Moleculin Biotech, Inc. (NASDAQ:MBRX) Q4 2022 Earnings Call Transcript

Moleculin Biotech, Inc. (NASDAQ:MBRX) Q4 2022 Earnings Call Transcript March 23, 2023

Operator: Hello and welcome to the Moleculin Biotech Fiscal Year 2022 Quarterly Update Conference Call and Webcast. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host Jenene Thomas, Investor Relations. Please go ahead, Jenene.

Jenene Thomas: Thank you, Kevin. Hello and welcome to the Moleculin Biotech quarterly update conference call and webcast. Following the presentation, there will be a question-and-answer session and note that this webcast is being recorded at the company’s request and a replay will be made available on the company’s website following the end of the event. 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 relates 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 has not independently verified and makes no representation as to the adequacy, fairness, accuracy or completeness of or that any independent source has verified any information obtained from the third-party sources.

So joining us on the call today is Moleculin leadership team, we have 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. It is now my pleasure to turn the call over to Wally Klemp, Chairman and CEO. Wally, please proceed.

Walter Klemp: Thanks, Jenene. Hello, everyone and again, welcome to today’s Moleculin Biotech earnings call. As you would expect, we will be updating you on financial aspects of the company. But the most important aspect of today’s call will be an update on our key clinical programs. And in that regard, from this point forward, our plan is to provide these clinical updates with each subsequent quarterly and year end call. And furthermore, given the fact that our current clinical trials are open label, we will be free to provide substantive updates on preliminary readouts for safety and efficacy with each one of these updates. We are also really excited for Moleculin to finally be entering Phase 2 activity. When we went public in 2016, we had zero clinical activity and really nothing more than a promising pipeline of preclinical technologies.

But as of today, we have either concluded or conducting or clear to begin 11 clinical trials involving three different technologies in a range of indications. What’s more we have successfully established safety and also witnessed clinical activity in three of these indications. Importantly, this is just in the Phase 1 stages of our clinical programs. Now, without a doubt, the most immediate opportunity for a clinical breakthrough is with Annamycin, largely because it’s the farthest along in its clinical development. So with this in mind, we will spend the bulk of this call talking about where we are and where we expect to be with Annamycin in the near future. But it is worth reminding investors that we have two more distinctly different technologies in addition to Annamycin and those programs continue to progress and provide valuable diversification to your investment and multiple ways for Moleculin to succeed.

Now everything we have done up to and including in 2022 has essentially set the stage for a year of Phase 2 clinical data in 2023. All this preparation is now finally culminating in Phase 2 activity. In fact, we have three Phase 1b/2 clinical trials underway with Annamycin and one of our STS trials has already reached the 50% mark for recruitment of the Phase 2 portion of that trial. And our AML clinical trial of Annamycin in combination with Cytarabine, well, that’s building off of an 80% response rate in the single agent trial completed last year. Now, in just a little bit, our Senior Chief Medical Officer, Dr. Paul Waymack will give you some more insights into these trials and more. But before he does, I’d just like to review what makes Annamycin so important and why it is truly a next generation anthracycline.

Annamycin was created at MD Anderson Cancer Center to overcome the well-known problems of currently prescribed anthracycline. Anthracyclines like doxorubicin and daunorubicin have been and continue to be cornerstone chemotherapies for a wide range of indications. For example, they are for the vast majority of patients, the first line treatments for advanced soft tissue sarcoma and for acute myelogenous leukemia. But these heavily used anthracyclines can fall prey to multi-drug resistance. They are limited in their use by their significant cardiotoxicity and their efficacy is further limited in certain organs, because of limitations in their pharmacokinetics which essentially means they have trouble getting to certain locations in the body in therapeutic quantities.

