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

Greetings. Welcome to the Moleculin Biotech 2023 Year-end Conference Call and Webcast. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to Jenene Thomas, Investor Relations. Thank you. You may begin.

Thank you, Darryl, and good morning, and welcome, everyone. At this time, I would like to remind our listeners that remarks made during this webcast may state management's intentions, beliefs, expectations or future projections. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the safe harbor provisions of the federal securities laws and are based on Moleculin's current expectations and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. 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. Additionally, certain information contained in this webcast release to or is based on studies, publications, surveys and other data obtained from third-party sources and the company's own estimates and research. While the company believes these third-party sources to be reliable as of the date of this presentation, it does not independently verify and makes no representation as to the adequacy, fairness, accuracy or completeness of or that any independent source of verified any information obtained from third-party stores. Any data discussed regarding clinical trials and progress are considered preliminary and subject to change. Joining us on the call from Moleculin's leadership team are Walter Klemp, Chairman and Chief Executive Officer; Dr. John Paul Waymack, Senior Chief Medical Officer; and Jonathan Foster, Executive Vice President and Chief Financial Officer. I would now like to turn the call over to Walter Klemp, Chairman and CEO. Wally, please proceed.

Thanks, Jenene, and welcome, everyone, to our year-end recap and pipeline update. We have some very exciting progress to talk about today. And because of that, we will primarily focus on our AML second line strategy and the significant opportunity we believe this represents. As we review the activities of 2023 and the data that we are just now announcing, it becomes increasingly clear that Annamycin and Anthracyclines, that is, remain perhaps the most critical component of treatment for AML and STS. For too long ago, the limitations of anthracyclines have prevented a majority of patients from benefiting. Annamycin has changed that. And for the first time ever, we're showing a viable pathway to enable that underserved majority to benefit from Anthracycline. It's for this reason that we won't be focusing on the rest of our development pipeline today other than to say that preclinical work continues to position both our STAT3 Inhibitors and our metabolic inhibitors for continued outside investment that only helps Moleculin investors. The primary focus of this call and the updates we expect to provide over the coming months are squarely on Annamycin, and even more specifically on the treatment of relapsed or refractory AML. And for good reason. A lot of small biotechs, frankly, would give anything to have the data we just announced. Annamycin was able to generate a 60% CRc rate in second-line patients, and that includes a 50% CR rate in combination with another 10% CRi. A conservative estimate says that Annamycin should be able to more than double the number of patients achieving complete remission as compared with all of the approved targeted therapies combined. Now this is possible in part because of Annamycin's complete lack of Cardiotoxicity. We've treated 82 subjects so far across multiple studies and have yet to see any indication of Cardiotoxicity. And what is important here is that all of this puts us on course to begin a pivotal registration study this year with the [potential] for securing an accelerated approval pathway from regulators. Look, this is a fundamentally different company than most of you on this call invested in. Candidly, even compared with just a few short months ago. We are now Phase III ready. We have data that outperforms every asset approved in AML, and in a space where lesser assets have sold for billions, and we have established what we believe is a pathway to approval. Annamycin is a remarkable next-generation treatment. It's lack of Cardiotoxicity, combined with its greater potency and lack of cross-resistance with currently prescribed Anthracyclines truly puts it in a class by itself. And while this is true for a wide range of potential indications, it's especially meaningful in AML. The AML treatment landscape is complicated. And it's easy to lose sight of just how big the unmet need remains. We estimate that currently, in the U.S., almost 60% of AML patients remain without a viable treatment option that could cure their disease or provide lasting remission. And that's despite all of the recent advances in targeted therapies. While we don't have time to explore this in detail today, it's very important for investors to understand why and how significant the unmet need still is. This is so important, in fact, that we produced a short video taking you through this analysis. The link of that video is shown here and it's also right on off the landing page of our website. If you are currently an investor or considering investment in Moleculin, you owe it to yourself to watch this short 6-minute video. And because the unmet need is so great, a lot of recent new drug approvals have been allowed on the basis of some pretty low performance numbers. Of the 5 targeted therapies that have been approved, they've done so on the basis of an average 21% CR rate. What we just announced is more than double that number, but the difference is even greater than that. The average 21% CR rate only applies to the few patients that have -- that happen to have the required targeted gene mutation, and that leaves 53% of AML patients out in the cold. In comparison, we've been treating all comers with Annamycin regardless of gene mutation or prior therapy. And this is where Annamycin really shines compared with all of the currently approved second-line therapies. The orange bars on this chart show the CR rates documented for each existing therapy. The blue bars weight those CR rates for the actual percentage of AML patients that can benefit because they happen to have the required gene mutation. And when you add them all together, it reveals that only 13% of all second-line patients will achieve a CR as a result of current targeted therapies. But since Annamycin is an all-comers drug there is no reduction from [ weighting ]. Instead, 100% of the CR rates should be expected for all second-line patients. And that means our 50% CR rate is multiple times greater than the expected benefit from all targeted therapies combined. And if you're thinking that the relatively low performance bar set by targeted therapies means they don't have much market value, well, think again. In 2021, Servier, a French mid-pharma company paid $2 billion for the combination of IDHIFA and TIBSOVO, two drugs that together are expected to produce complete responses in just 4% of the entire population of second-line AML patients. We are currently showing a performance from Annamycin that is more than 10x that number. And if you think that's an outlier, consider that our performance numbers in second line are better than Venetoclax's numbers in first-line patients where you would expect higher performance. Yet Venetoclax generates $2 billion a year in revenue for AbbVie. And let's not forget that Jazz Pharma paid $1.5 billion for Vyxeos, where, again, we believe our performance numbers are much greater. Any way you look at it, we believe the efficacy numbers we are sharing with you today support an eventual exit for Moleculin shareholders that will be measured in the billions. And again, this is just AML. As we said before, our preclinical data suggests Annamycin should also be beneficial in a wide range of other indications, potentially addressing 10x as many patients as both AML and STS combined. Now keep in mind, our opening slide. Anthracyclines remain a cornerstone of chemotherapy in many of the worst cancers and an Anthracycline that has demonstrated the lack of Cardiotoxicity could be a game changer for these cancers, especially in children, where the current Anthracyclines may cure their disease only to limit their lives because of the damage done to their hearts. With that as an overview, let me now hand the call over to Dr. Paul Waymack, our Senior Chief Medical Officer, to dive a bit deeper into the data. Paul?

