LEAP THERAPEUTICS INC

Previous wording

Our lead clinical stage program is DKN-01, a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1. We are currently studying DKN-01 in multiple ongoing clinical trials in patients with esophagogastric cancer, gynecologic cancers, or colorectal cancer. Our second clinical stage program is FL-301, a monoclonal antibody that targets cells that express Claudin18.2 on their cell surface. We also have two preclinical antibody programs, FL-302 and FL-501.

Current wording

Our lead clinical stage program is DKN-01, a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1. We are currently studying DKN-01 in multiple ongoing clinical trials in patients with esophagogastric cancer, gynecologic cancers, or colorectal cancer. We also have two other antibody programs, FL-301 and FL-501.

Previous wording

We intend to apply our extensive experience identifying and developing transformational products to build a pipeline of programs that have the potential to change the practice of cancer medicine.

Current wording

We intend to apply our extensive experience in identifying and developing transformational products to build a pipeline of programs that have the potential to change the practice of cancer medicine.

Previous wording

Our research and development activities have included conducting nonclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for our product candidates, primarily DKN-01. We recognize research and development expenses as they are incurred. Our research and development expenses during the three and six months ended June 30, 2024 consisted primarily of:

Current wording

Our research and development activities have included conducting nonclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for our product candidates, primarily DKN-01. We recognize research and development expenses as they are incurred. Our research and development expenses during the three and nine months ended September 30, 2024 consisted primarily of:

Previous wording

The table below summarizes our research and development expenses incurred by development program and the R&D Incentive income for the three and six months ended June 30, 2024 and 2023:

Current wording

The table below summarizes our research and development expenses incurred by development program and the R&D Incentive income for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Research and development expenses were $17.9 million for the three months ended June 30, 2024, compared to $11.1 million for the three months ended June 30, 2023. The increase of $6.8 million in research and development expenses during the three months ended June 30, 2024 as compared to the same period in 2023, was primarily due to an increase of $5.7 million in clinical trial costs due to patient enrollment, the duration of patients on study, the enhancement of correlative studies, increase in site activity associated with Part C of the DisTinGuish study, and the expansion of the size of Part B of the DeFianCe study. There was also an increase of $0.6 million in manufacturing costs related to clinical trial material and manufacturing campaigns and an increase of $0.5 million in payroll and other related expenses due to an increase in headcount of our R&D full-time employees.

Current wording

Research and development expenses were $14.9 million for the three months ended September 30, 2024, compared to $11.5 million for the three months ended September 30, 2023. The increase of $3.4 million in research and development expenses during the three months ended September 30, 2024 as compared to the same period in 2023, was primarily due to an increase of $1.7 million in manufacturing costs related to clinical trial material and manufacturing campaigns, and an increase of $0.8 million in clinical trial costs due to patient enrollment, the duration of patients on study, the enhancement of correlative studies, the increase in site activity associated with Part C of the DisTinGuish study, and the expansion of the size of Part B of the DeFianCe study. There was also an increase of $0.5 million in consulting fees associated with research and development activities and an increase of $0.4 million in payroll and other related expenses due to an increase in headcount of our R&D full-time employees.

Previous wording

General and administrative expenses were $3.4 million for the three months ended June 30, 2024, compared to $3.6 million for the three months ended June 30, 2023. The decrease of $0.2 million in general and administrative expenses during the three months ended June 30, 2024 as compared to the same period in 2023, was due to a $0.3 million decrease in professional fees, partially offset by a $0.1 million increase in payroll and other related expenses.

Current wording

General and administrative expenses were $2.9 million for the three months ended September 30, 2024, compared to $3.3 million for the three months ended September 30, 2023. The decrease of $0.4 million in general and administrative expenses during the three months ended September 30, 2024 as compared to the same period in 2023, was due to a $0.4 million decrease in professional fees.

Previous wording

During the three months ended June 30, 2024, we recorded interest income of $0.9 million. During the three months ended June 30, 2023, we recorded interest income of $1.2 million. The decrease was due to a higher average cash and cash equivalent balance during the three months ended June 30, 2023.

Current wording

During the three months ended September 30, 2024, we recorded interest income of $0.9 million. During the three months ended September 30, 2023, we recorded interest income of $1.1 million. The decrease was due to a higher average cash and cash equivalent balance during the three months ended September 30, 2023.

Previous wording

We recorded R&D incentive income of $0.5 million and $0.6 million during the six months ended June 30, 2024 and 2023, respectively, based upon the applicable percentage of eligible research and development activities under the R&D Incentive Program, which expenses included the cost of manufacturing clinical trial material.

Current wording

We recorded R&D incentive income of $0.6 million during the three months ended September 30, 2023, based upon the applicable percentage of eligible research and development activities under the R&D Incentive Program, which expenses included the cost of manufacturing clinical trial material. During the three months ended September 30, 2024, we expensed $0.5 million of R&D incentive income recognized during the six months ended June 30, 2024, in connection with our estimated 2024 Australian tax liability.

