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

What investors should be looking for is our next round of data at the rate things are progressing, we believe we'll be fully recruited sometime in the first quarter. Now that data set will become the foundation for what we present to the FDA. Importantly, depending on the results, it has the potential to represent a massive amount of derisking to our plan, and it should signal to the market and to potential partners that the upside opportunity for annamycin is real.

Welcome back for another Virtual Investor What This Means segment. My name is Jenene Thomas. I am CEO of JTC IR, and I will be the moderator for today's event. So today, we are featuring Moleculin Biotech, and I'm very pleased to be joined by Walter Klemp, Chairman and Chief Executive Officer of the company. Welcome, Wally.

Jenene, Glad to be here.

So happy to have you. Before we get started, I just want to inform our audience that Moleculin Biotech is listed on NASDAQ and trades under the ticker MBRX. And during today's discussion, the company will be making forward-looking statements, and actual results could differ materially from these forward-looking statements. So some of the factors that could cause actual results to differ materially from these contemplated by such forward-looking statements are discussed in the periodic reports Moleculin files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully.

So now we are ready to jump right in, Wally. You recently announced positive interim data from our Phase Ib/II clinical trial in AML at a meeting with KOL's in conjunction with the ASH Annual Meeting. Can you provide a high-level overview of the data you announced?

Sure, Jenene. As you know, this update came relatively quickly after our last earnings call, but the recruiting is going so quickly that we actually had new data to disclose with our presentation at last week's ASH Annual Meeting. That's the annual (sic) [ American ] Society of Hematology. And it's really one of the world's biggest venues for new AML-related data sharing. Now we've gotten to 16 patients recruited with 9 of those being completely dosed per protocol and 4 of those showing a complete response or CR. So a 44% CR rate on patients treated. Now we are careful to point out that statistically, we have to include 2 patients who weren't fully treated due to allergic reactions. So on, what we call, an intent-to-treat basis, the CR rate is 36%. But as the trial fully recruits, we would expect that this intent-to-treat percentage will come closer to that realized through treatment per protocol. Regardless, even the 36% is impressive, especially considering that all these patients had some prior therapy. For comparison purposes, venetoclax in combination with cytarabine, well, it only delivered a 21% CR rate for its approval. And this was in first line, meaning patients who had no prior therapy and our intent-to-treat percentage approximates the CR rate for venetoclax in combination with azacitidine or the well-known ven/aza therapy. But again, the ven/aza CR rate was only on first-line patients, whereas we're getting this level of response in patients who are second line or later.

Wally, exciting data. Thank you for that overview. You mentioned the allergic reactions. Can you elaborate on the significance of those reactions?

Yes, I'm glad you asked about that. One of these patients have an allergic reaction to cytarabine. That's the drug that we're being combined with. But because of the structure of this Phase II expansion, this patient was simply withdrawn from the trial because of their reaction to cytarabine. So they never got a chance to be fully treated with annamycin. Now in our next trial, which we expect to be our pivotal approval trial, that patient would be continued on annamycin without cytarabine. And we know that in our single-agent trial, we were seeing a 60% composite CR rate. So instead of losing this patient to a technicality, they would be given a strong chance for responding to annamycin. The other patient actually had a reaction to annamycin. And this is the first one that we've had in 70 patients treated, and it's not unexpected to have a handful of patients who will have this kind of reaction. So even though it reads right now as 1 patient out of 11 in the current Phase II, we believe in the larger approval trial, it's more likely this type of event will be infrequent enough that it really doesn't make a big difference in the intent-to-treat CR rate. But one thing that is really important for investors to understand is, these are cancer patients with rapidly progressing tumors. And that means they're in a weakened state, and they're highly prone to a wide range of maladies like sepsis or pneumonia that could take them out at any time. In fact, it's sadly not uncommon for cancer patients to die during a clinical trial because of their frailty. And it's all the more reason we feel so fortunate to have a drug like annamycin showing such strong results in second and third-line patients.

Well, this distinction between first-line and pretreated patients seems to be important. Can you elaborate on what this means related to your data set?

