Moleculin Biotech, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Moleculin is a Phase 2 clinical-stage pharmaceutical company developing drug candidates for hard-to-treat cancers and viruses. It reported no revenue and has no commercial sales organization.
Financial results and liquidity
Amounts are in U.S. dollars; financial statement figures are in millions unless otherwise stated.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $3.888 | $4.204 | $9.576 | $8.824 |
| General and administrative | $2.492 | $3.196 | $5.129 | $5.617 |
| Total operating expenses | $6.411 | $7.434 | $14.766 | $14.507 |
| Net loss | $5.976 | $6.777 | $13.891 | $13.644 |
| Net loss per share | $0.20 | $0.24 | $0.48 | $0.48 |
- Cash and cash equivalents were $32.172 million at June 30, 2023, down from $43.145 million at December 31, 2022. Operating cash use for the first half was $11.143 million, compared with $12.806 million in the prior-year period.
- Current assets were $35.380 million and current liabilities $6.554 million. Total liabilities were $6.847 million, consisting mainly of payables, accrued liabilities, lease liabilities, and a $2,000 warrant liability. The filing reports no borrowings.
- There is no meaningful gross or operating margin to report because the company had no revenue and incurred operating losses.
- Management said cash should fund planned operations, including current Phase 2 programs, into the third quarter of 2024 without additional cash equity issuance. However, the filing also states that cash is sufficient only into, but not beyond, the near term and that substantial doubt exists about the company’s ability to continue as a going concern, given its accumulated deficit and need for financing.
Changes and notable items
- Q2 net loss narrowed by about 12% year over year, while first-half net loss increased about 2%. First-half R&D rose $0.752 million, attributed mainly to the WPD sublicense termination and reacquisition of intellectual property rights. First-half G&A fell $0.488 million, primarily from lower regulatory, legal, consulting, and advisory costs.
- Interest income rose to $0.783 million for the first half from $0.080 million, reflecting higher interest rates. The fair-value warrant gain was smaller than in 2022: $0.075 million versus $0.763 million for the first half.
- In March, the company terminated its WPD sublicense agreement, paying $0.7 million in cash and issuing shares valued at $0.8 million. It regained certain territorial rights and acquired WPD’s in-process research and development. WPD is affiliated with the company’s founder.
- The company issued 225,568 shares under its Lincoln Park equity line for gross proceeds of approximately $0.2 million in the first half; $19.8 million remained available under the agreement at June 30, 2023. Common shares outstanding increased from 28.628 million at year-end to 29.789 million at June 30.
Outlook, programs, and risks
- Management’s internally funded priorities include Annamycin for soft-tissue sarcoma lung metastases and Annamycin plus cytarabine for relapsed or refractory acute myeloid leukemia (AML), as well as development of an improved WP1066 formulation. Further WP1066 and WP1122 work depends partly on external funding or investigator-led trials.
- For MB-106, the filing reports preliminary results from the first cohort: one complete response among three heavily pretreated subjects; the other two had disease progression. The second cohort results described in the filing occurred after quarter-end: one of three evaluable subjects had a preliminary CRi and two had progression. The company reported two CR/CRi responses among six Phase 1b subjects overall; results are preliminary and subject to change.
- For MB-107, management reported stable disease after two cycles in 67% of 15 evaluable subjects at the 330 mg/m² dose; across the Phase 1b and Phase 2 study, 73% of 26 subjects showed stable disease. These are preliminary company-reported results; further survival and progression-free-survival data were planned.
- In March 2022, the company received an SEC subpoena concerning materials related to certain individuals and entities and statements regarding its COVID-19 candidate. The investigation is ongoing; the company says it cannot predict its outcome. Related expenses were $0.9 million for the first half of 2023, and a possible insurance reimbursement had not been approved or quantified.
- Nasdaq notified the company in May 2023 that its share price had been below the $1 minimum for 30 consecutive business days. The initial compliance period ran through November 1, 2023; a reverse stock split was among possible options. There is no assurance of regaining compliance.
- Other key risks include dependence on additional financing, clinical-trial recruitment and results, regulatory approvals, licensed intellectual property, and third-party manufacturing. Management reported disclosure controls were effective at June 30, 2023, with no material change in internal control during the quarter.
Important facts for investors to verify
- Whether the stated cash runway into Q3 2024 remains achievable, given the going-concern warning and ongoing cash burn.
- Updated, finalized efficacy and safety data for MB-106 and MB-107, including the timing and scope of planned survival analyses.
- Progress on financing, use of the Lincoln Park equity line, and the impact of further share issuance on dilution.
- Resolution of the SEC investigation, insurance coverage for related costs, and compliance with Nasdaq’s minimum-bid-price requirement.
- Whether external funding, trial recruitment, regulatory steps, and third-party drug supply support the company’s development plans.