Moleculin Biotech, Inc. (MBRX) Earnings Call Transcript & Summary

Hi. Good afternoon, everyone, and thank you for joining the H.C. Wainwright 2021 Global Life Sciences Conference. My name is Ananda Ghosh and I'm an equity research associate at H.C. Wainwright. While we are virtual this year, we are confident we are going to be able to provide value to you, with over 425 companies presenting at this conference as well as via your interactions through one-on-one meetings. H.C. Wainwright is a full-service investment bank dedicated to providing corporate finance, strategic advisory and related services to public and private companies across multiple sectors and regions. We have a total of 18 publishing senior analysts and 493 companies covered across all sectors. Please visit us at hcwco.com for more information. From a logistics standpoint, please make sure to reference your virtual conference online portal that provides your individual links to your meetings and our presentations. Panels and all presentations are live and on-demand online from March 9 to 10. With that said, have a productive and enjoyable day, and I would like to welcome Walter Klemp, who is Chairman and CEO; and Jon Foster, EVP and CFO of Moleculin Biotech, which specializes in highly resistant cancers and viruses.

Thanks, Ananda. I appreciate it. Hello. I'm Wally Klemp, Chairman and CEO of Molecular Biotech, Inc., and I'm joined by our EVP and CFO, Jonathan Foster. Thanks for giving us an opportunity to share some insights on our company.

Here you go.

So we are publicly traded on NASDAQ under the ticker symbol MBRX. And everything we say here is subject to the more detailed disclosures we provide on our website and in our public filings. Our disclaimers regarding forward-looking statements can be reviewed at your convenience, along with the rest of this entire presentation by visiting the Investor tab at moleculin.com. Given the abbreviated time we have today, we'll only cover a few of the details in this deck, but we encourage you to download the entire presentation to gain a more detailed understanding of Moleculin and the breadth of activity in our pipeline. As a quick overview, let us introduce you to Moleculin with some key benchmark numbers. We have 3 core technologies, spanning a wide range of mechanisms that provide both diversity and the potential for synergistic combination. Annamycin is a next-generation anthracycline that, if approved, would become the first ever non-cardiotoxic form of this cornerstone chemotherapy. Our first-in-class STAT3 inhibitors are highly regarded with over 50 peer-reviewed journal articles because of their potential to reach what has, until now, been considered an undruggable target. A great deal of investor attention has been focused on our anti metabolites, especially WP1122, which has the ability to both inhibit glycolysis and alter glycosylation, 2 things that represent unique new approaches to addressing certain hard-to-treat cancers as well as viruses, including the current coronavirus. As of the end of 2020, our pipeline accounted for 5 clinical trials, either completed or underway. This includes internally funded trials in acute myeloid leukemia and cutaneous T-cell lymphoma as well as externally funded trials in both adult and pediatric brain tumors. We believe the external funding of trials is critical for several reasons. For one, it constitutes important independent peer validation of the merits of our technologies. And perhaps most importantly, it allows us to create leverage against the breadth of our pipeline while minimizing dilution to shareholders. Now nothing is quite so critical to small biotech companies as human data, and we now have 3 drugs showing human activity. In the case of annamycin in AML and WP1066 in DIPG, a rare form of pediatric brain tumor, this activity is happening early in the Phase I dose escalation portion of their respective trials where we haven't even reached therapeutic dose levels yet. In the case of CTCL, this proof-of-concept trial showed what we believe is approvable efficacy if we can repeat these results in a larger population. That now appears we may be able to improve on those results by simply extending the treatment period. All of this helps inform why we believe 2021 is going to be a pivotal year for Moleculin. We expect to see up to 8 clinical trials during the year. In addition to the ongoing AML and brain tumor trials, we just received an IND from the FDA for annamycin in sarcoma lung metastases. And we're looking to start a Phase I/II trial in both the U.S. and the EU, the latter of which, as we recently announced, will be grant funded. In addition, we're actively seeking a collaborative partner to work with on a Phase II CTCL trial for WP1220. And finally, there is the potential for even an eighth clinical trial in 2021, and that's a cancer or COVID-19 trial with WP1122. Now this hinges on receiving an IND in the U.S. or the equivalent outside the U.S. for either indication. In the U.S., this will depend on demonstrating activity in the appropriate COVID-19 animal model, which requires gaining access in a highly competitive environment where such validated models are in extremely high demand. That said, we may not need to demonstrate animal model activity outside the U.S. and we're just now preparing to seek approvals outside the U.S. without animal trials. Now if we're successful -- if we're unsuccessful in that effort, we can always pivot to focus on the cancer indications for which WP1122 was originally intended. If there's one thing we want investors to remember when it comes to Moleculin, it's that we have diligently curated a diverse portfolio that gives us what we call multiple shots on goal. We believe strongly that this reduces the risk of investing in Moleculin when compared to single technology biotechs, and it gives our investors more than one way to win. We're doing all of this with only 15 employees, so we maintain a very lean operating structure. Nevertheless, all of our key operations employees are veterans of drug development. And this core team is supported by over 150 contractors worldwide and guided by an industry-leading science advisory board from the likes of MD Anderson Cancer Center, Dana-Farber, and Memorial Sloan Kettering as well as the FDA and the NIAID. There are a few more numbers that every investor wants to know, and I'll let our EVP, CFO, Jon Foster, cover those for you. Jon?

