Earnings Call Transcript - MBRX Q1 2023

Operator, Operator

Hello and welcome to the Moleculin Biotech Q1 2023 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, Investor Relations

Thank you, Kevin. 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 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. Any data discussed regarding clinical trials in progress are considered preliminary and subject to change. Joining us on today's 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 Wally Klemp, Chairman and CEO. Wally, please proceed.

Walter Klemp, Chairman and CEO

Thank you, Jenene. We will keep this call concise and focused on our clinical results. First, I want to provide some context. We believe there is a significant gap between our current share price and the actual developments reflected in our clinical data. I want to take a closer look at both AML and soft tissue sarcoma. In our press release yesterday detailing clinical activity, we highlighted a crucial detail regarding the final cohort in our MB-105 clinical trial, which is the single-agent trial in AML. This cohort included five patients treated at a dosage of 240 milligrams per square meter. The official clinical study report indicated one complete response and three partial responses. However, we noted that two of those labeled as partial responses actually reduced their bone marrow blasts to below 5%, which according to protocol and industry standards qualifies as a complete response. By the time the clinical study report was audited for publication, the clinician who categorized those subjects as partial responses had left for another position. Based on our CMOs’ assessment, we believe these cases were indeed complete responses. So why am I emphasizing this detail? It's essential to appreciate that, following our protocol and industry standards for AML, we actually had four complete responses among the last eight patients treated, which translates to a 50% complete response rate in mostly elderly and heavily pre-treated patients in their fourth and fifth lines of treatment. We find that result quite remarkable and want to convey why the entire Moleculin team is thrilled about our progress. Another important aspect of our data is emerging in soft tissue sarcoma. With nearly half of our MB-107 trial participants enrolled, we are observing a preliminary median Progression-Free Survival approaching three months. While this marks a significant improvement over historical data for untreated patients in other trials, we believe it is even more impressive. This is because many previous studies involving advanced soft tissue sarcoma included a wide range of patients, from those who are resectable (with better-than-average expected PFS) to those with lung metastases, who typically face much poorer prognoses. In our MB-107 trial, we are exclusively enrolling patients with lung metastases and the most unfavorable prognoses. Therefore, to nearly double the historical median PFS for untreated advanced soft tissue sarcoma patients while only treating those with lung metastases is quite extraordinary. Yes, our data is still preliminary, and we have more patients to recruit. However, to this point, we are exceeding expectations with what are arguably the worst-case patient scenarios, and we are achieving this without the cardiotoxic effects commonly associated with currently prescribed anthracyclines. If you are an investor in Moleculin or thinking about investing, we believe this is where your focus should lie. This represents the most immediate opportunity for success, which is why I’m eager for our Senior Chief Medical Officer, Dr. Paul Waymack, to provide further insights on our clinical progress. Paul?

John Paul Waymack, Senior Chief Medical Officer

Thank you, Wally. As Wally noted, we at Moleculin are extremely pleased with 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. This slide summarizes our current status with Annamycin and soft tissue sarcoma. And 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. We are now just over halfway through enrollment for the Phase 2 component. In this Phase 2 portion of the trial, Annamycin has demonstrated a progression-free response of 60% of subjects showing stable disease through two or more cycles of therapy, with three subjects continuing with the study drug. One subject has exhibited stable disease after their end of cycle 4 scan and has now received six full cycles of therapy. For the three subjects with stable disease not continuing with study drug, they are still being followed for Progression-Free Survival. And for all subjects, overall survival is being monitored. These data are preliminary and are, of course, subject to change. Finally, as has been true of all clinical trials of Annamycin, and despite prospective methodical search plans, 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 trials. These were standard dose escalation Phase 1 studies. Not shown on this slide is the U.S. trial MB-104 and our European 105 study. We were able to dose escalate up to a dose of 240 mg per meter square administered on three consecutive days. Now although this dose did not fulfill criteria for stopping dose escalation due to any 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 that if and when Annamycin is approved for marketing for acute myelogenous leukemia, it will be as combination therapy. The reason our initial trials were not as combination therapy but rather as monotherapy were routine standard FDA demands for new drug testing. The second reason for stopping the monotherapy trial was that newly finished animal studies documented that significant efficacy for Annamycin existed when combined with Cytarabine when treating acute myelogenous leukemia. The final reason was that as is shown on this slide, up to 240 mg per meter square dose, four of the five patients had either a partial or complete response. That's an 80% response rate. Of these four responders, one was graded as a complete response by the investigator. And the other three were graded as partial responses. But as Wally mentioned, it should be noted that two of the three patients rated as partial responders had their bone marrow blast percentages fall to less than 5%, which is the standard definition of a complete responder. However, since the investigator classified these two cases as partial responders, they are so recorded in the clinical record, despite them having met the laboratory criteria for a complete responder. In light of these three factors, we have, therefore, moved 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 a standard Phase 1/b dose escalation phase. Once the Phase 1/b component has identified the recommended Phase 2 dosing regimen, we will move on to the Phase 2 clinical investigation. As of this time, we have six active sites in Europe participating in the trial, and we anticipate other sites in Europe going active shortly. We have already completed the first cohort in the dose escalation part of the trial. Among the three patients treated at 190 mg per meter square in this initial cohort, one patient achieved a durable complete response. And this was in a 78-year-old patient who had received two prior years of chemotherapy but had relapsed prior to enrollment in our trial. As Wally noted, overall among the last eight patients treated in our AML clinical trials, four had their blast counts fall to less than 50%, which again is the accepted definition of a complete responder. We have now begun enrollment in the second dosing cohort in the study. And we anticipate reaching the Phase 2 stage of the trial later this year. Finally, as was true in the soft tissue sarcoma study, we have yet to identify any cardiac toxicity. Moving on to the next slide, our immune transcription modulator 1066 is currently being tested in multiple Phase 1 clinical trials in patients with various types of brain cancer, primarily 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, and Northwestern University. These Phase 1 clinical trials had established that 8 mg per kilogram as a safe dose and had documented both clinical and radiological evidence of efficacy, although the data are limited. We are currently evaluating possible strategic partnerships and collaborations 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 the 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, that is, 1122 has now finished its Phase 1 dose escalation study in normal 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 their metabolism. In light of this possibility, we requested and were granted orphan drug designation from the FDA for the treatment of certain types of brain cancer, those are glioblastomas. We also have preclinical 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 the glucose molecules located on their outer surface. Along those lines, we expect to report preliminary findings from NIH funded animal testing in the potentially deadly arenaviruses in the near future. Going forward, we are currently looking for potential collaboration opportunities for our 1122 portfolio.