Thank you, Wally. The next slide summarizes the three clinical trials we have conducted in patients with AML. In our MB-104 clinical study, we dosed 6 patients with Annamycin at either 100 or 120 milligrams per meter square. The reason for the low dosing was FDA is concerned about possible Cardiotoxicity. However, we identified no Cardiotoxicity in the study, but we did achieve one CRi despite the extremely low dose of Annamycin. Our next clinical trial, MB-105, treated refractory and relapsed AML patients who had an average of four prior treatment regimens. They were treated with Annamycin as monotherapy in the study in cohorts with dosages ranging from 120 to 240 milligrams per meter square. Of note, at the 240-milligram per meter squared dosing cohort, 3 of the 5 patients treated met the criteria for CRs or CRi's. And we identified no Cardiotoxicity in this study and we did not reach dose-limiting toxicities. However, in light of the efficacy seen with the 240-milligram per meter squared dosing regimen plus efficacy we have seen in our animal studies when Annamycin was combined with Cytarabine, we elected to stop dose escalation and to proceed to our current trial, which would combine Annamycin with Cytarabine. Our combination Annamycin plus Cytarabine clinical trial, that is MB-106, has now enrolled 20 patients. This includes three patients for whom this is first line, 10 patients for whom in the second-line therapy and seven patients for whom it is third line or beyond. Among all patients enrolled in the study, 18 are now evaluable for efficacy. Among these evaluable patients, the rates of CRc, that is combined CR plus CRi is 39%. But the remaining two patients, one only began treatment last week and this should not be undergoing bone marrow efficacy evaluations for at least two more weeks. And the other has bone marrow with too little post-chemotherapy repopulation of the marrow to be currently evaluable, but he is currently being evaluated for possible bone marrow transplantation. And we also have an 11% PR rate in this population. But most importantly, among patients for whom combination therapy is used as second-line therapy, the CRc rate is 60% and the PR rate is 10%. The next slide describes all the patients who achieved a CR or CRi to date in our MB-106 study. As you can see, six of the seven patients received Annamycin as second-line therapy since we don't count maintenance therapy as a second-line therapy. You will also note that we have one death from pneumonia, which occurred in the CRi patient. This unfortunate case occurred at a site where they did not follow the accepted standard of care for antimicrobial prophylactic therapy in leukemia patients. As soon as we identified this problem, the site was informed of this issue, and they are now utilizing the standard of care set by leukemia medical societies. I would next like to discuss the Cardiotoxicity issue with Anthracyclines in more detail. The FDA has set limits with the total amount of Anthracyclines that a patient may receive over a lifetime. This ranges from 450 to 550 milligrams per meter square depending upon the Anthracycline utilized. As you can see from the slide, among patients who reach this level, the risk of any cardiac event is 65% and the risk of developing heart failure that is the heart's pumping ability being significantly impaired is 3.8%. Among patients who received from 600 to 850 milligrams per meter square, the risk of any cardiac event rises to 100%, and the risk of developing heart failure is 8.3%. Because of these cardiac problems with other Anthracyclines, we have serially monitored multiple parameters of cardiac function in all patients in all of our Anthracycline -- Annamycin clinical trials. This has included serial EKGs, [ troponin concentrations ] and [ troponins ] are a blood marker for acute cardiac toxicities and ejection fractions, which is a measure of how efficiently the heart is pumping blood. These data have been reviewed by an independent cardiologist with expertise in the field of drug-induced Cardiotoxicities. To date, he has found no evidence of any Cardiotoxicity in any of the patients treated with Annamycin. Finally, I would like to move on briefly to discuss our Soft Tissue Sarcoma data. Our MB-107 study is a dose escalation study in patients with Soft Tissue Sarcoma with pulmonary metastases in patients who have had at least one prior therapy. We finished enrollment in this study some time ago. However, we are continuing to follow these patients since most of them are still alive. As you can see in the column on the far right, among patients treated using the dosing regimen of 330 milligrams per meter square or less, which we believe will be our dosing regimen for any pivotal trial. And who had 1 or 2 prior therapies, our median progression-free survival is now over three months, and we have not yet reached our median overall survival since the majority of the patients who were treated are still alive. We will continue to follow these patients until we reach our median overall survival. Thank you, and I will now turn the presentation over to Jon.

