Q4 2023 Moleculin Biotech Inc Earnings Call

Participants

Jenene Thomas; Investor Relations; Moleculin Biotech Inc

Walter Klemp; Chairman of the Board, President, & Chief Executive Officer; Moleculin Biotech Inc

Paul Waymack; Senior Chief Medical Officer; Moleculin Biotech Inc

Jonathan Foster; Chief Financial Officer, Executive Vice President; Moleculin Biotech Inc

Jonathan Aschoff; Analyst; Roth Capital Partners, LLC

Vernon Bernardino; Analyst; H.C. Wainwright & Co.

Presentation

Operator

Greetings. Welcome to the Moleculin Biotech 2023 year end conference call. And webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference please press star zero on your telephone keypad. 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.

Jenene Thomas

Thank you, Daryl, 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 molecular its 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 forward 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 and documents filed 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 may 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.
The data discussed regarding clinical trials and progress are considered preliminary and subject to change joining us on the call from molecular leadership team or Walter Klemp, Chairman and Chief Executive Officer, Dr. Paul Waymack, Senior Chief Medical Officer, and Jonathan Foster, Executive Vice President and Chief Financial Officer. I'd now like to turn the call over to Walter Klemp, Chairman and CEO. Wally, please proceed.

Walter Klemp

Thanks, Janine, 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 animation anthracyclines that is remain perhaps the most critical component of treatment for AML and STS. for too long, though, the limitations of anthracyclines have prevented a majority of patients from benefiting animation has changed that. And for the first time ever, we're showing a viable pathway to enable that underserved majority. The benefit for anthracyclines is 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 stat inhibitors and our metabolic inhibitors for continued outside investment. That only helps molecular and investors.
Te primary focus of this call and the updates we expect to provide over the coming months are squarely on animation 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. And Amazon 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. Our conservative estimate says that animation and should be able to more than double the number of patients achieving complete remission as compared with all of the approved targeted therapies combined. This is possible in part because of animations complete lack of cardio toxicity. We've treated 82 subjects so far across multiple studies and have yet to see any indication of cardiotoxicity. What's 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 three 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. Animation is a remarkable next generation treatments, its lack of CardioTech toxicity, combined with its greater potency and the 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 important, in fact, that we produced a short video taking you through this analysis. The link to that video is shown here and it's also right on the landing page of our website. If you are currently an investor or considering investment in molecular and you owe it to yourself to watch this short six 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 five 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 happened to have the required targeted gene mutation and at least 53% of AML patients out in the cold and comparison we've been treating all comers with animals regardless of gene mutation or prior therapy. And this is where animation 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 CR as a result of current targeted therapies. But since animation is an all-comers drug, there's no reduction from waiting. Instead, 100% of the CR rate should be expected from for all second line patients and that means our 50% CR rate is multiple times greater, then 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, I think again, in 2021, Servier, a French mid pharma company paid $2 billion for the combination of Idesa entered Sylvo 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 that performance from animation that is more than 10 times that number. And if you think that's an outlier, consider that our performance numbers in second line are better than venetoclax as 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 the 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 from molecular shareholders that will be measured in the billions. And again, this is just a an L. As we said before, our preclinical data suggests animation should also be beneficial in a wide range of other indications, potentially addressing 10 times as many patients as both AML. and STS. combined.
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 cardio toxicity 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?

