Moleculin Biotech Inc (MBRX): Proceed With Caution

All this, and we’ve not even mentioned the questionable social media campaign that underpinned the company’s IPO efforts. A look at Moleculin’s Facebook page reveals it has nearly 80,000 likes, increasing at a rate of nearly 15% a week. It’s painting as an oncology space champion when it is a newcomer, and may have used Facebook to get followers to share news about its IPO. It also has some reviews from some very questionable follower profiles (no friends, no history, one profile picture etc.). This is often a sign of false reviews, designed to influence the opinion of real users that come across the reviews. Further, Moleculin has 80,000 likes on Facebook and just 17 followers on Twitter. This is further evidence of promotion, which is OK. Promotion does not mean a company is not worth an investment per se. It just means investors should be cautious here.

Moleculin may yet have a bright future and may just need the word to get out to jumpstart its work. Annamycin may yet succeed. The drug is supported by some promising data, and assuming this data passes audit, will have a chance to build into a pivotal trial across the next couple of years.

What we are pointing out, however, is that this company seems to be attempting to align itself with some big players in a big space, and it doesn’t even have a drug in its clinical development pipeline. It’s doing this through paid promotional activity, skewed social media campaigns and the supporting of its lead candidate with as yet unaudited data that another company collected.

The final concrete quantitative statistic we will leave you with is that CytRx, which is nearing the end of Phase III trials with a special protocol assessment for a very similar reformulated anthracycline chemotherapy, only has a market cap of $58M right now. Does a company that does not even have an active IND for a similar class drug deserve a market cap 28% higher? If annamycin succeeds, Moleculin will of course be worth much more than it is now by many multiples. But before we can even begin to assess whether it will be, its value looks set to fall in the meantime.

Annamycin does seem to work so far, but it doesn’t look to justify the company’s current valuation. There will probably be better entry points later if development continues. The drug looks good so far in term of long term potential. The current valuation, not so much.

Note: This article is written by Mark Collins and was originally published at Market Exclusive.