Thanks, Paul. We ended the year with roughly $24 million in cash on hand, sufficient to take us into the fourth quarter of this year. Keep in mind that this takes into account significant cash outlay, specifically in Q3 and Q4 for preparation to commence our AML pivotal registration study, which Paul and Wally have just discussed. On a post-split basis, our market cap as of mid-March was roughly $20 million, $22 million with a weekly average trading volume of 55,000 shares with approximately 2.2 million shares outstanding, including prefunded warrants that number increases to 2.4 million shares. Regarding the reverse split, given our clinical and regulatory progress, it is critical. We meet the minimum $1 bid price to keep our NASDAQ [indiscernible] as we're a [whole] [indiscernible] we believe all such housekeeping items need to be in order as we prepare for a transformation into a pivotal stage development company. We continue to monitor the short positions by brokers and we have reached out to one broker notifying them with such [ shorting in ] balances. A significant portion of our daily trading volume is [ shorting ]. We believe we have the opportunity to successfully break this trading pattern with our progress in Annamycin as we move forward in 2024. As you can see, 2024 is shaping up to be a very exciting year for Moleculin. As Wally and Paul have just discussed, we're moving forward in our clinical progress with Annamycin in 2024 with the following plans: completing the MB-106 AML trial with first and third-line subjects and concluding the study, taking the second-line data that Paul just discussed, then holding the end of Phase II meeting with the regulatory body here in the U.S. and in Europe, take the next feedback and initiating a pivotal study with Annamycin on AML. With STS, we're looking to close out the current trial, as Paul just mentioned, and then moving forward with an investigator-led and funded trial. As we have concluded 2023, our year of data, we look forward to moving Moleculin into a pivotal study during 2024. Wally?

