two other antibody programs, FL-301 and FL-501, which are in earlier stages of development. FL-301 is a potential best-in-class anti-GDF-15 antibody, designed to treat patients with cachexia and other GDF-15-driven diseases, while FL-501 may enhance the activity of the immune system in the tumor microenvironment.
Financials Leap Therapeutics has demonstrated financial resilience as it navigates the oncology landscape. In the first quarter of 2024, the company reported a net loss of $13.8 million, which was significantly better than the analyst estimate of a $15.69 million loss. This performance can be attributed to Leap's effective management of research and development expenses, which decreased to $11.3 million from $38.9 million in the same period of the previous year, primarily due to lower in-process R&D expenses.
For the third quarter of 2024, Leap Therapeutics reported a net loss of $18.18 million, compared to a net loss of $13.70 million in the same quarter of 2023. The company's research and development expenses during this period were $14.91 million, an increase from $11.50 million in the prior year quarter. This $3.41 million increase was primarily due to a $3.76 million rise in expenses related to the DKN-1 program, including higher manufacturing costs for clinical trial material and increased clinical trial costs resulting from patient enrollment, longer patient durations on study, and enhanced correlative studies. Additionally, there was a $19 million increase in expenses for the FL-501 program, Leap's potential best-in-class anti-GDF-15 antibody.
For the nine months ended September 30, 2024, Leap's research and development expenses were $44.10 million, down from $61.55 million in the same period of 2023. This decrease of $17.45 million was largely due to the $29.58 million of in-process research and development expenses the company incurred in 2023 related to the acquisition of Flame Biosciences. This was partially offset by increases of $12.61 million for the DKN-1 program and $122 million for the FL-501 program.
General and administrative expenses for the third quarter of 2024 were $2.94 million, down from $3.33 million in the prior year period, a decrease of $390,000 primarily due to lower professional fees. For the first nine months of 2024, general and administrative expenses were $9.83 million, compared to $10.67 million in the same period of 2023, a decrease of $839,000 driven by reduced costs associated with business development activities.
The company recorded interest income of $894,000 and $2.53 million for the three and nine month periods ended September 30, 2024, respectively, compared to $1.08 million and $3.09 million in the prior year periods. This decrease was due to lower average cash balances during 2024. Leap also recognized Australian research and development incentive income of $499,000 in the third quarter of 2024, compared to $554,000 in the same quarter of 2023, based on the percentage of eligible expenses reimbursed under the Australian government's R&D tax incentive program.
Liquidity Leap Therapeutics recently completed a $40 million private placement financing, with participation from notable investors such as Gilead Sciences, Samsara BioCapital, 683 Capital Partners, LP, Laurion Capital Management, and Rock Springs Capital. This influx of capital, combined with the company's existing cash, cash equivalents, and marketable securities, is expected to extend Leap's cash runway into the second quarter of 2026 and enable the expansion of the DKN-01 DeFianCe clinical trial and development program.
As of September 30, 2024, Leap Therapeutics reported $62.82 million in cash and cash equivalents. The company's current ratio and quick ratio both stand at 3.96, indicating a strong short-term liquidity position. Management believes that the current cash reserves will be sufficient to fund operations for at least the next 12 months.
Clinical Achievements and Upcoming Milestones Leap Therapeutics has made significant progress in its clinical development programs, particularly with DKN-01. In the second quarter of 2024, the company reported updated data from Part A of the Phase 2 DeFianCe study, which demonstrated an overall response rate (ORR) of 33% across all evaluable patients and 38% across evaluable patients with left-sided colorectal cancer (CRC) when DKN-01 was combined with bevacizumab and chemotherapy in second-line patients with advanced CRC.
Building on this momentum, Leap Therapeutics expanded the randomized controlled Part B of the DeFianCe study to 180 patients, with enrollment expected to be completed by the end of September 2024. The company anticipates reporting data from this pivotal study in mid-2025, which could potentially support the advancement of DKN-01 into a registrational Phase 3 trial in second-line CRC patients.
Additionally, patient follow-up continues in the randomized controlled Part C of the DisTinGuish study, which is evaluating DKN-01 in combination with tislelizumab and chemotherapy in first-line patients with advanced gastroesophageal junction and gastric cancer. Leap expects to report initial data from this study in late 2024 or early 2025.
Risks and Challenges While Leap Therapeutics has demonstrated promising clinical results and a strong financial position, the company faces several risks and challenges that are common in the highly competitive and regulated oncology industry. These include the inherent uncertainties associated with drug development, potential regulatory hurdles, and the need to secure additional funding to support its ongoing and future clinical trials.
Furthermore, the company's reliance on the success of its lead candidate, DKN-01, means that any setbacks or delays in this program could have a significant impact on Leap's overall performance. The company must also navigate the complexities of the oncology market, where competition for patient enrollment, physician adoption, and market share can be fierce.
Outlook and Conclusion Leap Therapeutics' focus on developing innovative targeted and immuno-oncology therapeutics has positioned the company as a promising player in the oncology landscape. The company's robust pipeline, led by the late-stage DKN-01 program, and its recent financial accomplishments, including the successful $40 million private placement, suggest that Leap Therapeutics is well-equipped to navigate the challenges and capitalize on the opportunities in the oncology market.
As Leap Therapeutics continues to advance its clinical trials and explore new avenues for growth, investors will be closely watching the company's progress and its ability to deliver on its promising pipeline. With a strong foundation in place and a steadfast commitment to its mission, Leap Therapeutics appears poised to make a meaningful impact in the fight against cancer.
The company's focus on biomarker-targeted antibody therapies, particularly its lead clinical stage program DKN-1, demonstrates its commitment to developing innovative treatments for various cancer indications. The ongoing clinical trials in esophagogastric cancer, gynecologic cancers, and colorectal cancer highlight the potential breadth of application for Leap's therapies.
While Leap Therapeutics is still in the clinical stage and has not yet generated product sales, the company's financial management and recent capital raises provide a runway for continued research and development activities. The significant investments in the DKN-1 and FL-501 programs underscore the company's dedication to advancing its pipeline and potentially bringing transformative therapies to market.
As Leap Therapeutics progresses through its clinical trials and development programs, the company's ability to meet key milestones, manage expenses, and potentially secure additional funding or partnerships will be crucial factors in its journey towards becoming a commercial-stage biopharmaceutical company. The oncology market remains highly competitive and dynamic, but Leap's focused approach and promising clinical data position it as an interesting player to watch in the coming years.