Well, Annamycin was specifically designed to overcome these limitations. Perhaps most significantly, Annamycin has little to no cardiotoxicity. In fact, in the first 42 patients we have treated that have been reviewed by an independent cardiology expert, there has been no evidence of cardiotoxicity even though 32 of those patients have been taken above the lifetime maximum allowable anthracycline dose level set by the FDA and some have been taken to well over double that limit. The bottom line is we fully believe the absence of cardiotoxicity coupled with the fact that Annamycin typically outperforms doxorubicin in most animal tumor models means that Annamycin has the potential to displace doxorubicin in a range of indications. And keep in mind, the doxorubicin has been a billion dollar revenue generator.

And if that’s not enough, Annamycin also has the potential to go where current anthracyclines can’t, at least not in therapeutic quantities. What we call the unique organotropic nature of Annamycin allows it to accumulate in the lungs in animals €“ in animal models at up to 30 times the level of doxorubicin. And we just announced a presentation at the upcoming AACR meeting that will show a similar affinity for the liver. And we also have data showing this potential in the pancreas. All this really does point to promising therapeutic potential, but what really matters is Phase 2 clinical data. And here to talk more about that is our Senior Chief Medical Officer. Dr. Paul Waymack. Paul?

John Paul Waymack: Thank you, Wally. As Wally noted, we at Moleculin are extremely pleased that our progress to-date, our lead candidate, Annamycin has now reached the Phase 2 stage of clinical development for our soft tissue sarcoma indication and we expect to reach Phase 2 stage for acute myelogenous leukemia later this year. The current slide summarizes our current status with Annamycin and soft tissue sarcoma. As you can see, we have successfully completed Phase 1b with the identification of 330 milligrams per meter squared as the recommended dose for Phase 2 development. And we are now roughly halfway through enrollment for Phase 2. More importantly, of the initial 6 patients in Phase 2 who have reached the stage of efficacy testing for a stable disease that’s a 67% response rate.

I should also note that in this study, we were not evaluating Annamycin as first line therapy. The first line therapy of course would be expected to yield the best results. But rather, the patients we are treating had an average of over four courses of prior therapy. Thus, this was a rather challenging patient population to be studying and yet to date, we have a 67% response rate. Finally and hasn’t been true of all clinical trials of Annamycin and despite a respective methodical search plan, we have yet to identify any cardiac toxicity from Annamycin in this or in any study. Moving on to our acute myelogenous leukemia development, we have now completed our two Phase 1 monotherapy studies. These were standard dose escalation Phase 1 studies.

In our 105 study, we were able to escalate up to a dose of 240 milligrams per meter squared administered on 3 consecutive days. Although this dose did not fulfill the criteria for stopping dose escalation due to newly identified dose-limiting toxicities in the patients, we nevertheless chose not to dose escalate further for three reasons. First, this was a monotherapy trial and we recognized that it is highly probable if and when Annamycin is approved for marketing for acute myelogenous leukemia, it will be as combination therapy. Now, the reason our initial trials were not as combination therapy, but rather as monotherapy were FDA demands for new drugs. The second reason for stopping dose escalation was that newly finished animal studies had documented significant efficacy for Annamycin when combined with Cytarabine when treating acute myelogenous leukemia.

The final reason was that, as is shown on the slide, at 240 milligrams per meter squared dosing, 4 of the 5 patients had either a partial or complete response, that’s an 80% response rate. We have therefore move forward to the combination therapy stage of clinical development in patients with acute myelogenous leukemia. In this study, patients with refractory or relapsed acute myelogenous leukemia are being treated with Annamycin in combination with Cytarabine. This initial combination clinical trial will begin with the standard Phase 1b dose escalation phase. Once the Phase 1b has identified the recommended Phase 2 dosing regimen, we will move on to the Phase 2 clinical investigation. As of this time, we have 5 active sites in Europe participating in this trial and we anticipate a number of other sites going active shortly.

We have already begun treatment in multiple patients in the Phase 1b portion of this trial. And we anticipate reaching the Phase 2 stage later this year. And as was true in the soft tissue sarcoma study, we have yet to identify any cardiac toxicity. Moving on to our transcription immune modulator 1066 is currently being tested in multiple Phase 1 clinical trials in patients with various types of brain cancer, primarily various types of glioma and medulloblastoma. These clinical trials have been and are being conducted at various prestigious medical university hospitals, including MD Anderson, Emory University, the University of Michigan and Northwestern University. These Phase 1 clinical trials have established that 8 milligrams per kilogram is the safe dose and have documented both clinical and radiologic evidence of efficacy.

