Before 2024, Lantern Pharma (NASDAQ:LTRN) was relatively unnoticed in the biotech sector. It was merely a nano-cap biotech stock that was indistinguishable from a very crowded pool of other low-cap stocks vying for investor attention.
But over the past six months, LTRN stock soared more than 175% due to the advancement of five of its leading drug candidates into clinical trials. The significance of Lantern Pharma, and its wholly-itssubsidiary Starlight Therapeutics, extends beyond their focus on cancer treatments. Its story is fundamentally about leveraging artificial intelligence, particularly in pioneering AI-driven drug discovery.
An AI Application That is Changing the Process of Drug Discovery
As artificial intelligence (AI) solidifies its status as a dominant investment theme in 2024, investors are shifting their focus beyond mere AI affiliation towards substantive application and impact. Investors are increasingly interested in how companies are leveraging AI, specifically whether it is being utilized in ways that benefit the business and its financial outcomes.
Central to Lantern Pharma’s bullish case is its innovative use of AI in drug discovery, particularly through its RADR precision medicine platform. During the company’s March earnings call, Panna Sharma, the President and CEO, highlighted the RADR platform’s significant advantages, illustrating the pivotal role of AI in advancing Lantern’s drug development efforts.
”Our platform…is revolutionizing the way we model, predict, and understand drug cancer interactions, enabling us to advance our newly developed drug programs from initial insights to first-in-human clinical trials in an average of less than two years and at a cost of under $2 million per program. It’s a milestone unheard of in the realm of oncology drug discovery.”
The significance of Lantern Pharma’s approach can be seen in the contrast it offers to the traditional drug development process. Traditional pharma companies often suffer from a mere 6% success rate, timelines stretching between 10 to 18 years to navigate clinical trials, and costs surpassing $2.5 billion. Lantern’s RADR precision medicine platform represents a transformative approach, affording the company many opportunities to innovate at a fraction of the traditional cost.
However, the value of Lantern’s strategy extends beyond just increasing the number of attempts; the company’s data indicate that its AI-driven approach is genuinely effective. Lantern reports that integrating AI-generated insights and biomarkers into their process can potentially amplify the chances of clinical trial success by up to 12 times.
Furthermore, the RADR system boasts an ability to “predict and stratify real-world patients for clinical trials with 88% accuracy,” underlining the practical efficacy of applying AI in drug discovery and development.
How to Think About LTRN Stock?
Lantern Pharma’s story is indeed compelling although one would assume the stock’s recent gain all but prices in the story so far as the company does not anticipate to be profitable in the near-term. The company’s market cap has soared from $30 million in late 2023 to just over $105 million today, implying the company needs to sustain recent momentum and deliver big wins to justify further gains.
If you want to take a position in LTRN stock, you have to be aware that any setback in one of the company’s clinical trials will cause the stock to pull back.
However, the company’s substantial cash reserve of $41.3 million mitigates immediate concerns regarding potential share dilution, providing some financial stability.
The bottom line for investors is that Lantern Pharma has the potential to be a 10x stock. But it is still a speculative stock. And with only 10% institutional ownership, there’s no rush to take a full position in the stock at this time.