Paul Waymack

Thank you, Wally. The next slide summarizes the three clinical trials we have conducted in patients with AML. In our MV. one oh four clinical study, we dosed six patients with animals and at either 100 or 120 milligrams per meter square. The reason for the low dosing was FDA's concerned about possible cardio toxicity or we identified no cardio toxicity in the study, but we did achieve one CRI despite the extremely low dose of analyzing our next clinical trial, MD. one oh five treated refractory and relapsed AML patients who had an average of four prior treatment regimens. It retreated with animation as monotherapy in this 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 three of the five patients treated met the criteria for CRs for CRI.s, and we identified no cardio toxicity 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 Amazon was combined with cytarabine, we elected to stop dose escalation and to proceed to our current trial, which would combine nanomedicine with cytarabine. Our combination analyzed and plus cytarabine clinical trial that is MB. one oh six has now enrolled 20 patients. This includes three patients for whom this is first line 10 patients for whom it is 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% for the remaining two patients. One only began treatment last week and thus should not be undergoing bone marrow efficacy evaluations for at least two more weeks. And the other has a 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 had 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. one oh six study. As you can see, six of the seven patients received denim license as second-line therapy since we don't count maintenance therapy as a second-line therapy. You will also note that we have one deaths from pneumonia, which occurred in the CRIF. patients. This unfortunate case occurred at a site where they did not follow the accepted standards 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, but my leukemia and medical societies.
I would next like to discuss the cardio toxicity issue with anthracyclines in more detail. The FDA has set limits for 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 answer CyClean utilized, as you can see from the slide, among patients who reached this level through 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 receive from 600 to 850 milligrams per meter squared 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 oriented CyClean we have serially monitored multiple parameters of cardiac function in all patients in all of our anthracycline Animus in clinical trials. This has included serial EKGs, troponin concentrations and troponins or a blood marker for acute cardiac toxicities and injection fractions, which is a measure of how efficiently the hardest pumping blood. These data had been reviewed by an independent cardiologists with expertise in the field of drug-induced cardio toxicities. To date, he has found no evidence of any cardio toxicity and any of the patients treated with Animas.
Finally, I would like to move on briefly to discuss our soft tissue sarcoma data. Our MB. one oh seven study is a dose escalation study in patients with soft tissue sarcoma with pulmonary patients cause 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 on 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 you had one or two 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 are 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 John.

Jonathan Foster

Thanks, Paul. We ended the year with roughly $24 million of 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 from preparation to commence or 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 2022 million with a weekly average trading volume of 55,000 shares with approximately 2.2 million shares outstanding, including pre-funded 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 as we are wholeheartedly. We believe all such housekeeping items need to be in order as we prepare for our transformation into pivotal stage development company. We continue to monitor the short positions by brokers, and we have reached out to one broker, notifying them as but shorting and balances a significant portion of our daily trading volume is shorting. We believe we have an opportunity to successfully break this trading pattern with our progress in animation as we move forward in 2024. As you can see, 2024 is shaping up to be a very exciting year from Electron.
As Wally and Paul have just discussed. We're moving forward in our clinical progress with anime and in 2024 with the following plan. Completing the NB. one oh six AML trial was first and third-line subjects and concluding the study taking the second line data that Paul just discussed and holding an end-of-Phase two meeting with the regulatory bodies here in the US and in Europe. Taking that feedback and initiating a pivotal study with intimates and on AML with FTS., we're looking to close out the current trough 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 molecular into a pivotal study during 2024. Wally?

Walter Klemp

Thanks, John. 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 in mice and 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 three 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 molecular in 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 animation 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 anime 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 path for approval pathway for animal license 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.

Question and Answer Session

Operator

(Operator Instructions) Jonathan Aschoff, Roth MKM.

Jonathan Aschoff

Bob. Thank you, guys. Good morning and congrats on the progress for sure. We know what's the final patient number for first line patients in this new Phase two cohort? And what do you need to see in that population? Two, you make the decision to go forward with a pivotal first-line trial.

Walter Klemp

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

Jonathan Aschoff

Then the Phase three that you're talking about --

Walter Klemp

You're talking about, the Phase three, confirm what that. So you're talking about the remedies will reconfirm it's free, right, right.

Jonathan Aschoff

Like I told you just really in the Phase two first-line patients to make that decision and go forward with that trial.

Walter Klemp

Exactly. That's let me let me hand it to Paul over to you. You're you're close close to all those numbers.

