MBRX - Moleculin Biotech Inc. (MBRX) Q3 2022 Earnings Call Transcript
Moleculin Biotech, Inc. (MBRX)
Q3 2022 Earnings Conference Call
November 10, 2022 5:00 PM ET
Company Participants
Walter Klemp – Chairman and Chief Executive Officer
Jonathan Foster – Executive Vice President and Chief Financial Officer
Conference Call Participants
Jonathan Aschoff – ROTH Capital
Presentation
Operator
Hello, and welcome to the Moleculin Biotech Inaugural Quarterly Update Conference Call and Webcast. As a brief reminder, all participants are currently in a listen-only mode. [Operator Instructions] Following the presentation, there will be a question-and-answer session. 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’d 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 risk 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 different materially from these contemplated by such forward-looking statements are discussed in the periodic reports Moleculin files with Securities and Exchange Commission. These documents are available on the investor 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 in research. While the company believes these third-party sources to be reliable, as the date of this presentation is not independently verified and makes no representation as to the adequacy, fairness, accuracy, or completeness of any of the independent sources is verified any information obtained from third-party sources.
Joining us on today’s call from Moleculin leadership team are Walter Klemp, Chairman and Chief Executive Officer; and Jonathan Foster, Executive Vice President and Chief Financial Officer.
I’d now like to turn the conference over to Walter Klemp. Please go ahead.
Walter Klemp
Welcome, everyone. Today’s marks an important moment for the company as we kick off our inaugural earnings call. We’re proud of the fact that our clinical trials have been progressing according to plan and we’ve arrived at a point where our vision and our hope for our pipeline are now being validated by significant data. And I’m pleased to say that this progress in these data are beginning to drive a noteworthy evolution of the company. Three Phase 1/2 clinical trials are now underway for Annamycin and we just announced a follow-up report from an independent expert that continues to document the complete absence of cardiotoxicity for what we believe is a remarkable anthracycline.
In addition to the data we’ve recently reported, we expect several additional milestones, trial progress and data points before this year is over. And importantly, we believe that we are in a great cash position to continue delivering value inflection points and milestones beyond mid-2024.
In our view, 2022 really has been a transformation year for Moleculin. It’s allowed us to gain critical mass across our entire pipeline. For Annamycin, we not only completed the Phase 1 portion of our STS lung mets trial in the U.S., but we also kicked off two additional Phase 1/2 trials, one in STS lung mets using an alternate dosing regimen and one combining Annamycin with Cytarabine in relapsed or refractory AML.
We also had additional preclinical data from our sponsored research at MD Anderson Cancer Center suggesting that the next additional indication for Annamycin might well be pancreatic cancer. Because of our unique ability to accumulate in the pancreas where other anthracycline simply can’t. Beyond Annamycin, our antimetabolite portfolio really came into its own this year with the startup and completion of a Phase 1 trial of WP1122 in healthy volunteers where we set an MTD or maximum tolerated dose to be utilized in possible future trials.
We see the possibility for these trials to be in both oncology and virology, and our intent is to tackle the bulk of this with external funding. In fact, our 1122 portfolio has now expanded into an IND clearance for GBM and most recently with NIH funding being awarded to the WP1096 analog as a possible therapy for renal viruses.
And finally, our STAT3 inhibitor portfolio led by WP1066 is now nearing completion of its first Phase 1 study in pediatrics and that sets the stage for its combination with radiation in a range of brain tumor indications. Now, in order to fully appreciate the opportunity that Annamycin represents, I think it’s helpful to understand just how different it is from currently prescribed anthracyclines like doxorubicin. Anthracyclines are a cornerstone chemotherapy for hundreds of thousands of patients every year, but their use has been hampered for decades because of their inherent cardiotoxicity and their inability to reach certain important targets.
But Annamycin was designed to be non cardiotoxic and we just received another report from an independent cardiology expert assessing results from two of our trials covering an additional 18 subjects. And like the prior assessment, this one concluded that there was no cardiotoxicity with Annamycin. And this brings us to a total of 42 subjects in our Annamycin trials where no evidence of cardiotoxicity has been identified. And again, this is by an independent expert cardiologist.
And all the preclinical data supports our expectation that Annamycin may be able to outperform doxorubicin in terms of efficacy in many tumors, in part because we’ve shown in animal models that it’s capable of accumulating in certain targeted organs at much higher concentrations. In fact, its ability to concentrate in the lungs at 30 times the level of doxorubicin in preclinical studies is what led to the successful conclusion of a Phase 1b study of Annamycin in patients with soft tissue sarcoma lung mets.