Although to-date, the data are limited. We are currently evaluating possible strategic partnerships and collaboration to assist in the development of 1066. And I should also note that we have received orphan drug designation for the treatment of brain tumors as well as rare pediatric disease designation from FDA for 1066. Finally, I would like to discuss our 1122 portfolio. These are our metabolism glycosylation inhibitors. Among the agents in this portfolio, our lead compound 1122 has now finished its Phase 1 dose escalation study in normal healthy volunteers. This study established the safety of 1122 and defined its pharmacokinetics. To that end, this drug is now ready to begin Phase 2 efficacy studies. We believe there are two potential avenues for the 1122 portfolio.

First, we have animal data suggesting it may have benefit in certain types of cancer, which is believed to be due to the fact that cancer cells are heavily reliant on glucose for metabolism. In light of this possibility, we have requested and were granted orphan drug designation from FDA for the treatment of glioblastoma. We also have clinical data suggesting that 1122 will be beneficial in treating certain types of potentially deadly viral diseases, since many of the types of viruses that infect humans require modifications of glucose molecules being placed on their outer surface. Along those lines, we expect to report preliminary findings from NIH funded animal testing in the treatment of potentially deadly arena viruses in the near future.

Going forward, we are currently looking for potential collaboration opportunities for the 1122 portfolio of drugs. I will now turn the call over to our Chief Financial Officer, Jon Foster.

Jonathan Foster: Thanks, Paul. As a small cap biotech, we are pleased with our cash position of $43 million at year end, which should fund us into the third quarter of 2024. These funds should support the development of our studies on the milestones that I will cover shortly and beyond. We had an increase for 2023 in our research and development to $19 million with our increased clinical activity that Wally and especially Paul just discussed. We used roughly $27 million in cash in 2023 compared to $19 million in 2022. We expect expenses to level out and even reduce as we go into mid-2023 and into 2024. So, what do our efforts bring us in the near-term? Annamycin we have delivered on starting the Phase 1b portion of our Phase 1b/2 clinical trial for using Annamycin in combination for the treatment of AML and Poland and Italy, which we expect to expand to at least one other country or countries in the in the EU in 2023.

And we plan to announce the safety and efficacy by cohort in the Phase 1b portion upon each cohort’s conclusion. And then the open label Phase 2 portion safety and efficacy data going from that point forward should be announced with each quarter’s results. We plan to present the detailed MB-105 clinical study report at a scientific conference or in a publication in the near-term expanding on the top line data already presented. For the STS single agent U.S. trial, we should announce the open label Phase 2 safety and efficacy data with each quarter and announcement and keep you up-to-date on the weekly dosing of Annamycin €“ the Annamycin trial going on into EU. With regard to other core technologies, we have the NIH study with that Paul just mentioned, with a molecule coming from our WP1122 portfolio.

We should have those animal study results. We also expect to further our collaborations on treating GBM using WP1066 and additionally for WP1066, which should see top line results for the pediatric Phase 1 trial and we expect that trial to expand into Phase 2. Now, all of these efforts surrounding 1122 and 1066 will be mostly externally funded. So, you can see our focus with our own funds is on providing clinical readouts for Annamycin in the near-term. Wally?

Walter Klemp: Thanks a lot, Jon. So let me conclude the prepared portion of today’s call by underscoring the key attributes of Moleculin. We believe we have the diversity and the multiple shots on goal of really a portfolio company. And yet we have the focus, near-term opportunity and frankly, the blockbuster potential of a drug like Annamycin. And we are operating with a highly qualified and experienced management team, with multiple development successes on our track records and coordinating a global network of truly world class experts in our targeted indications. Most importantly, we believe all of this is now culminating in 2023 becoming what we like to call the year of data for Moleculin. And finally, as Jon just pointed out, we have the cash we need to deliver on that data.