Previous wording

During the three months ended June 30, 2023, we recorded foreign currency transaction losses of $0.1 million. During the three months ended June 30, 2024, we recorded an immaterial amount of foreign currency transaction gains. Foreign currency transaction gains and losses are due to changes in the Australian dollar exchange rate related to activities of the Australian entity.

Current wording

During the three months ended September 30, 2023, we recorded foreign currency transaction losses of $0.5 million. During the three months ended September 30, 2024, we recorded an immaterial amount of foreign currency transaction losses. Foreign currency transaction gains and losses are due to changes in the Australian dollar exchange rate related to activities of the Australian entity.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

Research and development expenses were $29.2 million for the six months ended June 30, 2024, compared to $50.0 million for the six months ended June 30, 2023. The decrease of $20.8 million in research and development expenses during the six months ended June 30, 2024 as compared to the same period in 2023, was primarily due to $29.6 million of in-process research and development (“IPR&D”) acquired in the Flame merger which we expensed during the six months ended June 30, 2023 and a decrease of $0.3 million in consulting fees associated with research and development activities. These decreases were partially offset by an increase of $7.8 million in clinical trial costs due to patient enrollment, the duration of patients on study, the enhancement of correlative studies, increase in site activity associated with Part C of the DisTinGuish study, and the expansion of the size of Part B of the DeFianCe study; an increase of $1.1 million in payroll and other related expenses due to an increase in headcount of our R&D full-time employees; and an increase of $0.2 million in manufacturing costs related to clinical trial material and manufacturing campaigns.

Current wording

Research and development expenses were $44.1 million for the nine months ended September 30, 2024, compared to $61.5 million for the nine months ended September 30, 2023. The decrease of $17.5 million in research and development expenses during the nine months ended September 30, 2024 as compared to the same period in 2023, was primarily due to $29.6 million of in-process research and development (“IPR&D”) acquired in the Flame merger which we expensed during the nine months ended September 30, 2023. This decrease was partially offset by an increase of $8.7 million in clinical trial costs due to patient enrollment, the duration of patients on study, the enhancement of correlative studies, the increase in site activity associated with Part C of the DisTinGuish study, and the expansion of the size of Part B of the DeFianCe study. There was also an increase of $1.9 million in manufacturing costs related to clinical trial material and manufacturing campaigns, an increase of $1.5 million in payroll and other related expenses due to an increase in headcount of our R&D full-time employees and an increase of $0.1 million in consulting fees associated with research and development activities.

Previous wording

General and administrative expenses were $6.9 million for the six months ended June 30, 2024, compared to $7.3 million for the six months ended June 30, 2023. The decrease of $0.4 million in general and administrative expenses during the six months ended June 30, 2024 as compared to the same period in 2023, was due to a decrease of $0.6 million in professional fees associated with our business development activities, partially offset by an increase of $0.2 million in payroll and other related expenses.

Current wording

General and administrative expenses were $9.8 million for the nine months ended September 30, 2024, compared to $10.7 million for the nine months ended September 30, 2023. The decrease of $0.9 million in general and administrative expenses during the nine months ended September 30, 2024 as compared to the same period in 2023, was due to a decrease of $1.2 million in professional fees associated with our business development activities, partially offset by an increase of $0.3 million in payroll and other related expenses.

Previous wording

During the six months ended June 30, 2024, we recorded interest income of $1.6 million. During the six months ended June 30, 2023, we recorded interest income of $2.0 million. The decrease was due to a higher average cash and cash equivalent balance during the six months ended June 30, 2023.

Current wording

During the nine months ended September 30, 2024, we recorded interest income of $2.5 million. During the nine months ended September 30, 2023, we recorded interest income of $3.1 million. The decrease was due to a higher average cash and cash equivalent balance during the nine months ended September 30, 2023.

Previous wording

We recorded R&D incentive income of $0.3 million during both the three months ended June 30, 2024 and 2023, respectively, based upon the applicable percentage of eligible research and development activities under the R&D Incentive Program, which expenses included the cost of manufacturing clinical trial material.

Current wording

We recorded R&D incentive income of $1.1 million during the nine months ended September 30, 2023, based upon the applicable percentage of eligible research and development activities under the R&D Incentive Program, which expenses included the cost of manufacturing clinical trial material. We did not record R&D incentive income during the nine months ended September 30, 2024.

Previous wording

During the six months ended June 30, 2023, we recorded foreign currency transaction losses of $0.5 million. During the six months ended June 30, 2024, we recorded an immaterial amount of foreign currency transaction losses. Foreign currency transaction gains and losses are due to changes in the Australian dollar exchange rate related to activities of the Australian entity.

