Moleculin Biotech, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Moleculin is a clinical-stage pharmaceutical company developing drug candidates for difficult-to-treat cancers and viruses. It reported no revenue and has no sales organization or manufacturing facilities.
Financial results and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $5.7 million | $4.6 million; up $1.1 million |
| General and administrative expense | $2.6 million | $2.4 million; up $0.2 million |
| Total operating expenses | $8.4 million | $7.1 million |
| Net loss | $7.9 million; $0.28 per share | $6.9 million; $0.24 per share |
| Cash used in operating activities | $6.0 million | $4.8 million |
| Cash and cash equivalents | $37.3 million at March 31, 2023 | $43.1 million at December 31, 2022 |
Interest income rose to $0.4 million from $0.04 million, attributed mainly to higher interest rates. The company reported no meaningful operating margin because it had no revenue. It reported no borrowings; liabilities were $5.4 million, primarily accounts payable, accrued expenses, lease obligations and warrant liability. Current assets were $39.3 million and current liabilities $5.0 million.
Material changes and unusual items
- R&D expense increased mainly due to the WPD sublicense termination and increased clinical activity. The company reported $1.5 million of license-termination expense in Q1 2023, versus $0.4 million in Q1 2022.
- Under the March 2023 WPD termination, Moleculin agreed to pay $0.7 million in cash and issued 822,115 shares valued at $0.8 million. The termination restored certain territorial rights and transferred WPD’s in-process research and development; it also assigned the company rights and duties for an externally funded Annamycin trial.
- Operating cash use increased by $1.2 million year over year, attributed to increased clinical-trial activity, WPD-related costs, and higher consulting, legal and advisory fees. The company raised $0.1 million through its Lincoln Park equity line during the quarter.
- Shares outstanding increased to 29.6 million at quarter-end from 28.6 million at year-end, including shares issued for the WPD termination and equity-line financing.
Outlook, programs and risks
- Management estimated that March 31 cash would fund projected operating requirements beyond Q2 2024, potentially including increased R&D spending. It expects operating losses for several years and does not expect positive operating cash flow in the near future. The estimate is subject to changes in trial activity and potential legal costs; future financing availability is uncertain.
- The company focused internal development on Annamycin for soft-tissue sarcoma lung metastases and, with cytarabine, relapsed or refractory AML, as well as improved WP1066 formulation. It also seeks external funding and partners for parts of its pipeline.
- Post-quarter, the company reported preliminary MB-107 results: 13 subjects had been recruited; six of ten evaluable subjects had stable disease after two cycles, and three continued treatment. It reported two subjects in an externally funded alternative-dosing study had progressive disease after two cycles. These are preliminary results, not final conclusions.
- Post-quarter, Moleculin reported that the first MB-106 cohort treated three subjects; one had a preliminary complete response confirmed durable at four weeks, while two had disease progression. The second cohort opened at a higher Annamycin dose. These findings are preliminary and based on a small cohort.
- The SEC has an ongoing investigation following a March 2022 subpoena concerning, among other things, materials related to development of and statements about the company’s COVID-19 candidate. Moleculin says it does not know the investigation’s specific nature and cannot predict the outcome. It incurred approximately $0.5 million in related legal fees in Q1 2023.
- On May 5, 2023, Nasdaq notified the company that its share price had remained below the $1.00 minimum bid for 30 consecutive business days. The initial compliance period ran through November 1, 2023; a reverse stock split was among the options the company could consider. Delisting could affect trading liquidity and access to capital.
- Other stated risks include clinical and regulatory uncertainty, trial recruitment and timing, dependence on third-party manufacturers, licensing and intellectual-property obligations, and the need for additional capital. Management reported disclosure controls were effective as of March 31, 2023.
Key facts for investors to verify
- Cash burn, trial spending and whether the company’s projected funding runway remains achievable.
- Enrollment, safety and efficacy updates for Annamycin programs, including whether preliminary responses are confirmed in larger or longer-followed cohorts.
- Developments and potential costs or outcomes relating to the SEC investigation.
- Nasdaq listing compliance and any financing, equity-line use or other capital actions that could affect dilution.