Jonathan Foster, Executive Vice President and CFO

Thanks, Paul. Research and development expense increased by roughly $1 million, to $5.7 million for the first quarter. This increase of just over $1 million is mainly related to the acquisition of our technology rights in roughly 10% of the world via the termination of a sublicense. Otherwise, we see our clinical costs trending downward as we drop from three active internally funded trials to two compared to a year ago, as we continue to focus our internal funds on Annamycin trials. We experienced an increase in G&A expense by roughly 8% for the first quarter versus 2022. This increase is related to legal services and consulting fees. We ended the quarter with over $37 million in cash, which we believe comfortably gets us into the third quarter of 2024. So, where are we delivering on data? Well, for Annamycin, we continue delivering data on the Phase 1/b portion of our Phase 1/b2 clinical trial for using Annamycin combination for the treatment of AML in Poland and Italy, MB-106. The last time we spoke, we just started the first cohort. We have now recently announced, as Paul and Wally have pointed out, the conclusion of that first cohort and dosing and recruiting in the second cohort as we march towards a recommended Phase 2 dose for our Phase 2 expansion cohort. For AML trials, this is moving quickly for us. And we hope to announce the safety and efficacy in the second cohort very soon. We hope this cohort leads us to opening the Phase 2 expansion portion, which will bring along safety and efficacy data going from that point forward, which will be announced with each quarter's results. We will publish the detailed MB-105 clinical study report in the near-term, expanding on the top line data already presented. We will continue giving you quarterly updates on the STS trial, here in the U.S., and also on the STS trial in Europe. We continue to expect to announce with regard to our other core technologies, the NIH study with our WP1122 portfolio. We also expect to further our collaboration, as Paul just mentioned, on treating GBM using WP1066. And additionally, for WP1066, we should see top line results for the Phase 1 pediatric trial, and later expansion into Phase 2. All of these efforts will be mostly externally funded. So, you can see our continued focus, with our funds internally, is on providing clinical readouts for Annamycin, all while progressing on our other two technologies via external funding.

Walter Klemp, Chairman and CEO

Thanks, Jon. So, clearly, we're encouraging everyone to pay close attention to Annamycin. The reason is this is where we are expecting to deliver what we would call game-changing news flow over the coming quarters. But we shouldn't forget about our other two technologies. As Paul pointed out, WP1066 in combination with radiation is on the verge of a new round of clinical trial activity being paid for by, as he said, prestigious institutions, in both adult and pediatric brain tumors. We expect significant announcements here, by the way, before the end of the year. And WP1122 has now begun receiving research support from the federal government, and we believe there's potential for still more external funding support for this new class of antimetabolites. The early indications are promising. And the turning point Phase 2 data are now imminent for Moleculin. Now, look, we know that the small biotech market is under tremendous stress. And, of course, that has put pressure on values across the board, and we're seeing historic lows. But we also believe that strong Phase 2 data and encouraging guidance from the FDA will transcend even this market dynamic. And if we're right, it just makes the upside potential that much greater for Moleculin. So, thanks for your time, and definitely stay tuned for our next upcoming announcements. And with that, Jenene, I'll hand it back to you to open up for questions.