Current wording

During the nine months ended September 30, 2023, we recorded foreign currency transaction losses of $1.0 million. During the nine months ended September 30, 2024, we recorded an immaterial amount of foreign currency transaction losses. Foreign currency transaction gains and losses are due to changes in the Australian dollar exchange rate related to activities of the Australian entity.

Previous wording

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of June 30, 2024, we had cash and cash equivalents of $78.5 million. Additionally, we had an accumulated deficit of $433.8 million at June 30, 2024, and during the six months ended June 30, 2024, we incurred a net loss of $34.2 million. We expect to continue to generate operating losses in the foreseeable future. We believe that our cash and cash equivalents of $78.5 million as of June 30, 2024, will be sufficient to fund our operating expenses for at least the next 12 months from the issuance of this report on Form 10-Q.

Current wording

In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. As of September 30, 2024, we had cash and cash equivalents of $62.8 million. Additionally, we had an accumulated deficit of $451.9 million at September 30, 2024, and during the nine months ended September 30, 2024, we incurred a net loss of $52.4 million. We expect to continue to generate operating losses in the foreseeable future. We believe that our cash and cash equivalents of $62.8 million as of September 30, 2024, will be sufficient to fund our operating expenses for at least the next 12 months from the issuance of this report on Form 10-Q.

Previous wording

Operating activities. Net cash used in operating activities for the six months ended June 30, 2024 was primarily related to our net loss from the operation of our business of $33.9 million and net changes in working capital, including an increase in research and development incentive receivable of $0.5 million, an increase of $0.2 million in prepaid expenses and other assets and a decrease in lease liabilities of $0.1 million. These changes were partially offset by an increase in accounts payable and accrued expenses of $2.7 million, a decrease of $0.2 million in right-of-use asset, a decrease of $0.1 million in other assets and noncash stock-based compensation expense of $2.6 million.

Current wording

Operating activities. Net cash used in operating activities for the nine months ended September 30, 2024 was primarily related to our net loss from the operation of our business of $52.1 million and net changes in working capital, including a decrease in lease liabilities of $0.3 million. These changes were partially offset by an increase in accounts payable and accrued expenses of $2.6 million, an increase in taxes payable of $0.7 million, a decrease of $0.3 million in right-of-use asset, a decrease of $0.1 million in other assets and noncash stock-based compensation expense of $4.0 million.

Previous wording

Net cash used in operating activities for the six months ended June 30, 2023 was primarily related to our net loss from the operation of our business of $55.3 million and net changes in working capital, including an increase in research and development incentive receivable of $0.6 million, a decrease in accounts payable and accrued expenses of $0.4 million, an increase in prepaid expenses and other assets of $0.1 million and a decrease in lease liabilities of $0.2 million. These changes were partially offset by a noncash IPR&D expense of $29.6 million, noncash stock based compensation expense of $2.6 million, a decrease of $0.8 million in other assets, change in a right-of-use asset of $0.2 million and foreign currency transaction losses of $0.5 million.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2023 was primarily related to our net loss from the operation of our business of $68.9 million and net changes in working capital, including a decrease in accounts payable and accrued expenses of $1.0 million and a decrease in lease liabilities of $0.3 million. These changes were partially offset by a decrease in research and development incentive receivable of $1.3 million, a decrease of $0.8 million in other assets, a decrease of $0.1 million in prepaid expenses and other assets, noncash IPR&D expense of $29.6 million, noncash stock based compensation expense of $3.9 million, foreign currency transaction losses of $1.0 million and change in a right-of-use asset of $0.3 million.

Previous wording

*Investing Activities.*Net cash provided by investing activities for the six months ended June 30, 2023 was related to cash acquired in connection with the acquisition of Flame of $50.4 million and payment of direct and incremental costs of $1.4 million associated with the acquisition of Flame. There were no investing activities during the six months ended June 30, 2024.

Current wording

*Investing Activities.*Net cash provided by investing activities for the nine months ended September 30, 2023 was related to cash acquired in connection with the acquisition of Flame of $50.4 million and payment of direct and incremental costs of $1.4 million associated with the acquisition of Flame. There were no investing activities during the nine months ended September 30, 2024.

Previous wording

Financing Activities. Net cash provided by financing activities for the six months ended June 30, 2024 consisted of $40.0 million in gross proceeds from the April 2024 Private Placement and an immaterial amount of proceeds upon the exercise of stock options, partially offset by $2.9 million of offering costs paid. Net cash used in financing activities for the six months ended June 30, 2023 consisted of an immaterial amount we paid for the redemption of 10,000 of the 2019 warrants.

Current wording

stock options, partially offset by $2.9 million of offering costs paid. Net cash used in financing activities for the nine months ended September 30, 2023 consisted of an immaterial amount we paid for the redemption of 10,000 of the 2019 warrants.