Thanks, Wally. So to support all the technology that Wally just mentioned, we have a cash runway into at least the end of 2023. Now this includes increased spending over our current levels in preclinical and clinical activities. Now this runway extends beyond 2023, but how far depends on clinical activity and opportunity. Preliminary year-end numbers show $15.2 million of cash on hand, and we subsequently received over $80 million in gross proceeds from equity transactions in the first quarter of 2021. Now while we have a good, long runway, we're constantly in discussions on how to leverage our balance sheet by expanding our existing collaborations and creating new ones. We recently announced grant funding in Europe for over $1 million to support a physician-initiated trial there, and we hope for more of the same for our other clinical programs. Now combine this activity and this cash runway and we believe we have the potential and time for additional signs of significant human activity in our clinical trials. Thanks, Wally.

Thanks, Jon. With the time we have left, I want to draw your attention to some key slides in the more detailed corporate presentation deck that you may find useful to reference if you decide to dig deeper into Moleculin. We've taken the extra step to break our pipeline chart into 2 sections. This first one shows the programs we are funding or intend to fund directly, which forms the basis for the cash planning that Jon just talked about. The key takeaways from this chart are that we expect to reach an MTD in our single-agent annamycin AML trial this year and progress on to an expansion Phase II. However, we're also expecting to begin a Phase I/II AML trial for the combination of annamycin in with Ara-C with which recently published data suggests should be significantly more effective for relapsed or refractory AML patients. Annamycin is clearly the most robust of our internally funded programs as we also expect to begin a Phase I clinical trial in the U.S. for sarcoma lung metastases. Now the lung mets opportunity is particularly exciting since an independent animal study just demonstrated that annamycin is capable of accumulating in the lungs at 34x the level of doxorubicin. Doxorubicin is the current standard of care chemotherapy for sarcoma lung metastases and yet it has limited efficacy for these patients. Since all currently approved anthracyclines are significantly cardiotoxic, we believe that the absence of cardiotoxicity with annamycin should make it a preferred alternative even with equivalent efficacy. But the fact that annamycin avoids cross-resistance with doxorubicin, coupled with this latest animal data, suggests that annamycin may actually outperform doxorubicin in relapsed and refractory patients. This second pipeline chart shows the trial activity that we have and intend to fund externally through investigator-initiated trials that are largely supported by grants. A great example of this is our recent announcement that grant funding has now been approved in the EU for a Phase I clinical trial with annamycin in sarcoma lung metastases. We see our STAT3 inhibitor trials continuing to move forward in 2021, all with the benefit of external funding. The principal investigator in the MD Anderson Phase I/II single-agent GBM trial is relocating to Northwestern University. So we now see an opportunity to expand the effort that was initiated by MD Anderson to additional institutions. In addition, new grant funding has been awarded for a follow-on Phase I/II trial testing the combination of WP1066 with radiation. In parallel, The Emory University study of WP1066 for pediatric brain tumors has been especially encouraging. In addition to recruiting rapidly, we saw significant efficacy in a patient with DIPG or diffuse intrinsic pontine glioma. This is a particularly rare form of childhood brain tumor for which existing treatments are simply not effective. In fact, no drug has shown activity against DIPG in the last 200 clinical trial attempts. WP1220 is another of our STAT3 inhibitors built on the same molecular backbone as 1066 and formulated as a topical drug. A proof-of-concept clinical trial in CTCL was completed last year and shows the kind of efficacy that we believe could enable new drug approval, on an accelerated basis, if demonstrated in a larger patient population. So now we're seeking potential collaborative partners who specialize in the dermatology