Yes. It's super important, Jenene. To be clear, the best time to catch these patients is when they're first diagnosed. I mean the best chance to succeed with AML patients is first-line. And statistically, with every following line of therapy, their chances go down. By the time they've had 3 or 4 lines of therapy, their marrow reserves are becoming depleted, and the disease has taken a toll on their entire system. Now this usually gets worse with each line of therapy. One of the patients in our trial, for example, that didn't respond to annamycin, they had 10 prior lines of therapy. Now a very important insight here is that the responses we are seeing are mostly where annamycin is second or third line for patients. So far in this trial, the patients with 3 or more lines of prior therapy. Well, they account for the vast majority of nonresponders. Said another way, of the 9 patients who were dosed per protocol, 5 of those had 2 or fewer prior lines of therapy and 4 of those were CRs. Well, that's a complete response rate of 80%. Now again, at this point, the N is still small, but here's why this is so important. For our pivotal approval trial, we hope to be only enrolling first or second-line patients. So we should be going into our discussions with the FDA and into the approval trial with a lot of confidence. And look, at the rate we're recruiting, we shouldn't have to keep apologizing for a small N for much longer.

Well, why do you think enrollment is advancing so quickly in this AML trial?

Well, we think enrollment is advancing quickly for several reasons. For one, the type of patients we're recruiting, which specifically are those who are considered unfit for intensive therapy, really don't have a lot of options. Even though there are a lot of AML clinical trials out there, most of those are for gene-targeted therapies, which are only relevant to a small percentage of AML patients who happen to have that particular mutation. So when it comes to unfit patients who either don't respond to or don't qualify for targeted therapy, there aren't a lot of promising clinical trial options. For example, in the CRs, we've seen so far in the MB-106 trial, there are patients who were relapsed from or refractory to ven/aza. Well, these patients just don't have much left in terms of alternative treatment options. Additionally, annamycin showing no cardiotoxicity in our trials, well, that's got physicians now able to use our drug in multiple cycles to maintain CR durability in cases where either a bone marrow transplant is delayed or inappropriate. This is especially important, by the way, for elderly patients who often are not candidates for a bone marrow transplant. I'd say another big driver for recruitment is the fact that annamycin is starting to show real traction in terms of efficacy. And now that our principal investigators are seeing this, they're becoming more enthusiastic about enrolling frankly, any patients who qualify. When you cut through it all, physicians want what's best for their patients and the numbers are showing that annamycin may just be the best option in more and more situations.

Wally, certainly an exciting update a lot of great progress with this study. Again, congratulations on the new data that you just put out. What can we expect in Q1 of 2024 for your AML trial?

Well, I mean, what investors should be looking for is our next round of data at the rate things are progressing, we believe we'll be fully recruited sometime in the first quarter, hopefully, in time for our March earnings call that will be covering fiscal year '23 and an important timing aspect for all AML trials like ours is that you usually know if you have a CR within just a month from treatment. Now we believe getting into the 20s in terms of the number of patients treated is a kind of critical-mass threshold for the financial community and for prospective partners, and we think we'll be there by next quarter. Now that data set will become the foundation for what we present to the FDA. Importantly, depending on the results, it has the potential to represent a massive amount of derisking to our plan, and it should signal to the market and to potential partners that the upside opportunity for annamycin is real. Now remember, venetoclax generates $0.5 billion a year in revenue for AbbVie. Biotech valuations are in the range of 2 to 10x annual revenue. So you don't have to be a math genius to see the potential for where our valuation could be headed.

A lot of great progress for Moleculin in 2023. I think you're setting the stage for a lot for investors to follow in 2024. So while, again, congratulations on all of your progress. So happy to have you here with us today. As a reminder, Moleculin does trade on NASDAQ under the ticker MBRX, and this does conclude our Virtual Investor What This Means segment, featuring Moleculin Biotech. I'd like to thank you, Wally, for joining us today for another great update. I'd like to thank our participants for watching us today. As a reminder, you can access the webcast replay from today's event as well as a lineup of our other, What This Means segment at virtualinvestorco.com. Thanks again, Wally, and wishing everyone a great afternoon.

Thanks again, Jenene. Take care.