So, I’d like to leave you with one last thought before we dive into Q&A. The last major development in anthracycline therapy was a drug called Vyxeos. And Vyxeos extended overall survival for a subset of AML patients by 3.5 months. The story of that company feels a lot like Moleculin up to this point. Nobody was really paying attention to them. The stock was languishing around $1. And it seemed like they had been toiling away forever. But then, seemingly overnight, they started reporting data, the kind of data that had the potential to lead to a new drug approval. And within months, Jazz Pharma agreed to pay $1.5 billion for Vyxeos. My message to you is that the Moleculin team firmly believes that Annamycin has the potential to become the next Vyxeos.

And frankly, we believe it will be much more important than Vyxeos. If we are right about this, now is definitely the time to be paying attention to Moleculin. So thank you for your time and attention and let’s open up this call to Q&A. Jenene?

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Q&A Session

Operator: Thank you. The first question is coming from Jonathan Aschoff from ROTH MKM. Your line is now alive.

Jonathan Aschoff: Few questions if you would bear with me. So we will get more Phase 2 U.S STS LM data prior to top line. Certainly, it sounds like top line final data this year. And my question is what gives you confidence that the 28 patients will be pivotal when the best result we have seen is stable disease and 5 of the 6 patients taking two cycles with two treatment experience to remain on Annamycin? Might you have to do another trial in less treatment experience patients to sidestep that myelosuppression and what kind of hurdle would that be to ask for such a patient population?

Walter Klemp: Sure. Jonathan thanks for the question. As you well know, this is a pretty important subject matter. I am going to €“ I am going to lateral this to Paul who is really the resident expert on our regulatory strategy and where we think this trial goes in the future. So Paul, you want to tackle this one.

John Paul Waymack: Yes. Thank you. I don’t think the chances of getting FDA approval to market this drug based upon our current trial are great. This is a Phase 2 segment in a limited number of patients. However, I think the data we are seeing are extremely encouraging for a number of reasons. These patients had been through many prior rounds of chemotherapy. So these were not the best candidates, despite that fact, truth of the initial 6 patients, 4 of the 6 have stable disease and are continuing on. And that’s an impressive number in that, if you look at the literature, there had been a few randomized placebo-controlled trials in soft tissue sarcoma where patients failed one course not for us, it’s frequently four courses, but just failing one course and then going to placebo use have a progression-free survival of 6 weeks, that’s the average.

And yet, we are going to be when these 4 patients reach 12 weeks from the next efficacy and analysis, even if they were found to have progressed in, that’s 12 weeks, that’s twice what a placebo would get in a very poor patient population. So we believe we are seeing strong evidence of efficacy. We think these data strongly suggest that this drug will be worthy of proceeding to a pivotal trial, the design of the pivotal trial would be dependent upon the totality of the drug results in this study plus collaboration with key opinion leaders and then meetings with FDA, but we think in this core patient population is we are studying to get the results we are seeing is an indication that we are hopefully only one trial away from being able to file to submit for an MDA.

Jonathan Aschoff: Okay. Just because the press release says pivotal data, which would have to be from an ongoing trial, so that was confusing. So definitely another trial would be needed and would you seek less treatment experienced patients to sidestep this myelosuppression?

Walter Klemp: Yes. We are treating these patients because whenever you’re doing your initial efficacy study, there is competition for patients and you have to sort of document to the investigators this drug has potential and so you don’t get the 82nd airborne patients. But we think these data are going to convince and when we presented them to investigators, they are impressed that this drug has great potency. Currently for most patients with soft tissue sarcoma, the initial chemotherapy is doxorubicin. And we think for all the reasons, Wally, John and I have stated we are a better drug than doxorubicin. We don’t have final definitive proof, but we believe that that’s where we are going here and that if these data continue that we are hoping to show that we are a strong alternative to doxorubicin for this indication.