space to continue the development of 1220 into a Phase II pivotal trial in 2021. With significant activity in all 3 of our core technologies, it's difficult to cover it all in an introductory presentation like this, so we encourage you to review this more detailed corporate presentation via our website. Here, we set forth the clinical and regulatory accomplishments to date, including Orphan Drug, Fast Track and Rare Pediatric Disease designations as well as key points of differentiation for each of our technologies. Now given the intense interest in our COVID-19 drug candidate, WP1122, I will point out, in particular, that recently announced Phase II data from a trial in India conducted by an unrelated company showed efficacy in moderate to severe COVID-19 patients with orally administered 2-deoxyglucose or 2-DG. This is extremely important since 2-DG is the active moiety or active ingredient in WP1122. And animal studies have shown that 1122 is capable of substantially outperforming 2-DG alone because of its significantly improved pharmacokinetics. In order to provide investors with a clear understanding of the COVID-19 opportunity for Moleculin, we also provide this road map of how we see the development of WP1122 and its analogs unfolding. Based on recent feedback from the FDA, we need to test 1122 in a COVID-19 animal model before submitting our U.S. IND. Although we previously contracted for testing in a hamster model, subsequent scientific review has revealed that this model is unsuitable for WP 1122. For this reason, we're now focused on gaining access to one of the rare recognized and validated mouse models for this purpose. But we remind investors that this could take some time since such models are in very high demand. In the meantime, though, we're also preparing to request clinical trial authorization outside the U.S. where COVID-19 animal model may not be required. And in light of the recent 2-DG clinical trial results from India, there's an argument to be made that this step is no longer necessary since it's hard to find an animal model that's better than human patients with COVID-19. We believe all of the required preclinical tox and CMC work is now successfully completed for 1122. So we should be able to move quickly once a clinical trial is authorized. Regardless, all of the preclinical work that we've done to date puts us in a strong position to move 1122 forward in a cancer setting in the event that the COVID-19 path proves infeasible. Finally, we've also added a new way to look at how we expect information to flow to investors as a result of all the activity we have going on. In addition to ongoing clinical updates from our AML, GBM and pediatric brain tumor trials, we expect to be announcing as many as 4 different clinical trial authorizations for new trials in the first half of the year. As well, significant clinical development milestones could be achieved for both annamycin and 1122. We'll be updating this slide for investors on a regular basis. In fact, if you compare this slide to the version we published in January, you can already see that we've accomplished 2 of the milestones we set out. One was gaining grant funding for the European sarcoma trial, and the other was contracting with a CRO to begin recruiting sites for the U.S. sarcoma trial. I'll also note that we moved back the filing for our annamycin combination trial in Europe because it now appears we may qualify for grant funding for this trial as well. And we should have a reading on that yet in the first half of this year. As you can see, activity is expected to ramp up dramatically in the second half of this year with as many as 8 different clinical trials potentially kicking into gear and data readouts from as many as 4 different trials. 2021 is looking like the most critical year ever for Moleculin investors, so we're truly excited to get this year started. Oh, one last thing. We've also provided an appendix in the more detailed corporate presentation deck with insightful information about the development landscape for each of our major indications. So if you'd like to learn more about our programs, please do visit our website for the full presentation. We look forward to providing you important updates as the year unfolds. And as always, please reach out to us through our Investor Relations team with any questions you might have. Thanks again for joining us.

Thanks, Walter. Thanks, Jon.