Jenene Thomas, Investor Relations

Thank you. Kevin, please proceed.

Operator, Operator

Thank you. We'll now be conducting a question-and-answer session. Our first question today is coming from Jonathan Aschoff from ROTH MKM. Your line is now live.

Jonathan Aschoff, Analyst

Good morning, and thank you, guys. I was wondering, are the second cohort Phase 1b AML combo therapy patients, are they being dosed yet or have they still just been identified? And if yes, how many have been dosed?

Walter Klemp, Chairman and CEO

So, we have just begun dosing the first patient in that second cohort. Additional patients have already been identified. So, Jonathan, our expectation is that this cohort is going to fill up quickly. Obviously, you can always have screening failures and that kind of thing, so we don't want to overstate it. But it looks like this cohort is going to fill up quickly.

Jonathan Aschoff, Analyst

Okay, so we should still see updates. I'm assuming that if the data is more positive versus less positive, you won't just wait for the quarterly calls to release data, but will share it like you always have. Is that correct?

Walter Klemp, Chairman and CEO

So, we do have the latitude, and John, correct me if you feel I'm misstating this, but we have the latitude to announce on a cohort-by-cohort basis while we're still in dose escalation mode. So, yes, what we've defaulted to is to say, at the minimum, you can count on us giving updates on a quarterly basis even when we're not in a dose escalation environment. So, John, is that a fair summation?

John Paul Waymack, Senior Chief Medical Officer

Correct. Jonathan, we will announce the end of that cohort when it happens, and we'll announce the efficacy whether it's good or bad. And hopefully that'll happen before the next quarter conference call, so.

Jonathan Aschoff, Analyst

Okay. I was going to ask you about granularity on other data release timing, but the slides were more granular than the two press releases, so that's fine. But the one I would like to ask for, as it really sounds like early 2024 for the U.S. soft tissue lung met data, sounds reasonable for the top line final data for that?

Walter Klemp, Chairman and CEO

We are continuing to recruit quite swiftly and have just passed the halfway mark based on the traffic we've observed. If this pace continues, we may exceed that timing estimate. Additionally, depending on the flow and consistency of the data, it's possible we could consult with the FDA before enrolling all 28 patients in the expansion. Technically, if we do complete the 28 patients, the formal presentation of the dataset would likely occur in early 2024. However, given our current pace and the consistent responses from patients, we might not need to wait that long to engage with the FDA.

John Paul Waymack, Senior Chief Medical Officer

If I can clarify one thing, when you say the top line data, I would point out that there are two types of top line data here. Progression-free survival is what the critical decision is. And as Wally said, we may, and I think Jon also, we may be there before the end of the year. The other is overall survival, and there is no way we're going to be overall survival by the end of the year, because overall survival, you have to have 50% plus one of the patients die, and that's not going to happen from what we're seeing before the end of the year. So, progression-free survival, as Wally said, that's possible this year. Overall survival, it won't be, but we will not need overall survival if we want to meet with FDA.

Jonathan Aschoff, Analyst

Right. And if PFS looks the way you wish, which is the primary endpoint, which is what I was talking about, is it the case where OS could trump that, and bring a good-looking PFS down in relevance if the OS was unimpressive or is PFS standalone okay for registration?

John Paul Waymack, Senior Chief Medical Officer

My answer is that it will be based on the data and what it reveals. We certainly hope for both outcomes to be positive. However, if progression-free survival is sufficient for approval, we would proceed to the FDA with that information alone. Additionally, when submitting a New Drug Application, it is typical to include a four-month safety update during the FDA review process. In trials of this nature, if overall survival data is not available at the time of filing, it is usually included in the safety update.

Jonathan Aschoff, Analyst

That's helpful. Thank you, guys.

Walter Klemp, Chairman and CEO

Thanks, Jonathan.

Operator, Operator

Thank you. The next question is coming from Jeff Jones from Oppenheimer. Your line is now live.

Jeff Jones, Analyst

Thank you for taking my question. I have two inquiries. First, regarding the number of patients enrolled who have surpassed the lifetime maximum for treatments, could you provide details for both the AML and STS studies? Second, concerning AML, what are the plans for communication with the FDA to explore possibilities in the U.S.?

Walter Klemp, Chairman and CEO

Sure, and thanks for the question. I'm going to defer to Jon as the keeper of the headcount data. But while he's maybe looking for that specific point, a couple of comments. One, among the people that we've taken above the lifetime maximum, it's now getting to be a pretty substantial number. We've had a few of those people reach as high as 1,800 mg per square meter, and whereas the lifetime maximum is 550. And so, we're not just taking them slightly over that threshold; dramatically over that threshold. And historical data supports that 65% of all patients that are taken above the 550 lifetime maximum will exhibit some evidence of cardiotoxicity. And again, in our case, 100% of them have exhibited no evidence of cardiotoxicity. So, we're pretty proud of the track record here. Jon, do you have a current count on the total number of people that have been taken over that limit?