And we’re now into the Phase 2 portion of that trial. We believe that there is a very significant unmet need here, and we’re already showing activity in patients who stopped responding to doxorubicin, which is the standard of care. That U.S. study is now being flanked by an investigator led study in the EU in the same patient population, but using a weekly dosing regimen.
Preclinical data from MD Anderson showed that this dosing regimen was more effective than the standard monthly dosing that has been historically universal for anthracyclines. And this led to the EU grant funding of this trial. In the case of acute myeloid leukemia or AML, we successfully concluded a Phase 1 study demonstrating once again that Annamycin is safe. We set a recommended Phase 2 dose and we showed a 60% overall response rate in patients in the last cohort. And these were patients who were relapsed or refractory after multiple previous combination therapies.
Here again, our ongoing research collaboration with MD Anderson demonstrated that when you combine Annamycin with Cytarabine, a drug commonly used with AML patients, it’s 68% more effective than single agent Annamycin in a very aggressive AML mouse model. So we’ve now started up a Phase 1/2 in this indication with the combination. And this is what led to our decision to conclude the single agent study after setting the RP2D and moving directly into a combination trial. This way we continue advancing Annamycin, but we also conserve our cash runway.
Switching for a moment to WP1122 and our antimetabolite technologies. The story here has gotten more interesting. What started out early in the pandemic as a race to provide a therapeutic option for COVID-19 has now evolved into what we believe is a broader opportunity. We just completed a Phase 1 trial in healthy volunteers demonstrating that 1122 is safe and setting an MTD, and even though the COVID opportunity itself is cooling off as the pandemic winds down. This trial has now put us in a great position to exploit the U.S. I?D approval we have in GBM. And we’re in discussions already with potential collaborators for that opportunity. At the same time, however, our COVID research efforts uncovered an analog in the WP1122 portfolio that we call WP1096. And it’s showing some very interesting antiviral potential in preclinical studies.
In fact, based on the in vitro data generated in our work with UTMB, Galveston and the CDC funded Galveston, National Labs, the NIH is now providing funding for an animal study of 1096 in an arenavirus. Now, this in vitro data points to strong activity against some of the worst viruses out there, including Ebola, Marburg, Zika, and even HIV. So we plan to continue advancing the 1122 portfolio, and we intend to do most of this with external non-dilutive funding in both oncology and virology.
Now, while we’ve achieved a lot this year, I believe this is just the beginning of our transformation and we are poised to significantly build on this momentum with more important news to come yet this year and into 2023.
The U.S. clinical trial of Annamycin in STS lung mets continues to move quickly. So we should have interim Phase 2 data to report in Q1 of 2023. Also, both European trials, that’s one in STS and one in AML, should show Phase 1 progress this year that we expect will lead to Phase 2 activity and data next year. And as I mentioned, the NIH has started funding an animal trial with WP1096 in the arenavirus space, and we appear to be on track to see results from that trial this year as well.
So now let me invite our EVP, CFO, Jonathan Foster, to give his take on our financial situation before we wrap this up. Jon?
Jonathan Foster
Thanks, Wally. [Indiscernible] many differences Moleculin has over other small biotechs. We believe is our strong cash position, continue to focus on a minimum cash burn rate while advancing our portfolio in multiple trials, in multiple indications with both internal and external funds. We are focused on outsourcing where we can and with a minimum workforce, and this helps us maintain this lengthy cash runway.
Regarding this quarter R&D expense of just shy of $15 million outpaces last year’s expense, mirroring the increase in clinical activity Wally just mentioned.
G&A expense of $8.7 million was higher than prior years due to increased legal cost. The company ended the quarter with over $50 million in cash on hand. We believe this is sufficient to fund our operations beyond mid-2024 and fund the company led trials Wally has just described and provide time for us to deliver very important human data. I strongly believe this strength, along with our multiple shots on goal, sets us apart from other small biotechs. Wally?
Walter Klemp
Thanks, Jon. So look, given the stress that the biotech sector has been under and in particular where our stock has been trading. We can’t emphasize enough that we believe the fundamentals of the company have never been stronger. We have never been more convinced of our science and the multiple shots on goal we have in front of us. And perhaps most importantly, we believe we have an opportunity to bring hope to patients who are facing some of the worst diseases imaginable. And from an investor standpoint, we are positioned for a breakthrough year ahead with multiple potential value inflection points. And as Jon said, unlike a lot of other small biotechs, we have the cash reserves we need to get there.
So with that, let’s open this call up to questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question today is coming from Jonathan Aschoff from ROTH Capital. Your line is now live.
Jonathan Aschoff
Thank you guys. I have three questions. Is the R&D the same kind of spike in the third quarter that we saw in the last couple years? Like if I drop it 25% for this current quarter, that kind of allows your cash to get it – to get you guys into the second half of 2024. So is that the way to think about R&D?