Thanks, Jon. Well, I'd like to close with where I began today's presentation with the observation that the most important cancer therapy for both AML and STS continues to be an Anthracycline, and we are now providing the data showing that Annamycin has the potential to finally bring the benefit of Anthracyclines to a majority of these patients. As a bottom line summary, we are now Phase III ready, we have data that outperforms every asset approved in AML, and we're in a space where lesser assets recently sold for $2 billion, and we have what we believe is an established pathway to approval. In our view, the gap between these realities and where our market cap is today can no longer be justified. We believe once the market awakens to this new reality, a more appropriate trading range will be established. And this isn't just talk. I've been investing my own after-tax dollars in Moleculin stock because of my belief in what I'm saying. In fact, I've personally invested over $300,000 over the last 16 months, and the rest of our management team has been investing right alongside me. We are believers and we are committed to making this a success. From here, you can expect several things from us in the near future. One is the formation of a larger and more focused science advisory board to help guide our pathway to new drug approval. We've now shared this data with some of the most recognized and respected key opinion leaders in the global AML community. In every case, they have agreed with our assessment that there is a significant unmet need that our efficacy numbers, if we produced in our pivotal trial, should support new drug approval and that they would use Annamycin in their practice once approved. We'll be announcing SAB appointments in the coming weeks, and I'm confident you will be impressed with their world-class credentials. Another is a formal presentation of the final data at a prestigious conference, which we expect to be announcing soon. Also, we continue to make progress in establishing the market exclusivity of Annamycin and hope to release news on that subject as well. And finally, we are preparing to meet with FDA to discuss this data and establish a concrete approval pathway for Annamycin that we hope to announce this summer. Until then, I encourage everyone to dig into our data. Look, until now, there has been far too much speculation and not enough facts. That changed with our most recent announcement. We could not be more proud of what we have accomplished and we couldn't be more excited for what is about to unfold. Thank you very much.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is come from the line of Jonathan Aschoff with ROTH MKM.

Congrats on the progress, for sure. [ We know ] what's the final patient number for first-line patients in this new Phase II cohort? And what do you need to see in that population to make the decision to go forward with a pivotal first-line trial?

Let me clarify because we think our -- let's say, our first pivotal registration trial. The trial will use for new drug approval beyond second-line patients, not first-line patients.

Yes, for sure. So then the Phase III that you're talking about, what's [indiscernible]

So you're talking about the Phase III [indiscernible] So you're talking about the Phase III [indiscernible]

[indiscernible]

[indiscernible] Right, right, right.

[indiscernible] so Phase II first-line patients to make that decision and move forward with that trial.

Exactly. That's -- let me hand that Paul over to you, you're closest to all those numbers.

Yes. As Wally mentioned, we anticipate -- we're going to the FDA with second-line therapy as their initial indication. We would, however, perform a first-line study to get an additional indication. And that would be coming after our initial approval for second line. We would anticipate the first line would be a randomized trial compared to probably a different Anthracycline to show that we are at least noninferior and potentially superior. The patient numbers would be dependent upon the data we get as our current 106 trial is finished. As was mentioned, 106 is completed for second line, but we have only enrolled three first-line patients today. We're continuing to enroll them. And when we get the numbers from all the first-line patients in 106, that would be compared to the literature. And that would allow us to do power factor calculations for the number of patients required for a pivotal trial comparing us to, say, daunorubicin.

Okay. So how many -- let's break it down. How many first-line patients you intend to enroll in 106 in the Phase II portion?

We are currently at three. It will be driven by the data. If we get very good results quickly, there'll be no need to go further. I can see us stopping at 6 or 7 or going further. Right now, we only have two evaluable, one at CR, one who had progressive disease. Third one was dosed last week. But we will just have to watch the data as they come in.

Okay. Then what's the efficacy [indiscernible] ? What's the CR, the CR [indiscernible] that you're looking for to say, yes, this is a contender, worthy of running a Phase III trial in just first-line patients?

It would probably be in the 40% range, around 40%.

Okay. And certainly, if you don't do this trial, you must do a confirmatory in second line, yes?

It depends on how the meeting with FDA goes. If we are allowed to do a single-arm study under accelerated approval, then we would need a confirmatory trial. If we are required to do a randomized trial as their second-line therapy study, then a confirmatory trial might not be required. That's one reason why we plan to go and meet with the FDA sometime by beginning of summer.