Jonathan Foster, Executive Vice President and CFO

No, there are no updates available beyond what is on our corporate dashboard, which I believe is the last number of 18. I want to emphasize that with both trials progressing rapidly, we do not intend to provide any reports until that data has been audited and confirmed.

Jeff Jones, Analyst

Understood.

Walter Klemp, Chairman and CEO

And what was the second part of your question?

Jeff Jones, Analyst

The second question was on AML and discussions with the U.S. FDA?

Walter Klemp, Chairman and CEO

Discussion with the FDA, sure. Paul, do you mind characterizing how you feel like that FDA discussion on AML would need to go?

John Paul Waymack, Senior Chief Medical Officer

Yes. Well, first, just to remind everybody. This trial is unblinded; everybody gets the drug. So, we see the data in real-time. And we're obviously not going to go meet with them after a dose escalation; it would be after the expansion cohort. So, we would be watching to see what affect we're having in the expanded cohort, which won't start until sometime later this year. We would meet with FDA when we see enough efficacy, both in terms of the magnitude of it and as far as talking about the statistical confidence intervals in the data where we think we have established that this drug works for AML and combination therapy. As Wally mentioned, right now, recently, once we've gotten this drug up to around 200 or more milligrams per meter square, we're getting about a 50% complete response rate. That, in the patient population we are treating, that has got our attention. And if such trends were to continue, then we would stop the expansion cohort whenever we feel we have enough data establishing efficacy, we would stop and have and end of Phase 2 meeting with FDA. As far as the previous question, let me just point out one thing about how many people went over the 550 milligrams per meter square anthracycline dose. Most of the patients, even before they started Annamycin, were on another anthracycline in strong dosages. So, most of the patients have gone over the recommended limit. I don't have the exact numbers either, but almost all the patients had prior anthracycline therapy, so almost all of them are over the 550 limit.

Jeff Jones, Analyst

Okay, that's kind of what I expected, and I appreciate the extra clarity on the FDA strategy. I assume that since these matters are connected, the discussions with the FDA regarding the cardiotoxicity of AML will also allow you to utilize the data you've gathered from both the STS trial and the AML trial during your meetings with the agency on that topic?

Walter Klemp, Chairman and CEO

100%.

John Paul Waymack, Senior Chief Medical Officer

That's correct. Because when you write for an NDA, the integrated summary of efficacy, you're only talking about efficacy in that indication. But when you're talking the integrated summary of safety, you will talk and pool safety data from all clinical trials for all indications. And as I noted, we have yet to see a single patient develop an impairment of ejection fraction among all the patients treated in all the indications in all the clinical trials. So, we think the data are becoming compelling that Annamycin does not cause the cardiotoxicity typical of all other anthracyclines.

Walter Klemp, Chairman and CEO

And I would just add to what Paul just described, I think we're aware of the fact that there are a few other anthracyclines out there that are in clinical development that claim to have an improvement in the cardiotoxicity issue. But to our knowledge, we're the only ones who are recording and reporting information as it relates to troponin levels, which are an indication for long-term cardiac impairment, the best indicator. So, to the best of our knowledge, we're really the only ones that are thoroughly evaluating cardiotoxicity with every known measure, and then having it independently reviewed, in this case by the Cleveland Clinic. So, we're really serious about demonstrating the safety record. And Jeff, I know we talked about this, that the liquid tumor division at the FDA took a different view initially years ago now, but took a different view about their confidence in the absence of cardiotoxicity. Then a bit later when we were dealing with the solid tumor division, they were more sanguine, they were more convinced by our data, and of course at that time we had more data. And so, now by the time we go back to the liquid tumor division, we are going to, by comparison to the conversation we have with them several years ago, we got a mountain of data. So, we are really optimistic that we're going to be able to make that point.

Jeff Jones, Analyst

Great, really appreciate the additional clarity, guys. Thanks for taking the questions.

Walter Klemp, Chairman and CEO

Yes, you bet.

Operator, Operator

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over for any further or closing comments.

Walter Klemp, Chairman and CEO

We think we really necessarily covered it here as that the main message obviously is that there is critical data that's going to be coming in, not just at the next quarterly call, but as it becomes available. So, obviously stay tuned. We can't wait to get to the next data points to deliver to everybody. Thank you so much for your time, and have a great week.

Operator, Operator

Thank you. That does conclude today's teleconference and webcast, and we disconnect your line at this time, and have a wonderful day. We thank you for your participation today.