Walter Klemp
Thanks, Jonathan. That’s clearly a Jon’s question so far away Jon.
Jonathan Foster
Sorry, I jumped in there.
Walter Klemp
Yes. Yes.
Jonathan Foster
So yes, Jonathan, I mean, you and I have talked about this before. The spike we have is the production of Annamycin. So that will spike it. Now, this quarter wasn’t Annamycin, it was the start of all the clinical trials and initial payments to the CROs. So that really up to spin this quarter. As we look at 2023, I would say there’s going to be similar $1 million to $2 million spreads each quarter. As you move forward, the spin should be slightly less than 2022. And then in 2024, you’re not going to have the production of Annamycin. So the first half of 2024 is lower than our current burn rate.
Jonathan Aschoff
Okay. thank you. But by the way, you guys never mentioned what is the WP1122 dose that you found with safe and tolerable in the healthy volunteers?
Walter Klemp
So that was 32 mg/kg. And that’s delivered in two doses of 16 mg/kg twice daily and for seven days.
Jonathan Aschoff
Right. For seven days. And was the last question is, will 1096 go into the clinic only with external funding?
Walter Klemp
That’s the current thinking. I don’t want to sound too absolute about it. But we’re really built and budgeted to focus on the oncology indications. And every indication we have is that if the animal data comes back positive that there appears to be enough interest on the part of the government to continue. I mean, they’ve started funding it. Our expectation is if they like what they see, they’re going to continue to fund it. So I think you’re safe in assuming that as we push 1096 forward in the virology space, it’s going to be on someone else’s nickel.
Jonathan Aschoff
Okay. thank you very much guys.
Walter Klemp
Thanks, Jonathan.
Jonathan Foster
Thanks, Jonathan.
Operator
Thank you. [Operator Instructions] Our next question today is coming from Jeff Jones from Oppenheimer. Your line is now live.
Unidentified Analyst
Hey guys, thanks for taking the question. This is Kyle Yen [ph] on behalf of Jeff. So quick question on timing. So do you mind confirm on the data readout of the Phase 2 soft tissue sarcoma trial and also what are going to be the next steps following the data readout? Are you going to have to go back to FDA before proceeding with the next study? Thanks.
Walter Klemp
Sure. And Jon, I’ll invite you to kind of backstop, if I’ve misconstrued. But one of the things that we’re trying to communicate to folks is we were primarily a Phase 1 company in the past and it looks like we’re just about to make that full transition out of Phase 1 and into Phase 2. It’s already started. When we were in Phase 1, we were happy to report on a cohort by cohort basis because that provided for relatively frequent updates, three patients at a time. But in the Phase 2 portions of these studies, you don’t really have those natural breaks. So our thinking here is going forward as it relates to these Phase 2 studies, unless there’s some basis for an exception, you should expect to hear updates from us with these quarterly earnings calls. It’s in part – it’s why we were excited to put these in place. So we have a natural predictable pace for sharing information. Jon, do you have any additional thoughts there you want to relay?
Jonathan Foster
No. That’s perfect. These are open label trials, of course being in Phase 2. So we’re getting the data real time and we’d look forward to sharing it in March when we report the 10-K and then in May when we report our first 10-Q and going forward.
Walter Klemp
And Kyle, relative to your second – the second part of your question about interaction with the FDA. That’s you’re absolutely right. What our expectation here is that once we’ve accumulated enough Phase 2 data from this U.S. trial, then it’s going to be time for us to have a session with the FDA to talk about trial design for the next trial. Our expectation is the next trial should be capable of being a pivotal approval trial. But of course, that’s subject to discussion with the FDA and the actual design of that trial is also subject to that. I will add that we’re gathering a group of opinion leaders at the upcoming CTOS meeting in Vancouver, BC and part of that is to review the data to date and to start talking about what that next trial design is and the conversations that we’d like to have with the FDA to completely vet that that if you will. So that’s kind of how our thinking about how that unfolds.
Unidentified Analyst
Got it. Thanks so much.
Walter Klemp
Yes.
Jonathan Foster
Thanks for calling.
Operator
Thank you. We reach out our question-and-answer session. I’d like to turn the floor back over to management for any further or closing comments.
Walter Klemp
Well, thanks again everybody. We appreciate your time and we’re excited about looking forward to the next of these earnings conference calls because we know we’re going to have a lot more to talk about. And the year of 2023 is lining out to be full of important inflection points that we’re eager to update you on. But in the meantime, we appreciate your interest in the company and have a great evening.
Operator
Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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Moleculin Biotech, Inc. (MBRX) Q3 2022 Earnings Call Transcript