That was helpful. Why not just first line anyway because this drug looks obviously, safer. It certainly looks no less effective. And it's not some novel agent that docs have to get their mind around, to wonder what's [going] to do with my patient. I mean, so why not a push in first line now?

That's a good question. And the reason is regulatory time to approval. If we go in first line, there are a number of drugs approved for first line, the FDA is a different standard than for second line, where as Wally mentioned, right now, most patients with needing second-line therapy, they don't have any options that are good. They don't have any approved options. The 5 drugs approved are for a minority of patients. So there is this unmet medical need out there, which is why the FDA cuts a different standard, which is why, as Wally mentioned, FDA approved those 5 drugs on will be considered limited data, and that's why we're going here first because the amount of data that would be required and data means the number of patients and time will be far less than first-line therapy and we are eager to get this thing to market as soon as possible and thus, take the second line as our initial indication and then move on to first line to broaden the market share.

Jonathan, it's really about managing cost, time and risk, right? If we were -- look, if we were Pfizer, we probably would do exactly as you're describing, right, but we're not. And so this -- what Paul has just described is a dramatic -- if we get what we want with FDA is a dramatic reduction in the number of patients and therefore, the time it takes and cost it takes for us to get there, okay?

Okay. And so is it fair to say that the STS trial, I believe you had said it's kind of now in that basket along with the lung mets from TNBC and RCC and the liver mets from pancreatic cancer. It's a upon external help, we'll carry that forward, and we're going to focus on AML. That's the message.

That's a reasonable takeaway. And I'll just give you a little bit of encouragement there. The leading Sarcoma experts in Europe have looked at this data and basically have indicated their strong interest to run a trial they will fund to position Annamycin for first-line treatment in Soft Tissue Sarcoma. So we're -- there's -- a lot of these externally funded trials take a while to get off top at center. But I'm just telling you the momentum appears to be there that they like the numbers, they think it should be positioned for first line and they want to pay for a trial.

Our next questions come from the line of Vernon Bernardino with H.C. Wainwright.

Hi, Wally, John and Dr. Waymack, we haven't met yet, but congrats to all on the impressive results. I apologize, I have a cold. So sound like [Barry White]. But anyway, I do have questions as far as the Phase III dose. They are quite impressive. One thing I was wondering, you have not seen any safety issues so far and that is fantastic. I was just wondering what, if anything, you could share that the FDA has any thoughts regarding that dose? Because conceivably, you could actually dose higher and pardon me, I'm not an oncologist, to try to get even more efficacy out of Annamycin. What are your thoughts there? And anything you could share as far as feedback from FDA?

Yes. So Vernon, you're right to ask that question. Look, generically speaking, especially as it relates to Anthracycline, the mindset for four years has been you go to the maximum because you're trying to stop this cancer in its tracks and you're willing to tolerate a lot of patient discomfort and even patient risk for the sake of beating the cancer. But Paul, you and I have talked a lot about this -- the optimum dose -- and I think Vernon would love to hear what you have to say about the strategy behind dosing here.

Yes. And I agree with both of you. Generally, you keep going up and up and up. The reason we stopped was when we were getting CR rates of 60% CR plus PR of 70% and no toxicity -- and when -- as Wally described, the competition is in the 20% range, you reached the point where you start thinking, well, what more would I achieve at the risk of starting to get significant toxicity. So the clinical team's decision was, look, these results are far beyond what we imagined. As far as efficacy, toxicity is not there, let's not try to improve on it or if I can quote an old Virginian saying, "when you're riding Secretariat, don't get off ". So [indiscernible] [ 230, 240. ] The results were really great. And I said, let's not try to go any further. This is working more than we ever imagined. Let's go with this.

So conceivably, you have this dose go through a Phase III trial and it doesn't prevent you from going to a higher dose in a post-approval trial?

Correct. But again, our #1 goal is to get to an NDA as soon as possible and as cheaply as possible. We found what we thought was a safe effective dose. We hope to get confirmation from the FDA sometime June or so and then proceed forward.

Thank you very much. That's -- this is impressive data, and that's really the only one question I had.

Thank you. There are no further questions at this time. And with that, I would like to close the call out for today. You may disconnect at this time. We appreciate your participation, and I wish you a great day.

Thanks.