Paul Waymack

Yes, on As Wally mentioned, we anticipate it will go into the FDA with second line therapy as their initial indication. We would, however, and perform a first line study to get an additional indication, and that would be coming after our initial approval for second line in the U.S., we would anticipate the first line would be it's a randomized trial being compared to probably a different anthracycline to show that we are at least non-inferior and potentially superior and how it is working with the regulators with the patient numbers would be dependent upon the data we get as our current oh one oh six trial is finished as was mentioned, one of the six is completed for second line, but we have only enrolled first line patients to date. We're continuing to enroll them. And when we get the numbers from all the paid first-line patients and one out of six that would be compared to the literature. And that would allow us to do perfect calculations for the number of patients required for a pivotal trial comparing us to say Ghana revisions.

Jonathan Aschoff

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

Paul Waymack

We are currently at three. It will be driven by the data. If we get very good results quickly soon, there will be no need to go further on I could see us stopping at six or seven are going further. Right now. We only have two evaluable one 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.

Jonathan Aschoff

Okay. And what's the efficacy both know what for CRCR. bogey that you're looking for to say, yes, this is contender and worthy of running a Phase three trial and just first line patient.

Paul Waymack

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

Jonathan Aschoff

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

Paul Waymack

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. But that's that's one reason why we plan to go and meet with the FDA sometime by beginning of summer.

Jonathan Aschoff

Thank you. That was helpful. And you know, why not just first line anyway, because you know, this drug looks obviously safer. It certainly looks no less effective. And if not some novel agent that docs have to get their mind around wondering what thought and do my patient. I mean, so what why not a push in first line now that that's a good question.

Paul Waymack

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 has 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, five drugs approved or 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 five drugs on will be considered limited data. And that's where we're going here first, because the amount of data that would be required and data means the number of patients in 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?

Walter Klemp

It's Jonathan. And I really are it's really about managing. It's really about managing cost time and risk, right? It would if we look, if we were Pfizer, we probably would do exactly as you're describing, right, but we're not. And so 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 risk there.

Jonathan Aschoff

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 in other liver mets from pancreatic cancer, let's say, upon external help will carry that forward. I'm going to focus on AML.

Walter Klemp

That's that's the message if that's a reasonable takeaway. And I'll just give you a little bit of encouragement there of 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 two to position animation 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 dead center but I'm just 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.

Jonathan Aschoff

That sounds great. Thank you very much.

Operator

Vernon Bernardino, H.C. Wainwright.

Vernon Bernardino

And while we have going on and Dr. WiMAX, we haven't met yet. But Tom, congrats to all on the impressive results. I apologize. I have a cold. So some might come valuate by them. Anyway, I I do have questions. As far as the Phase three dose, they are quite impressive. And one thing I was wondering on you have not seen any kind of safety issues so far and that is fantastic. I was just wondering on what, if anything you could share that, that is any thoughts regarding that?
Those could conceivably you could actually dose higher. And pardon me, I'm not an oncologist. I've tried to get our even more efficacy out of animals and what are your thoughts there? And can you just share as far as feedback from the FDA?

Walter Klemp

So sovereign and you're right to ask that question. I mean, look, generically speaking, especially as it relates to anthracyclines, the mindset for 40 years has been you go to the maximum because you're trying to 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 But Paul, you and I talked a lot about this, that it's the optimum dose. And I think Vernon would love to hear what you have to say about the strategy behind dosing here.

Paul Waymack

Yes, and I agree appropriate. 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 a point where you start thinking well, what more would I achieve at the risk of starting to get significant toxicity? So at 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 tried to improve on it or if I can quote an old Virginia saying when you're writing Secretariat don't get off. So after this to 30 to 40, the results were really great. And I said, let's at let's not trying to go any further this is working more than we ever imagined, let's go with this.

Vernon Bernardino

So conceivably, you have this dose on and go through a phase three trial and it doesn't prevent you from going to a higher dose in a post-approval trial, direct mitigating any monopoly.

Paul Waymack

And the number one 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.

Vernon Bernardino

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

Walter Klemp

Thanks, Dan, and thank you.

Operator

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.

Walter Klemp

Thanks.